Jump to content
The Wifcon Forums and Blogs

Smurphy430

Fractional Hourly Billing

Recommended Posts

I have recently taken over the duties as COR for a IT Service Contract. The contract is a T&M ID/IQ service contract in which T&M or FFP orders are placed in the form of task orders. There is no optional work within the task order and there is no mixed task order i.e. T&M Line Items with FFP Line Items.

My question is that it has always been my experince that hours are billed in 1/4 hour increments. I have some invoices where the hours are billed fractionally:

Therefore:

60 Minutes /100 =0.6 .60 of 1 Hour is 36 Minutes = $44.50 at $1.24 per Minute

The contractor says by not-rounding the Government is saved money, in my opinion this is not reasonable. The additional manhours to track and then try to close this task order washout any savings by a "to the minute recording of time worked". Not to mention monthly invoice reviews.

My question to the forum is: Is there anything that gives guidance regarding timekeeping recording? If so, please tell me provide the references....

Thank you in advance Steve

Share this post


Link to post
Share on other sites

The contract clause at FAR 52.232-7, Payments under Time-and-Materials and Labor-Hour Contracts, says in paragraph ( a )( 4 ) that fractional parts of an hour shall be payable on a prorated basis.

I suppose you could put a blurb in your contract's Section G that fractional parts of an hour shall be computed using only half and quarter denominators, and that all rounding between quarter points shall be downward - but that might be considered as a deviation (I'm not sure at this point, but I'll leave that up to you).

Share this post


Link to post
Share on other sites

Shouldn't the contractor's timekeeping practices determine the granularity of its labor billings.

For example, if the contractor records time in increments of one-tenth of an hour, shouldn't that be the same level at which it bills? Why would you want to go and force the contractor to bill in a manner that is not consistent with its own timekeeping and labor accounting practices?

If you force the contractor to "round up" or "round down" then (a) its billings will not tie to its accounting records (leaving it vulnerable during audit) and (B) that manual rounding process will cost somebody money (if it were me, I'd direct charge the labor involved to the contract that requires it).

Many contractors invest a lot of money in business systems, including labor accounting and billing. To force a manual intervention into the automated process seems to me to be ill-advised. Your preferences regarding how labor should be billed should take a second place to what's called for by the contractor's systems and practices, in my view.

Hope this helps.

Share this post


Link to post
Share on other sites

The contract clause at FAR 52.232-7, Payments under Time-and-Materials and Labor-Hour Contracts, says in paragraph ( a )( 4 ) that fractional parts of an hour shall be payable on a prorated basis.

And for commercial acquisitions, FAR 52.212-4 (Alt I) paragraph (i )(1)(i )(A ) has similar "prorated" language.

Share this post


Link to post
Share on other sites

The contractor's stated practices and their timekeeping/accounting system are also drivers on billing quarter hours versus by tenths

Share this post


Link to post
Share on other sites

I would agree with granulaity of billing, if it were consistant. However, it is not consistant. It appears that the contractor deviates from task order to task order. I think this accounting practice is unreasonable to account for. Especially when a contractor logs 8.60 hours for one day which mathmatically works out to be 8:36. Not to mention the nightmare it creates when you try to close out a contract with seconds, and minute computations.

But this is my opinion, I am sure some people will defend the practice as well as perform the practice.

Share this post


Link to post
Share on other sites

I would agree with granulaity of billing, if it were consistant. However, it is not consistant. It appears that the contractor deviates from task order to task order. I think this accounting practice is unreasonable to account for. Especially when a contractor logs 8.60 hours for one day which mathmatically works out to be 8:36. Not to mention the nightmare it creates when you try to close out a contract with seconds, and minute computations.

But this is my opinion, I am sure some people will defend the practice as well as perform the practice.

Have you asked the contractor to provide its timekeeping and billing practices?

Share this post


Link to post
Share on other sites

Smurphy430--

You wrote:

Therefore:

60 Minutes /100 =0.6 .60 of 1 Hour is 36 Minutes = $44.50 at $1.24 per Minute

You know that math isn't right, don't you? The contractor bills by the HOURLY billing rate, not by the minute.

8.60 hours is billed at [(8 hours x hourly billing rate) + (0.60 hours x hourly billing rate)]. There is no conversion to minutes, unless your contract billing terms specify otherwise. There should be no need to "close out a contract with seconds and minute computations."

In any case, just tell DCAA to go audit the contractor's timekeeping practices. If there's an issue with consistency they'll let you know.

Hope this helps.

Share this post


Link to post
Share on other sites
Guest
This topic is now closed to further replies.

×