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I have a vendor with an unpaid invoice. DFAS will not pay because DFAS is claiming the incorrect rates were used.

The vendor ordered material in FY18, and it was not received by the government until November of FY19, and by the vendor until February of 2020.

The vendor claims the rates should be the year they were incurred in their accounting system.

Are they correct?

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Just to be clear, the vendor is a contractor, correct?  If so, what type of contract are you talking about, cost reimbursement, T&M, FPI, etc.? 

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"Just to be clear, the vendor is a contractor, correct?  If so, what type of contract are you talking about, cost reimbursement, T&M, FPI, etc.? "

Yes the vendor is a contractor. It is a Cost CLIN on a CPFF contract.

The question is, is the Government obligated to pay either the Material Handling Fee when the material was ordered or when it was received?

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Depends on what the contractor's practices are for recording material costs.

A consistent practice must be used, but it can vary by contractor. Some contractors record the cost of material when ordered, others when received, others when the invoice is received, others when the invoice is paid.

Ask the contractor what its practice is. That will give you the answer to your question, as the burden to be applied will be based on when the cost of direct material is recorded by the contractor.

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2 hours ago, ArrieS said:

DFAS will not pay because DFAS is claiming the incorrect rates were used.

What is the basis for this claim by DFAS?  The Allowable Cost and Payment clause, FAR 52.216-7 states that "Properly allocable and allowable indirect costs, as shown in the records maintained by the Contractor for purposes of obtaining reimbursement under Government contracts" are costs that are reimbursable consistent with what H2H said.

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