Significant delays in voucher review/approval

What's the contract type? CPFF?

Sorry, it is CPFF.

Two things: First, you do not want to end up on the bad side of the COR. Enough said. Second, if the problem is defective invoices, then you should fix that problem before you complain about the COR. Once you have fixed that problem you can sit down and talk things over with the COR, but I think that before you take formal action to pressure the COR you should look back to my first point.

Have you talked with the COR about the problem? If so, what was the response?

We have had conversations with teh COR about this problem and he basically told us that he manages several programs and is very busy. He says will try to do a better job and review them in a more timely manner . However, we have yet to see that happen. Understand your point about our invoices must be correct otherwise, we have no room to complain. Historically the invoices have been fine, but the amount of time it is taking him to finally approve is drawing a tremendous amount of attention from our sr. mgmt. They feel we are meeting our part of the contract, but the government is not meeting there's. Our contract contains 52.232-25 and Alt I, but I do not see anything that addresses a COR's untimely review of an invoice other than it states the authorizing representative will review/return within 7 days. We looking at a minimum of 60 days before he even begins to look at it.

I understand your point of not getting on the wrong side of the COR, but we've tried to be patient with him, but that doesn't seem to be working out for us. Any additional guidance you can provide would be much appreciated.

Okay. I would write a letter to the CO with a copy to the CO's boss stating that the problem is serious and threatens performance. I would ask that specific action be taken within a specific period of time. I would send it by a method that will give you a written record of the CO's receipt. Certified mail, return receipt requested tends to get attention. Stand by for repercussions, but hopefully also for positive action. Be prepared for retaliatory nitpicking over each voucher.

If you don't get timely action in response to your letter, start filing a claim pursuant to the Disputes clause for each and every voucher for which you do not receive payment within 30 days of the COR's receipt. State that since the government has not acted upon your request within 30 days as required by the Prompt Payment clause you consider the voucher to be in dispute. You should get legal help for that.

Was the payment office adding prompt payment act interest to your payment, when they finally got around to issuing you a check? If not, you may have an action for an additional claim on unpaid PPA interest.

But as Vern already advised, if you are going to play hard ball, talk to an attorney first.

Hope this helps.

Was the payment office adding prompt payment act interest to your payment, when they finally got around to issuing you a check? If not, you may have an action for an additional claim on unpaid PPA interest.

But as Vern already advised, if you are going to play hard ball, talk to an attorney first.

Hope this helps.

If the clause requires the government to review the voucher within seven days, you need to cite that in your notices to the KO. Your attorney can explain the consequences of failure to timely review invoices.

Joel,

We seem to differ a bit on this issue. My take on it is that "Government acceptance is deemed to occur constructively on the 7th day after the contractor delivers supplies or performs services in accordance with the terms and conditions of the contract, unless there is a disagreement over quantity, quality, or contractor compliance with a contract requirement."

So I'm thinking that the clause can be silent and the 7 day rule would apply. In fact, we should assume the 7 day rule applies, unless the clause is worded differently.

H2H

help:

The original poster said that the contract is CPFF, so the Prompt Payment clause, FAR 52.232-25, must be used with its Alternate I in accordance with FAR 32.908( c)(3). Alternate I adds a paragraph (e) to the clause, which says that paragraph (a)(5)(i), which contains the seven day "constructive acceptance" rule, does not apply to invoices for interim payment. Instead, paragraph (e) says that non-compliant invoices "will be returned within 7 days after the date the designated billing office received the invoice." Note that it says "will be returned," not "shall be returned." So we need to know if the invoices in question are for interim payment or delivery payment.

I think that's still useful to the contractor in this case, but not as useful as the constructive acceptance rule.

Is this contract invoiced through WAWF or a similar system ?

Seems to me that when a COR on a contract of mine failed to review and put a notoation that there was something wrong with one of my invoices within 7 days, then WAWF just went ahead and processed the invoice without her input.

After that happened 2 times, the COR learned that no, the world doesn't sit around waiting until she feels like doing her job.

From that point on, she went into WAWF and approved invoices in time.

