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Invoice Submittal for Cost Reimbursement Contracts


Acq_4_life

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I am reviewing an invoice submitted by a contractor for a cost reimbursement contract. In submitting the invoice, the contractor submitted a lump sum for direct labor, other direct cost, etc. versus classifying individual labor categories. In reviewing the contract, I noticed that the contract was written the same way, direct labor lump sum, other direct cost lump sum, etc. Is this acceptable for cost reimbursement contracts? And can I reject the invoice and request that the contractor resubmit the invoice to include individual labor categories?

Other information: The contractor's proposal was submitted by classifying individual labor categories.

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I assume you have the following clause in your contract: 52.216-7 Allowable Cost and Payment (Dec. 2002).

Note this sentence in (a) (1): "The Contractor may submit to an authorized representative of the Contracting Officer, in such form and reasonable detail as the representative may require, an invoice or voucher supported by a statement of the claimed allowable cost for performing this contract."

Note the phrase in the middle of the sentence: "...in such form and reasonable detail as the representative may require, ...".

I think you are entitled to ask for details on the contents of the direct labor.

Quote

(a) Invoicing.

(1) The Government will make payments to the Contractor when requested as work progresses, but (except for small business concerns) not more often than once every 2 weeks, in amounts determined to be allowable by the Contracting Officer in accordance with Federal Acquisition Regulation (FAR) Subpart 31.2 in effect on the date of this contract and the terms of this contract. The Contractor may submit to an authorized representative of the Contracting Officer, in such form and reasonable detail as the representative may require, an invoice or voucher supported by a statement of the claimed allowable cost for performing this contract.

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I assume you have the following clause in your contract: 52.216-7 Allowable Cost and Payment (Dec. 2002).

Note this sentence in (a) (1): "The Contractor may submit to an authorized representative of the Contracting Officer, in such form and reasonable detail as the representative may require, an invoice or voucher supported by a statement of the claimed allowable cost for performing this contract."

Note the phrase in the middle of the sentence: "...in such form and reasonable detail as the representative may require, ...".

I think you are entitled to ask for details on the contents of the direct labor.

Quote

(a) Invoicing.

(1) The Government will make payments to the Contractor when requested as work progresses, but (except for small business concerns) not more often than once every 2 weeks, in amounts determined to be allowable by the Contracting Officer in accordance with Federal Acquisition Regulation (FAR) Subpart 31.2 in effect on the date of this contract and the terms of this contract. The Contractor may submit to an authorized representative of the Contracting Officer, in such form and reasonable detail as the representative may require, an invoice or voucher supported by a statement of the claimed allowable cost for performing this contract.

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I assume you have the following clause in your contract: 52.216-7 Allowable Cost and Payment (Dec. 2002).

Note this sentence in (a) (1): "The Contractor may submit to an authorized representative of the Contracting Officer, in such form and reasonable detail as the representative may require, an invoice or voucher supported by a statement of the claimed allowable cost for performing this contract."

Note the phrase in the middle of the sentence: "...in such form and reasonable detail as the representative may require, ...".

I think you are entitled to ask for details on the contents of the direct labor.

Quote

(a) Invoicing.

(1) The Government will make payments to the Contractor when requested as work progresses, but (except for small business concerns) not more often than once every 2 weeks, in amounts determined to be allowable by the Contracting Officer in accordance with Federal Acquisition Regulation (FAR) Subpart 31.2 in effect on the date of this contract and the terms of this contract. The Contractor may submit to an authorized representative of the Contracting Officer, in such form and reasonable detail as the representative may require, an invoice or voucher supported by a statement of the claimed allowable cost for performing this contract.

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Guest Vern Edwards

I agree with napolik. BUT be fair. Don't hold up reimbursement if you didn't specify the form and detail at the time of award or at least before the invoice was due to be submitted. You don't need details in order to process the reimbursement. The contractor can submit the request in a lump sum and you can audit it later.

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I assume you have the following clause in your contract: 52.216-7 Allowable Cost and Payment (Dec. 2002).

Note this sentence in (a) (1): "The Contractor may submit to an authorized representative of the Contracting Officer, in such form and reasonable detail as the representative may require, an invoice or voucher supported by a statement of the claimed allowable cost for performing this contract."

Note the phrase in the middle of the sentence: "...in such form and reasonable detail as the representative may require, ...".

I think you are entitled to ask for details on the contents of the direct labor.

Quote

(a) Invoicing.

