Invoicing and Unit of Measurement Question

[jtim]

I have several service FFP contracts that use "month" as the unit of measurement in the contract pricing schedule. Invoices are submitted every 30 days in both cases. I'm more accustomed to seeing "labor hour" as the unit of measurement in such cases, so it raised a few questions in my mind.

The SOW of one contract specifies that 40 hours are to be worked per week. The employee on this contract has recently worked less than 40 hours per week. When it comes time to invoice, would it be appropriate to prorate the unit of measurement "month" to reflect the fewer than 40 hours per week worked during that invoicing period? In other words, is this a "units within units" situation (hours within month) that should be reflected via prorating?

In contrast, the SOW for the other contract only provides an estimate for the number of hours to be completed per year. There is no number of hours associated with 1 month specifically in the contract. Would it then make sense to invoice the entire 1 month unit of measurement, even if the employee worked less than the average number of hours if you divided the yearly hourly estimate by 12 months? I was thinking that theoretically, the employee could work half the average hours this month and double the average hours next month, and in both cases the full 1 month unit of measurement price would be invoiced. But please correct me if you have any alternative advice.

 

[C Culham]

I will take a stab at responding but in truth a specific answer would have to spin off the exact wording of the entire contract.  I say this as there are payment clauses and invoicing requirements and sometimes the latter is buried in the SOW/PWS of a contract.   This said my general thought is this -

The basic FAR payments clause 52.232-1 provides "The Government shall pay the Contractor, upon the submission of proper invoices or vouchers, the prices stipulated in this contract for supplies delivered and accepted or services rendered and accepted, less any deductions provided in this contract. Unless otherwise specified in this contract, payment shall be made on partial deliveries accepted by the Government if-" so for the one contract (40 hours a week)prorating does seem appropriate and in my view is covered in the clause as services rendered and accepted and partial delivery.

For the other contract billing the monthly amount would seem appropriate but the language of the rest of the contract would definitely play a role in this general view.

 

[Retreadfed]

jtim, is either contract a level of effort contract?  For the first contract, you say the SOW specifies that 40 hours are to be worked a week.  However, does the contract contain other provisions describing a task that needs to be completed such as mowing the grass?  Does the contract condition payment on the number of hours worked or satisfactory completion of a task?  Finally, is there a clause in the contract addressing proration?

As for the second contract, you say it contains an estimate and later say that it contains an average number of hours. These are  different things.  Which is it?  Also, again, what are you acquiring under the contract, a level of effort or completion of a task?

[jtim]

Could you clarify what you mean by a "level of effort contract"?  I am not familiar with that term, but I can say that both contracts are not for completion of a task with a discrete end state, they're both based on an employee providing services on an ongoing basis.

Regarding the first contract with an SOW specifying 40 hours to be worked per week, the SOW describes ongoing duties and responsibilities for a staffed position. It is not for a task such as cutting grass to a certain length or cleaning an amount of square feet to a certain standard. The contract does not include the FAR payments clause 52.232-1 but it does include DFARS 252.232-7003 Electronic Submission of Payment Requests and Receiving Reports. The DFARS clause does not mention anything about proration. I searched the rest of the contract for information on proration and have not found anything. The contract does not condition payment on the number of hours worked or satisfactory completion of a task. 

For the second contract, it includes an estimate for the yearly number of hours to be worked but it doesn't contain an average number of hours. The average number of hours I cited was purely hypothetical. The employee has worked a low number of hours this month because there has not been a lot of work available to complete. With that said, my plan was still to invoice the full unit of measurement (1 month) because there is no information on proration in the contract nor information on hours associated with a month, only an estimated number of hours for the year. Like the first contract, it also does not condition payment on the number of hours worked or satisfactory completion of a task. 

 

[joel hoffman]

9 hours ago, jtim said:

The [first] contract does not condition payment on the number of hours worked or satisfactory completion of a task. 

I think that there should be a payment clause in the contract in addition to the DFARS clause at 252.232-7003 Electronic Submission of Payment Requests and Receiving Reports. See paragraph (f) of that clause:

“(f) In addition to the requirements of this clause, the Contractor shall meet the requirements of the appropriate payment clauses in this contract when submitting payment requests.”

The scope of Subpart 232.70 - “ELECTRONIC SUBMISSION AND PROCESSING OF PAYMENT REQUESTS AND RECEIVING REPORTS “prescribes policies and procedures for submitting and processing payment requests in electronic form to comply with 10 U.S.C. 4601 (procedures for submitting and processing electronic invoices).

It would appear that you aren’t fully complying with the statement of work requirement to work 40 hours per week,

Thus you may be partially non-compliant with the terms of the contract but appear to be invoicing for work that is specifically required by the contract. 

[Retreadfed]

On 10/16/2024 at 5:58 AM, jtim said:

Could you clarify what you mean by a "level of effort contract"?

See, the discussion of "term contract in FAR 16.306(d).