LM ABITWT's problem isn't really with the COR; the CO isn't doing their job.

This COR cannot handle their job responsibilities, but it's not their place to fire themselves.

Vern thanks for the clarification. I withdraw my comment about Joel's comment.

H2H

The question that interests me is: What is the COR doing with the voucher? What is he looking at? What is he looking for? I have always wondered that about COR reviews of vouchers/invoices for CR and T&M contracts. When a COR "approves" a voucher or invoice, what does the approval signify? What is okay about the voucher or invoice.

Following on to Vern's point, if the contract is with DoD, look at DFARS 242.803. The way I read that section, the COR should not be reviewing your vouchers. I know that DPAP has issued a couple of memos on this point trying to get contracting offices to comply with the DFARS.

Following on to Vern's point, if the contract is with DoD, look at DFARS 242.803. The way I read that section, the COR should not be reviewing your vouchers. I know that DPAP has issued a couple of memos on this point trying to get contracting offices to comply with the DFARS.

I wouldn’t say that the COR should not be reviewing vouchers; just that the COR should not be in the critical path for processing vouchers for payment. Witness this excerpt from the DOD COR Handbook – “The COR’s responsibilities begin with understanding the contract and establishing the COR file. Monitoring the contract includes such activities as evaluating and maintaining data, documenting performance, and review/verification of invoices.” [emphasis added.]…

“Typical COR post-award responsibilities include:

• …

• Monitoring contract performance;

  • Training;

  • Travel;

  • GFP

  • Personnel and labor;

  [*]Inspection and acceptance or rejection of deliverables;

  [*]…”

Following on to Vern's point, if the contract is with DoD, look at DFARS 242.803. The way I read that section, the COR should not be reviewing your vouchers. I know that DPAP has issued a couple of memos on this point trying to get contracting offices to comply with the DFARS.

I can't believe that DOD or any responsible acquisition organization would tell COR's or others not to make some sort of review of vouchers. DCAA auditors are AUDITORS, not technical or management. In addition, DCAA, as far as I know, uses sampling techniques. They don't verify every item in an invoice. I think that many folks think that they go through every item with a fine tooth comb, like a travel voucher examiner, who have been known to question $ .50 worth of expenses.

The COR must be able to determine whether the right things are being done, do the expenses make sense, are they necessary, etc. The COR should detect trends to avoid wasteful or unreasonable costs/expenses/activities, etc. I don't think that auditors do that.

Review vouchers for what? They usually don't know anything (or much) about cost allowability, and they are not often in a position to verify hours worked or other costs incurred, at least not all of them. So when a COR approves a voucher just what is he or she saying?

It's one thing to affirm that work was done and that the work delivered or done conformed to contract requirements, but do you need to see a voucher to do that, other than to see what work it covers?

excerpt from the DOD COR handbook reference invoice and payment date 22 March 2012.

CORs can approve invoices on fixed-price contracts. However, for cost-reimbursement,

time and-materials, and labor-hour contracts, CORs can review — but not approve —

invoices. For other than fixed-price contracts, DCAA has the sole authority for verifying

claimed costs and approving interim payment requests. Only the Contracting Officer can

approve final payment requests.

Basically the COR has to monitor the contractors performance, track the monthly reports, and surveillance reviews. As far as costs go, the COR will probably be looking at on service contracts the hours worked vs the hours billed and labor category as compared to the monthly reports the contractor submits and information gather from the COR's technical monitors, (if he has any) (if he even does that quite honestly)

If he sees an issue he is to contact the ACO and DCAA and get the issue rectified

"Review" to what end? How can the COR verify the hours worked? Is he sitting side-by-side with every worker verifying that each of them is working on what they're supposed to be working on? Look at SF 1094, Public Voucher. What is a COR looking for? The only thing I can see is the list of articles or services, to see if the contractor is billing for the right kind of thing. But for other than supplies or simple services, how can a COR verify quantities?

unfortunately he can't.