(1) The Government will make payments to the Contractor when requested as work progresses, but (except for small business concerns) not more often than once every 2 weeks, in amounts determined to be allowable by the Contracting Officer in accordance with Federal Acquisition Regulation (FAR) Subpart 31.2 in effect on the date of this contract and the terms of this contract. The Contractor may submit to an authorized representative of the Contracting Officer, in such form and reasonable detail as the representative may require, an invoice or voucher supported by a statement of the claimed allowable cost for performing this contract.

Unquote

Can I just add in here that we seem to have some information missing? What we do know is that the contractor is billing the customer is exactly the same way its costs were negotiated and contracted-for, no more and no less. Now somebody is saying, after award, wait a minute, maybe we need some more detail. Do we know whether the contractor's system has any more detail? Do we know whether the system was found to be adequate for cost-type contracting? Do we know if the contractor has a Disclosure Statement and how it accounts for its costs?

Nope.

Seems to me we need the answers to those questions before we make any suggestions here. Sombody (me) might say, it's unfair to tell the contractor <i>after submission of the first invoice</i> the customer needs more detail. Somebody (me) might say, you didn't need that detail to find the offer fair & reasonable, and you didn't need that detail when you negotiated the price -- so what has changed here? The only thing that's changed is that you want to change the ground rules after the game has started, which will delay the contractor's payment and might cost it more in admin. costs.

But I'm not saying that -- yet -- because I believe there's too much information missing.

Hope this helps.

NOTE: I see Vern just posted while I was reviewing this. I concur with him but will post this anyway. H2H

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Yes. Clause 52.216-7 was incorporated by reference. Is it appropriate to categorize direct labor, other direct cost as lump sums in cost-reimbursement contracts?

This contract was awarded as a cost-reimbursement contract; however, the use of cost reimbursement contracts is prohibited for the acquisition of commercial items. This contract is for a commercial service. Can the contract be modified to reflect a different contract type?

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Guest Vern Edwards
Yes. Clause 52.216-7 was incorporated by reference. Is it appropriate to categorize direct labor, other direct cost as lump sums in cost-reimbursement contracts?

This contract was awarded as a cost-reimbursement contract; however, the use of cost reimbursement contracts is prohibited for the acquisition of commercial items. This contract is for a commercial service. Can the contract be modified to reflect a different contract type?

Wait a minute! The contract is for commercial items (services) and is costs-reimbursement? How did that happen?

As for your question about what's appropriate, if the contract or contracting officer's representative didn't specify what information it wants in an invoice or voucher, then the contract gets to submit its request any way it sees fit.

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here_2_help,

I have been reassigned as Contract Specialist to 15 different contracts that were awarded by a former Specialist and found several discrepancies. I am trying to correct the discrepancies to ensure that they do not end up in a protest. In reviewing the contract, I did see that the file was documented to include "adequate system for cost-type contracting only?; however, I did not see a Disclosure Statement. I very much understand your response and I agree. What can I do to clean up the contract?

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here_2_help,

I have been reassigned as Contract Specialist to 15 different contracts that were awarded by a former Specialist and found several discrepancies. I am trying to correct the discrepancies to ensure that they do not end up in a protest. In reviewing the contract, I did see that the file was documented to include "adequate system for cost-type contracting only?; however, I did not see a Disclosure Statement. I very much understand your response and I agree. What can I do to clean up the contract?

Acq_4_life,

If I understand your situation correctly, your agency has awarded a cost-type contract to a contractor who has been determined to have an adequate accounting system. You say the contractor is performing a "commercial service" but you don't say whether the contract was awarded pursuant to Part 12 or if it contains any commercial item clauses.

Putting this all together, you may have an illegal contract (cost-type commercial item procurement). Or not. But either it needs to be a full-on commercial item contract (convert to FFP or T&M, and lose any clauses inconsistent with commercial item acquisitions), OR it needs to be full-on cost-type (specify some invoicing requirements and lose any clauses that smack of commercial item acquisitions). One way or the other; not both. To help me decide which way to go, I would look at the original solicitation, contractor's proposal and bid evaluation.

In the meantime, I would pay the contractor's invoice as submitted and ask your friendly audit agency to do a post-payment voucher review. (I think they might call it a booked-to-billed reconciliation.)

I'm sure there's more to be said -- and others to say it. Hope this helps.

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here_2_help,

You've done just that, helped me determine the proper corrective action. This WIFCON site has really helped me with many issues that I have encountered. It definitely contains some incredible information that allows me to feel comfortable with my decisions. Thanks again.

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