T4C for failing to invoice?

Did the contractor complete the work?

Did the government accept the work? If not, is the government going to accept it?

Have you determined if the business is still in operation and existence by checking with sources other than the company itself?

Are these contracts or unilateral purchase orders? If you have contracts going back to 2011 with no evidence that the contractor has delivered anything, assuming the delivery date has passed, why are you worrying about a T4C instead of doing a T4D?

Did the contractor complete the work?

Did the government accept the work? If not, is the government going to accept it?

Have you determined if the business is still in operation and existence by checking with sources other than the company itself?

In order to answer the first two questions there would have to have been adequate contract administration. Many things could have happened since we are dealing with awards that sometimes include the rental/lease of several hundred office devices scattered over large geographic areas including other countries, and now at sea. Maybe the vendor was a few months behind on installation and no one told the contract specialist, maybe they did, maybe the vendors billing is so messed up they missed a few months. All I can say with any certainty is that there are many awards with large ULOs for which the vast majority have no evidence of receipts. Some of these awards need a full time COR/ CA but that's not in the cards.

Yes, 99% of the businesses are still in operation

gittist:

First time I have seen the acronym ULOs. What does it mean? In context I assume it means unliquidated obligations, but couldn't find the use in the FAR or DAU's glossary of defense acquisition acronyms & terms.

*DFARS uses unliquidated obligation at 204.7106**[3][ii].**

How about a letter (certified, with return receipt) saying something like the period of performance has long ended and the Government wants to close out the contract, and unless the contractor responds with an invoice within 30 days after receipt, the Government will consider the last invoice as the final invoice and the last payment as the final payment.

Then do it. If the contractor claims a right to payment, evaluate it when you get it.

A T4C is a dumb idea, in my opinion. It opens the Government to payments for settlement expenses and so forth that may go beyond the price of the contract, and the contractor has a full year to submit its settlement proposal.

Well, you have a mess on your hands.

Here's a thought: Under the Contract Disputes Act of 1978, a contractor's right to submit a claim expires six years after its accrual. See FAR 33.206(a) and 52.233-1(d)(1).

If we figure that the right to payment accrued upon successful performance (there is no right to payment without successful performance), then I say that if a contractor has not sought payment by the end of the sixth year after the contract or task order was or should have been physically complete, then it cannot claim payment. You can deobligate any remaining funds and close out the contract or order without termination.

I would not T for C, because that might trigger a new right to payment. T for D would be pointless if the contract was physically complete more than six years ago, because the government could not pursue any claim against the contractor.

To show good faith I would send each contractor whose right to submit a claim has not yet expired a certified letter telling them to submit an invoice within 30 days of receipt. I would do nothing else and send no other notice. Set a date for the end of the sixth year of each such contract and on that date close out the contract and deobligate the funds.

I'm sure there are other solutions, but since your agency didn't devote any time to doing its job properly, i don't think anyone should devote any more time to helping it out now. It sounds like you inherited this mess. Tough luck.

I would not send any more letters if you already have done that. Let the six year period for claims expire then administratively close out the contracts. Why? For one thing, what are you going to do to verify an invoice, if you receive one or more? How would you know that any items invoiced for have been received - or if received, whether or not have already been paid for? Can you distinguish between those already paid for and any not paid For?

Don't compound the previous incompetence by inviting firms to invoice for payments that can't be validly confirmed.

Void the De-obligation mod if it isn't proper.

Joel:

How do you "void" a mod?

The government does not have to "verify" an invoice. The contractor must provide proof of performance and acceptance. If the evidence is not satisfactory to the CO, the CO should reject the invoice.

A suggested alternative…..that fits of sorts with a couple of suggestions already provided.

(FAR 49.101 & 49.104-4) Send a letter indicating in general the circumstances, the Government is terminating the contract(s) in its best interest and provide that rather than a termination notice the letter is a proposed “no cost settlement” of the contract(s), give the contractor a reasonable amount of time to respond to the letter and if a response is received continue through the termination effort as appropriate.

To handle the circumstance that the contractor may not respond to the letter state in the letter that “failure to respond to this letter within the time stipulated is the Contractors consent and agreement to the no cost settlement”, and when no response is received then move to the processes necessary to close out the contracts and get rid of the ULOs.