The COR will probably not get into the "weeds", or as you asked "Is he sitting side-by-side with every worker verifying that each of them is working on what they're supposed to be working on?" but will be looking bigger picture. Is the task getting done if is services to meet the required timeline.

The management reports, metrics and various other propaganda that the contractor provides will be what the COR utilizes in addition to the QASP.

But under a cost-reimbursement or T&M contract it does not matter if the task is being done. The contractor gets paid anyway. The contractor gets paid even if the government terminates the contract for default. If there is a problem with performance the COR shouldn't wait until he's reviewing a payment voucher to say something. As for verification of costs and hours worked, that's what auditors do, based on accounting records.

I simply don't see the point in having a COR review payment vouchers for CPFF or T&M contracts. As a CO I never had a COR even look at a CPFF payment voucher. In this case you have a COR who is taking as long as 60 days to do a pointless thing, unless there is more to this than we have been told.

Here is what 52.216-7(a)(1) says on this: "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." DFARS 242.803 designates the DCAA auditor as the authorized rep of the CO for this purpose. These authorities are contractual and regulatory in nature. The COR Handbook is neither and cannot be inconsistent with higher authority such as the FAR and DFARS.

Pursuant to the responsibility delegated to DCAA by DFARS 242.803, DCAM 6-1003 states: "the contract auditor is the authorized representative of the contracting officer to: (1) receive reimbursement vouchers, interim rate adjustment vouchers, and final rate adjustment vouchers directly from contractors."

Finally, see the DPAP letter at this link on approval of vouchers http://www.acq.osd.mil/dpap/policy/policyvault/2008-0171-DPAP.pdf

This is all consistent with DCAA's charter, DODD 5105.36, which states that DCAA will "Approve, suspend, or disapprove costs on reimbursement vouchers received directly from contractors, under cost-type contracts, transmitting the vouchers to the cognizant Disbursing Officer." Notice that the Directive and DCAM state that the auditor will receive the vouchers directly from the contractor.

From all this, I get that DoD contractors are to submit interim vouchers directly to DCAA for review and approval as part of the payment process. They should not go to a COR first. However, I don't see any problem with the COR getting an information copy of the vouchers for performance of his/her responsibilities.

The memo says that CORs "may review contractor billings as part of their contract performance surveillance (e.g., hours billed and labor mix are commensurate with contract effort performed/accomplished)....

Such a review does not make a heck of a lot of sense to me, since it cannot be the basis for any decision about reimbursement under a CR contract other than the reasonableness of incurred costs, and even then is unlikely to be grounds for not reimbursing the contractor. It would require a CO decision. I don't think the government can refuse to pay a T&M contractor for hours actually worked on any grounds of unreasonableness.

As far as I'm concerned, having a COR review vouchers or invoices for CR and T&M contracts simply does not make a heck of a lot of sense, especially if it's resulting in unwarranted payment delays. But the government will do this as long as contractors won't demand that the government respect their contractual rights. The government does these things because contractors are afraid to insist that their rights be respected.

The memo says that CORs "may review contractor billings as part of their contract performance surveillance (e.g., hours billed and labor mix are commensurate with contract effort performed/accomplished)....

Such a review does not make a heck of a lot of sense to me, since it cannot be the basis for any decision about reimbursement under a CR contract other than the reasonableness of incurred costs, and even then is unlikely to be grounds for not reimbursing the contractor. It would require a CO decision. I don't think the government can refuse to pay a T&M contractor for hours actually worked on any grounds of unreasonableness.

As far as I'm concerned, having a COR review vouchers or invoices for CR and T&M contracts simply does not make a heck of a lot of sense, especially if it's resulting in unwarranted payment delays. But the government will do this as long as contractors won't demand that the government respect their contractual rights. The government does these things because contractors are afraid to insist that their rights be respected.

Amen. The way contractors frequently react to being abused by contracting officers is the same way many battered spouses react to the batterer "if I am just nicer to him/her, (s)he will stop beating me." However, it just doesn't work.

