Redress for nonpayment of subcontractors

Is this a FFP service contract?

We need to know the contract type (FFP, CPFF, etc.) and the payment clause(s) in the contract.

Also subcontractor business size would be beneficial.

As a general rule, the authority to reduce, refuse, suspend, or withhold payments comes either from (1) a contract clause or (2) the doctrine of breach of contract.

For an example of a contract clause, see, e.g., FAR 52.222-41, Service Contract Act of 1965 (NOV 2007), paragraph (k), and FAR 52.232-16, Progress Payments (APR 2012), paragraph ( c ). See also FAR 52.216-7, Allowable Costs and Payment (JUN 2013), paragraph ( b )(1)(ii) (authority implicit) and (g)(1) (authority explicit).

To reduce, refuse, suspend, or withhold payments improperly is a serious breach of contract.

The Contract Type is T&M. Payment Clause 52.232-7 - Payments under Time-and-materials and labor-hour contracts FEB/2007 is included. Prime is a SB, as is its subcontractor.

Does the prime bill for the subs at hourly rates pursuant to para. (a), or does it invoice pursuant to para. ( b )? If the latter, then the Allowable Cost and Payment clause applies and the authority is probably para. ( b )(1)(ii)(A) of that clause, whether or not the subs are small businesses. Under that provision you would not be "suspending" payments, you would be disallowing the invoiced cost.

MichiganKO, look at 52.232-7(a)(5). The requirement for the prime to substantiate payment may be of benefit to you in this case.

Gentlemen -

Thank you for the feedback. This has been most helpful. In addition to the suggestions above, the payment clause includes the following:

(5) Vouchers may be submitted once each month (or at more frequent intervals, if approved by the Contracting Officer), to the

Contracting Officer or authorized representative. The Contractor shall substantiate vouchers (including any subcontractor hours

reimbursed at the hourly rate in the schedule) by evidence of actual payment and by

(i) Individual daily job timekeeping records;

(ii) Records that verify the employees meet the qualifications for the labor categories specified in the contract; or

(iii) Other substantiation approved by the Contracting Officer.

(6) Promptly after receipt of each substantiated voucher, the Government shall, except as otherwise provided in this contract, and

subject to the terms of paragraph (e) of this clause, pay the voucher as approved by the Contracting Officer or authorized

representative.

It appears from the billing, that the Prime was submitting time sheets from the Sub directly to the COR along with its billing. There is no documentation from the prime demonstrating that it actually paid the Sub.

There you go.