The only question that lingers, are there subcontractors that need to be considered? If so then a different strategy may be in order.

C. Culham,

I think Vern's point -- that a T4C can create a new right for the contractor, and possibly "reset" the Statute of Limitations -- is worth considering. If Vern is right, then a T4C would be the wrong tactic.

I've been watching this thread with interest because I cannot conceive of any entity that would go through the headache of winning a government contract, only to fail to submit invoices. On the other hand, I know of an SDB firm that won a commercial item contract from an FFRDC, and performed very well. The firm was so busy performing that it failed to keep records of who did what for whom, and it failed invoice because the firm (quite literally) didn't know how much to invoice for. It's hard to believe, but more than an year went by before anybody noticed the situation.

Hope this helps.

Joel:

How do you "void" a mod?

The government does not have to "verify" an invoice. The contractor must provide proof of performance and acceptance. If the evidence is not satisfactory to the CO, the CO should reject the invoice.

From the information provided, the deobligation mod appears to be in an internal processing status. The OP didn't say that it had been issued to the vendor.

There should be procedures for the vendor to "substantiate" (provide evidence to prove) delivery and performance of the (rental?) as part of the invoicing process.

The government should "verify" (confirm) that the contractor should be paid (and confirm that the vendor hasn't already been paid) for what it is invoicing the government under the contract prior to making further or final payment. From the OP's limited information, it appeared that there may already have been some performance and some payments. It is possible that the OP is referring to several contracts/purchase orders.

At any rate, from gittist's post #4 above, it might not be possible to verify whether or not the vendor has been paid for whatever rental or service it might invoice for in response to further government requests to submit invoice(s).

I was asking if the government was in a position to do that.

A two part question concerning contractors who don't submit invoices on FFP awards, and don't return phone calls or emails (incommunicado).

See the principal payment clause for FFP contracts, FAR 52.232-1.

The fact that the OP is concerned that the contractors have not submitted invoices suggests that the contractors have fulfilled their contractual obligations and the agency wants to pay them off. Why else worry about invoices under an FFP contract?

If the contracts are physically complete, what is the point of termination? The contractor has, in theory, six years to invoice from the date that it is entitled to invoice. I know of no standard contract term that obligates the contractor to seek payment any sooner. The OP wants to close out the agency's files, but that's no contractual concern of the contractor, is it, except for the practical reason that if the contractor messes around for too long there won't be anyone in the government who knows anything about the contract?

Assuming that the above statements are true, then T for C would be a lot of unnecessary paperwork and, potentially, a legal hassle.

Send each of the dilatory contractors a certified letter, in order to show good faith. Wait until the six year deadlines have passed. Then close the things out.

As for subs, the government has no obligation to them, neither contractual nor moral. COs are not sub-nannies.

Joel:

You didn't answer my question. I asked: "How do you 'void' a mod?" I asked that because you suggested that course of action and I wanted to know what you meant.

If a CO has signed a mod and distributed it in accordance with FAR 4.201, then the mod has taken effect, unless the mod says otherwise. If the CO has signed it, but has not yet distributed it, then it has not taken effect.

If the CO has signed the mod, but not yet distributed it, and if she no longer wants to mod the contract, then she can just tear it up. But if the CO has signed and distributed the mod, how does she "void" it?

The only way that I know how to undo a mod that has been signed and distributed is to write, sign, and distribute another mod. If a CO deobligated funds with the mod and wants to restore them, she'll need another funding document before she do it.

I agree with you. I was under the assumption that the mod is still in processing and has not been distributed or might not even be signed yet due to internal differences.

I am personally aware of instances of ineptitude, or worse, on the part of government personnel, whose job included the duties of verifying quantities where a contractor was paid more than once for the same raw materials and for deliveries of readi-mixed concrete. That's why i brought it up. Our Resident DCAA auditor, whose wife was Korean, noted many duplicate delivery tickets, which were written in Korean. The "mistake" amounted to several hundred thousand dollars.

H2H - I do not disagree with Vern. My read of FAR 49.101 could be too literal with my alternative based on this language from the reference…..

_“_The contracting officer shall effect a no-cost settlement instead of issuing a termination notice when…”

My conclusion under my alternative is that I have not issued the “termination notice” therefore I have not issued a T4C or a T4D but rather a proposal for the contactor to consider that I am ending the contract with a “no cost settlement”.