Retreadfed,

Actually, many of the larger contractors are insisting that their contractual rights be respected, via appeals filed at the ASBCA and CoFC. There's a tsunami of litigation headed the government's way--forced on contractors by flawed DCAA audits and COs who refuse to exercise independent business judgment in their "quasi-judicial" role of arbiter. I know this is so because I hang out with folks from the larger contractors at industry gatherings.

I found it interesting that the recent article posted on this site, dealing with the Contracting Officer's Final Decision, failed to mention the requirements imposed on the CO by the Courts in such cases as Penner Installation. Vern has written at least one very good blog post on that particular subject ... yet the agency attorney didn't feel it merited any mention in his article. Not to trash the author, because any writing for publication is hard, but I found the omission to be very interesting.

Anyway, keep watching the Courts. You'll see what I'm talking about, as the decisions are issued.

H2H

Moving the goal posts.

I encounter this situation all too frequently where I have worked where the invoice and payment execution process is not particularly efficient:

The lamentable misunderstanding between the contracting side and the financial side concerning proper execution of payments for contractors - from receiving of the invoice to payment and all that goes on in between. Often, as I have seen it, what goes on "in between" is excessively complicated and prone to delay and missteps at each node in what is referred to as a "three way match."

E.g.; 14 day construction progress payment.

1. Proper and fully COR vetted invoice for the work is received at the Designated Billing Office, my desk, as specified on the SF-1442, on Jan 3rd. I approve it and highlight Jan. 3rd as the pay from date.

2. I have the "receiver" input the invoice into the bowels of the financial system with Jan. 3rd and in this case the receiver did not do that until Jan 9th but still utilized Jan. 3rd as the receipt date for the system.

3. The invoice and documentation with a very transparent Jan. 3 date is sent to the final approving office early Jan. 9th. Still time to batch and meet the target pay date of on or about Jan. 17th.

I follow up on the payment by querying the arcane financial system and see the payment was made on Jan. 22 - about five days late, no interest and confirmed by the Contractor. And I also see that the financial final approver had "moved the goal post" on the pay from date from Jan. 3 to Jan. 9. Telephone calls and emails not returned by the finance. Not surprising.

I take the issue up the ladder a bit. And it was revealed to me that "we use the Payment Office as the starting point for determining pay from dates." Further discussions concerning the basics of the payment clause and prompt payment act were met with a blank stare. I am used to this kind of discussion and I doubt Clarence Darrow would be cogent enough.

H2H, note I said "frequently." The abuse is generally heaped upon smaller contractors who do not have the resources to push back with much power. Unfortunately, sometimes I think the government takes the positions it does with these companies because it knows it can and get away with it because the contractor is afraid if it pushes back, it will not get further awards. I have heard this over and over again from contractors, even when they are being extorted by the government.

Our OIG wants our CORs to perform a full audit on all invoices before they approve them for payment down to the point of reviewing every time card for signatures. They also want us to make sure every receipt of property has been cosigned by a Government employee and then they brought up the archaic requirement to have boarding passes for every travel. We have been wasting lots of time pushing back by informing them that incurred cost audits catch mis-billings but they are sticking to thier guns and insisting we make SOPs that conform to thier thinking. So much for quick payment. DCAA told me that they have short list of things they quickly check before payment and use the incurred cost audits. They also said they have a constant battle with the DoD OIG about not intensifying pre-payment reviews.

I think there is a lot of confusion about the proper role of a CO(T)R in the contractor payment process. (I'm using CO(T)R to indicate a person from the requiring activity who is monitoring or managing some part of contractor performance.)

Let's first consider fixed-price contracts for supplies and services. The standard non-commercial item payment clause is FAR 52.232-1. It says that the contractor is entitled to payment upon receipt of a proper invoice for supplies delivered and accepted or services rendered and accepted, at the prices stipulated. So a contractor submits an invoice. What must the CO do? Answer four questions:

1. Have the supplies and services described in the invoice have been received?

2. Are the deliveries "acceptable" (see FAR 46.101and Subpart 46.5)?

3. Is the invoice "proper"?

4. Are the prices invoiced are the prices stipulated in the contract?

If the answer to all of those questions is yes, then the contractor must be paid. All of that must be done within the times prescribed in the contract.

