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Can a DOD contract establish progress payments by CLIN?

As in, one or more CLINs will establish progress payments based on costs incurred, but not all of them. The other CLINs will be payment on delivery (DD250).

(Asking for a friend.)

 

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I see nothing in FAR or DFARS that prevents use of progress payments on a CLIN by CLIN basis, and I'm pretty sure I did it, but I can't remember specifics.

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Does DFARS PGI 204.7108,( c )(5), (6), and (7),  Payment Instructions help?

See also, DFARS PGI 204.7108(d),  Payment Instructions. 

I recall DFAS publishing some related guidance. I'll try to find it.

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1 hour ago, C Culham said:

h2h - Just to make sure the contract is a fixed priced contract?

Yep. Contract is FFP.

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1 hour ago, Jamaal Valentine said:

Does DFARS PGI 204.7108,( c )(5), (6), and (7),  Payment Instructions help?

See also, DFARS PGI 204.7108(d),  Payment Instructions. 

I recall DFAS publishing some related guidance. I'll try to find it.

Thanks I'll go check it out. I reviewed PGI 232 but not 204.

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I think Jamaal nailed it. The PGI @ 204.7108 provides:

"When some, but not all, of the fixed price line items in a contract are subject to contract financing payments, the contracting officer shall clearly identify to which line items the payment clause(s) included in Section I apply."

So DOD seems to be fine with notion.

Thanks!

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In accordance with the Progress Payment Clause, 52.232-16, progress payments are paid on the total contract basis.  The parties can agree that costs for specific CLINs are only allowed as eligible costs, or costs for specific CLINs are not allowed as eligible costs. For example, a separate clause may be written that states progress payments are not authorized for CLIN 0001, or progress payments are only authorized for CLINS 0005, 0006, and 0007.

 

Unless the line items are service items, all invoices should be based on an acceptance documented on a Material Inspection and Receiving Report (i.e., a DD250 or an IRAPT receiving report in DoD's Wide Area Workflow e-Business Suite).  The price for delivered and accepted items is not paid via a receiving report, nor is it the vehicle for paying the price of delivered and accepted fixed-price line items.  Progress payments are financing payments in advance of delivery.  They are not delivery invoice payments.

 

Line items for services may be accepted via a receiving report, but these days, they may not use the receiving report as the acceptance vehicle. Progress payments may be authorized for fixed-price services line items.

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54 minutes ago, sme1102 said:

In accordance with the Progress Payment Clause, 52.232-16, progress payments are paid on the total contract basis.

Emphasis added. That changes the language of the clause, which actually is:

Quote

Unless the Contractor requests a smaller amount, the Government will compute each progress payment as 80 percent of the Contractor’s total costs incurred under this contract whether or not actually paid, plus financing payments to subcontractors (see paragraph (j) of this clause), less the sum of all previous progress payments made by the Government under this contract.

I do not think that "total costs incurred under this contract" means "total contract basis." If the clause is applied to only a particular line item or set of line items, then I think it means total costs incurred under this contract for the line item or set.

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I believe where the clause reads "the contract", it means the "contract".  The contractor will only claim eligible costs on Line 11 of the Request for Progress Payments, which would not include any costs for line items excluded by other terms of the contract.  The Government needs to know about the entire contract because it administers the entire contract.  The contractor will be required to obtain financing to complete performance other than progress payments.  This could be from an external source or from internal resources.  In any case, the government needs to validate the company can complete all requirements with all financing available  -- not just the line items authorized for progress payments.  The government also needs to ensure the company may not be operating in a loss contract position, that is, the contract cost will exceed the contract price.  It doesn't matter whether one or more line items are excluded from progress payments.   If the contractor cannot complete the contract because it cost are more than planned, then the government is at risk.

 

The Title part of the clause states title “vestiture shall occur when the property is or should have been allocable or properly chargeable to this contract.” It does not read title only vests in property related to line items authorized for progress payments.  In case of monies due to the government because of issues related to progress payments, the government can take title to any property allocated to the contract to obtain the necessary resolution.

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I don't understand what you're saying. You seem to agree that progress payments can be applied on a CLIN  by CLIN basis, so what's the point that you are making? Are you talking about how to complete a form?

Do you administer progress payments for your agency? Do you work for DCMA?

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I interpreted your posting to mean the clause does not apply to the contract as a whole, but only to the line items authorized for progress payments.  The clause does not specifically mention information is restricted to line items authorized for progress payments.  It only mentions the "contract", except when it requires the costs applicable to items delivered, invoiced, and accepted (Line 20a of the request form) shall not include costs in excess of the contract price of the items.

I do not administer progress payments and I do work for DCMA.

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And yet ... the PGI section I quoted above clearly and unequivocally states that the Section I payment clauses shall be clearly identified with the CLINs to which they apply. I don't see any other interpretation than the progress payment clause would apply only to the CLINs subject to progress payments. CLINs not subject to progress payments would be subject to different payment clauses.

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I agree with here_2_help. I does not make sense to me to apply the progress payment clause to items for which progress payments are not being provided.

sme1102:

Do you know of any DCMA published interpretation of the clause?

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