Hope this helps understand my suggestion.

I was able to get our local counsel to approve a termniation for convenience on one that had a large ULO (but no evidence of receipts) dating back to FY11 but even some of my own people are shaking, twitching and acting like someone put a curse on them. Finance is especially troublesome and is refusing to record the de-obligation modificaiton.

I think that your Finance office is wise not to record a deobligation of funds. Creating an obligation and recording an obligation are two different things. From what you described, the obligation created by the contract has not been reduced in any way.The "recording statute" (31 USCA § 1501) requires that the amount of funds recorded as obligated must be the same as the amount of the obligation that was created. Reducing the amount recorded as an obligation does not mean that you have reduced the amount of the obligation created by the contract. However, it may mean that you have under-recorded the Government's actual obligation.

For more on this subject, see the discussion beginning on p. 7-6 of the GAO Redbook (Criteria for Recording Obligations (31 USCA § 1501)),

A point on which I am not clear is whether the OP is talking about contracts or purchase orders where a contract is formed through contractor performance. If it is the latter and the contractor never delivered anything in response to the purchase order, there would be no contract and no funds would have been obligated.

A point on which I am not clear is whether the OP is talking about contracts or purchase orders where a contract is formed through contractor performance. If it is the latter and the contractor never delivered anything in response to the purchase order, there would be no contract and no funds would have been obligated.

​Retread, are you saying that a purchase order under which a contract is formed through contractor acceptance by performance does not constitute an obligation until the contractor delivers? If so, can you cite anything authoritative in support? A GAO decision? Something in the Red Book?

I'm equally interested in Retread's clarification. This could alter the substantial performance rule.

A point on which I am not clear is whether the OP is talking about contracts or purchase orders where a contract is formed through contractor performance. If it is the latter and the contractor never delivered anything in response to the purchase order, there would be no contract and no funds would have been obligated.

I don't think either part of the second sentence of that quote is true.

According to the Court of Federal Claims in Davis Precision Machining, Inc. v. U.S., 35 Fed. Cl. 651, 661 (1996), the beginning of performance of a purchase order creates an irrevocable option contract, and substantial performance constitutes contractor acceptance of the option offer.

When there is no written acceptance of the purchase order, suppliers may accept the Government's offers by delivering the requested supplies in accordance with the specified terms and conditions. A supplier may also indicate its mutual assent by beginning performance and, thus, “accept” an option contract, and the Government's offer becomes irrevocable. Rex Sys., Inc., ASBCA No 45,301, 93-3 BCA ¶ 26,065, 1993 WL 190365. The beginning of performance, however, does not amount to acceptance of an offer that results in the creation of a supply contract. Although the beginning of performance is sufficient to establish an option contract that makes the Government's offer irrevocable, it does not amount to acceptance of the offer for a supply contract. Once the contractor has substantially performed under the option, however, that contractor has accepted the Government's offer and a supply contract exists, because the supplier has proceeded with the work “to the point where substantial performance has occurred.” Acceptance under FAR Part 13 is the completion of substantial performance. Whether a supplier is entitled to compensation is dependent on compliance with the delivery provisions, line item specification requirements, and requirements of provisions incorporated by reference.

That being the case, I say that an obligation occurs and must be recorded when a purchase order is issued. This seems to be confirmed by the third sentence of FAR 13.302-2[c], which concerns unpriced purchase orders. See also 13.302-4**. Moreover, I have never heard of modifying a purchase order after issuance in order to record an obligation of funds upon substantial performance.**

I think it's clearly wrong to say that there is no obligation until the contractor has actually delivered, but Retread might know something that I don't or he might have meant something else.

I found nothing about this in the Red Book, but I may have missed something.

Isn't it a contract upon PO issuance? No performance needs to take place to create a contract. Both parties are obligated.

Isn't it a contract upon PO issuance? No performance needs to take place to create a contract. Both parties are obligated.

No. That is very wrong. Read Davies Precision Machining, cited above. See also the definition of purchase order in FAR 2.101.

Issuance of a purchase order is an offer from the government to buy something.

I'm still trying to resolve this passage from the Davis Precision Machining decision cited above:

Once the contractor has substantially performed under the option, however, that contractor has accepted the Government's offer and a supply contract exists, because the supplier has proceeded with the work to the point where substantial performance has occurred. Acceptance under FAR Part 13 is the completion of substantial performance.