The role of the CO(T)R evolved from the role of inspectors, who primary job was to determine whether the work has been received and whether it is acceptable. Thus, questions 1 and 2 should be answered by the CO(T)R. Should the CO(T)R also answer questions 3 and 4? I don't see why not, unless the CO(T)R's organization does not want her to. The CO cannot force a CO(T)R to do whatever the CO wants him to do if the CO(T)R is in another organization.

Now consider reimbursement of costs under a cost-reimbursement contract pursuant to FAR 52.216-7. First, note that successful performance is not a condition of reimbursement. The contractor gets its allowable costs even if it defaults. See FAR 52.249-6(h). What it might not get is fee. While confirmation of receipt and contract quality assurance are important to sound contract management, they are not essential to determining whether a contractor should be reimbursed. The CO(T)R as inspector has no role. It may be appropriate to require the CO(T)R to review the invoice as part of his or her contract management duties, but such review is not essential to payment and should not be on the critical path to payment. The same is true for T&M contracts.

Most CO(T)Rs are not qualified to determine whether costs are allowable in accordance with FAR 31.2 and should have no role in the process. That's what auditor's do.

In short, allowing a cost-reimbursement or T&M payment voucher to be held up for 60 days because a CO(T)R has not "reviewed" it is unconscionable and, to me, a sign of an incompetent CO and contracting office. I say: Sue their butts off. File claims when they are late. File a claim the very first time it happens. File one for each and every late payment. Demand a timely CO final decision and appeal on a deemed denial basis the very instant he or she is late in issuing it. Make it clear that you will uphold your end of the contract and that they must uphold theirs. If the CO gets irritated, tell her its not personal, its business. Then take the gun AND the cannoli.

Of course, if you are going to do that you had better have your own act together.

Our OIG wants our CORs to perform a full audit on all invoices before they approve them for payment down to the point of reviewing every time card for signatures.

Please cite that IG report.

Moving the goal posts.

I encounter this situation all too frequently where I have worked where the invoice and payment execution process is not particularly efficient:

The lamentable misunderstanding between the contracting side and the financial side concerning proper execution of payments for contractors - from receiving of the invoice to payment and all that goes on in between. Often, as I have seen it, what goes on "in between" is excessively complicated and prone to delay and missteps at each node in what is referred to as a "three way match."

E.g.; 14 day construction progress payment.

1. Proper and fully COR vetted invoice for the work is received at the Designated Billing Office, my desk, as specified on the SF-1442, on Jan 3rd. I approve it and highlight Jan. 3rd as the pay from date.

2. I have the "receiver" input the invoice into the bowels of the financial system with Jan. 3rd and in this case the receiver did not do that until Jan 9th but still utilized Jan. 3rd as the receipt date for the system.

3. The invoice and documentation with a very transparent Jan. 3 date is sent to the final approving office early Jan. 9th. Still time to batch and meet the target pay date of on or about Jan. 17th.

I follow up on the payment by querying the arcane financial system and see the payment was made on Jan. 22 - about five days late, no interest and confirmed by the Contractor. And I also see that the financial final approver had "moved the goal post" on the pay from date from Jan. 3 to Jan. 9. Telephone calls and emails not returned by the finance. Not surprising.

I take the issue up the ladder a bit. And it was revealed to me that "we use the Payment Office as the starting point for determining pay from dates." Further discussions concerning the basics of the payment clause and prompt payment act were met with a blank stare. I am used to this kind of discussion and I doubt Clarence Darrow would be cogent enough.

The date of receipt of the invoice is NOT the date of receipt at the payment office. The office designated for receipt is the billing office and the payment office should know that. It it is stated in the prompt payment clause and is defined in 32.001. In fact this was discussed in the OMB Circular that directed implementation of the Prompt Payment Act Amendments of 1988, which implemented the 14 day period for construction contract progress payments. I'm out of town this week but I have a 3 inch thick folder that dates back to that period.

I might not be aware of recent changes but I'd be highly surprised if it has been changed.