What is the significance, if any, between Accepted vs. Acceptance; and Substantial performance occurred vs. Substantial performance completion?

Here is an excerpt from section 080510 of the FMR on obligation of funds for purchase orders:

A purchase order requiring acceptance by the vendor in order to form a binding contractual agreement shall be recorded as an obligation in the amount specified in the order at the time of acceptance. Evidence of this acceptance shall be retained in the files. If written acceptance is not required or provided, then commencement of performance constitutes acceptance by the vendor, and the amount of the order shall be recorded as an obligation.

As this indicates, an obligation against a purchase order does not occur until the purchase order is accepted. This is consistent with 31 U.S.C. 1501 which states in part that:

An amount shall be recorded as an obligation of the United States Government only when supported by documentary evidence of—

(1)a binding agreement between an agency and another person (including an agency) that is—

(A)

in writing, in a way and form, and for a purpose authorized by law;

Thus, the issuance of a purchase order is not a contract that requires recording of an obligation until the purchase order is accepted. The question I have inartfully been asking is whether the agency issued a purchase order that was accepted to form a contract. If no contract has been formed, no obligation should have been recorded. Failure to deliver by the delivery date which should have been specified in the PO, without more, such as a communication from the contractor requesting an extension, would be an indicator that acceptance has not occurred.

Retread:

So, pursuant to the FMR, a purchase order that does not require the contractor's signature indicating acceptance should not include a find citation and an amount when issued, but must be modified to add a fund cite and amount after the contractor has commenced performance? Or it must include those, but the P.O. should not be distributed pursuant to FAR Part 4 until the contractor has commenced performance? Or it should be distributed, but not recorded by the accounting and finance office until notified by the CO that the contractor has accepted? And so a P.O. that does not require the contractor's signature indicating acceptance must include a clause that requires the contractor to notify the CO after it has commenced performance, so the CO can document that event?

I think that whoever wrote the FMR needs to consult counsel. A purchase order is a unilateral contract upon issuance. The FMR is wrong about when a purchase order becomes a mutually binding contract. We know that from the Court of Federal Claims and the boards of contract appeals, which have ruled, repeatedly, that a purchase order binds the government to an option contract upon issuance, but that it does not bind the parties to the P.O.'s performance obligations until the contractor has substantially performed. Commencement of performance binds the government, but not the contractor.

I also think that the FMR misinterprets 31 U.S.C. 1501. A P.O. is binding upon the government upon issuance, and Section 1501 says "binding," not "mutually binding." That's consistent with FAR Part 13.

Of course, DOD COs should comply with the FMR, but I wonder how many do what I described above?

Anyway, thanks for the reference.

This might help in the discussion…..as copied from here - DoD 7000.14-R Financial Management Regulation Volume 3, Chapter 8 * September 2009

080510. Purchase Orders

A. A purchase order may create an obligation when issued in the amount stated. This occurs when the purchase order represents acceptance of a binding written offer of a vendor to sell specific goods or furnish specific services at a specific price, or the purchase order was prepared and issued in accordance with small purchase or other simplified acquisition procedures.

B. A purchase order requiring acceptance by the vendor in order to form a binding contractual agreement shall be recorded as an obligation in the amount specified in the order at the time of acceptance. Evidence of this acceptance shall be retained in the files. If written acceptance is not required or provided, then commencement of performance constitutes acceptance by the vendor, and the amount of the order shall be recorded as an obligation. Formation of the binding contractual agreement should occur during the period of availability of the appropriation cited on the purchase order. If contract formation occurs after expiration of the period of availability of funds cited on the purchase order, the obligation must be recorded against current funds, and the purchase order contract modified accordingly.

Thanks.

My comments in Post # 28 stand. If the P.O. requires acceptance, and there is no obligation until acceptance, then it seems that either the order must be modified to add a funds citation and amount of obligation after the acceptance takes place or some procedure must be established to hold off on recording an obligation until the acceptance has been established and documented. That makes no sense to me, since the government is obligated to the contractor upon issuance to fulfill its duties if the contractor choses to exercise its option to accept, unless the government cancels the order first. Even then, according to FAR Part 13, the government may be liable for termination costs. It seems to me that the obligation occurs upon issuance.

I think it's clear that the DOD FMR is wrong on the law of contracts. But DOD is certainly within its rights to set policy about recording an obligation. I cannot remember that while working for DOD we even thought about such things. My recollection is that we issued a P.O.with a funds cite and an amount and distributed the document upon issuance. I frankly don't remember (if I ever knew) what the accounting and finance office did.

The following is from the 2014 Fiscal Law Deskbook published by the U.S. Army's Judge Advocate General's Legal Center and School, Contract Fiscal Law Department. It is from Chapter 3, pages 3-4 to 3-5. I have highlighted the language that seems to me to be relavant to this discussion:

F. Obligation.

1. Definition: A definite act that creates a legal liability on the part of the government for the payment of goods and services ordered or received, or a legal duty on the part of the United States that could mature into a legal liability by virtue of actions on the part of the other party beyond the control of the United States. Payment may be made immediately or in the future. An agency incurs an obligation, for example, when it places an order, signs a contract, awards a grant, purchases a service, or takes other actions that require the government to make payments to the public or from one government account to another. GAO Glossary, at 70.

The emphasized language seems to fit purchase orders.

The following is from Chapter 5, pages 5-18 to 5-19, "Obligating Appropriated Funds," Section V, "Amounts to Obligate," Subsection B.6., "Purchase Orders":

a. A purchase order creates an obligation if the purchase order represents acceptance of a binding written offer of a vendor to sell specific goods or furnish specific services at a specific price, or the purchase order was prepared and issued in accordance with small purchase or other simplified acquisition procedures. DOD FMR, vol. 3, ch. 8, para. 080510A.

b. A purchase order requiring acceptance by the vendor before a firm agreement is reached must be recorded as an obligation in the amount specified in the order at the time of acceptance. If written acceptance is not received, delivery under the purchase order is evidence of acceptance to the extent that delivery is accomplished during the period of availability of the appropriation or funding cited on the purchase order. If delivery is accepted subsequent to the period of availability, a new or current funding citation must be provided on an amended purchase order. DOD FMR, vol. 3, ch. 8, para. 080510B.

Note that paragraph b. does not repeat the FMR's statement that acceptance occurs upon commencement of performance.

Further reading in the publication suggests that the P.O. is backed by an administrative commitment of funds until obligation occurs. What procedure the comptroller office uses to convert the commitment to a recorded obligation is unclear to me. Neither is it clear to me how this works in light of FAR 13.302's discussion of cancellation and termination.

Interesting.

What we know from the board and COFC decisions is that the purchase order becomes irrevocable once the contractor begins to perform and the purchase order expires if the contractor has not delivered by the stipulated date delivery date. Acceptance by the contractor takes place upon substantial completion.

It seems the FMR and the FAR are in conflict as to when acceptance of the P.O. takes place:

The FMR states: "If written acceptance is not required or provided, then commencement of performance constitutes acceptance by the vendor, and the amount of the order shall be recorded as an obligation."

The FAR states: "When appropriate, the contracting officer may ask the supplier to indicate acceptance of an order by notification to the Government, preferably in writing, as defined at 2.101. In other circumstances, the supplier may indicate acceptance by furnishing the supplies or services ordered or by proceeding with the work to the point where substantial performance has occurred."

Commencement of performance is not the same as furnishing the supplies/services or proceeding until substantial performance has occurred. Commencement of performance may make the Government liable if a unilateral purchase order is cancelled, but I know of no basis in the law for the proposition that commencement of performance constitutes acceptance.

So, what Vern said in different words.

In our electronic writing system which is integrated with our finance system, the unilateral purchase orders are obligated immediately when the CO hits the submit button in Momentum Acquisitions to award it.

Please don't make my head hurt with all this talk of it not really being obligated until delivered.

So, it appears from the many responses in this thread to my original questions (below) is that no one is aware of any authority that is on point?

Does anyone know of any REDBOOK, case law, or other authority that addresses:

1. The contractor's duty to submit invoices (timely?), or

2. The extent of the Government's duty to pursue invoices?

I do appreciate all of the responses however waiting 6 years is not an option because we are under pressure to get these off the books.

I think that your Finance office is wise not to record a deobligation of funds. Creating an obligation and recording an obligation are two different things. From what you described, the obligation created by the contract has not been reduced in any way.The "recording statute" (31 USCA § 1501) requires that the amount of funds recorded as obligated must be the same as the amount of the obligation that was created. Reducing the amount recorded as an obligation does not mean that you have reduced the amount of the obligation created by the contract. However, it may mean that you have under-recorded the Government's actual obligation.

For more on this subject, see the discussion beginning on p. 7-6 of the GAO Redbook (Criteria for Recording Obligations (31 USCA § 1501)),

I respectfully disagree. If terminating (partial or fully) doesn't reduce the amount of the obligation, what does?

Why would a Termination trigger a deobligation if you don't know how much has been delivered and if there is no termination settlement proposal or termination settlement ?

Does anyone know of any REDBOOK, case law, or other authority that addresses:

1. The contractor's duty to submit invoices (timely?), or

2. The extent of the Government's duty to pursue invoices?

There is nothing in the Redbook about failure or refusal to invoice. (The term "invoice" appears in 18 places.) I don't know of any rule (statute, regulation case law, policy) that says the Government has to "pursue" invoices. I don't know of any contract clause that requires a contractor to submit an invoice or the government to demand an invoice. As far as I have been able to determine, failure to seek or demand payment is not a breach of contract.

What do you do when a contractor won't bill you? You've been given some suggestions, and you seem to have come to the end of your rope here. You apparently know what you want to do. So why don't you just go off and do it, or do whatever else you can get the others in your organization to agree to?

I respectfully disagree. If terminating (partial or fully) doesn't reduce the amount of the obligation, what does?

You didn't say that the termination would reduce the amount of the work the contractor was required to perform. Will it? You said you wanted to terminate because they didn't send you an invoice for the work.

Gittist, the only requirements that I know of in the FAR that require a contractor to submit an invoice within a certain time period are in 52.216-7 for cost reimbursement contracts and 52.232-7 for T&M contracts.

Retread:

Under those clauses, a contractor has to submit an invoice only if it wants to get paid. Failure to submit an invoice would not be a breach of contract.

Vern, that is true, but under 52.216-7, if the contractor does not submit a timely completion voucher, the contracting officer can issue a final decision establishing the amount due to the contractor. Once that decision is issued, at most the contractor has one year within which to challenge it.

Vern, that is true, but under 52.216-7, if the contractor does not submit a timely completion voucher, the contracting officer can issue a final decision establishing the amount due to the contractor. Once that decision is issued, at most the contractor has one year within which to challenge it.

With respect to the instant situation, gittist indicated in the 23 December post number #4 that the contractor(s) might not be able to document what has been provided and it is pretty apparent that the government can't or didn't document everything that it received. I would think that a KO would have a very difficult time issuing a factually or even good faith based final decision without trying to work out a settlement - or get agreement to closeout the contract - or wait out the 6 year claims limit (which is apparently untenable to the organization). I remember years ago notifying a contractor or two that if we didn't hear from them within some stated period, we would administratively close out the contracts. Then we did it.

Retread:

FAR 52.216-7(d)(6) provides as follows:

(6)(i) If the Contractor fails to submit a completion invoice or voucher within the time specified in paragraph (d)(5) of this clause, the Contracting Officer may—

(A) Determine the amounts due to the Contractor under the contract; and

Record this determination in a unilateral modification to the contract

(ii) This determination constitutes the final decision of the Contracting Officer in accordance with the Disputes clause.

Do you believe that the unilateral modification would constitute a government claim?

The section of 52.216-7 Vern quoted in #42 concerns submission of final invoices after settlement of indirect cost rates ("billing rates"). It acknowledges that final billing rates will likely be agreed-upon/determined literally years after physical completion of the contract. Once those final billing rates are agreed-upon or determined, the contractor has 120 days to submit the contract's final invoice. That's all it says.

It does not address routine submission of vouchers for interim payments.

H2H

Vern, I believe the modification establishing the amount due the contractor for failure to submit a completion invoice would be a government claim against the contractor just as a default termination is a government claim. It certainly is not a decision on a claim by the contractor. Because the modification constitutes a final decision under the Disputes clause, hopefully, the contracting officer would include all the requisite information for a decision in the modification, particularly the contractor's appeal rights. In any event, the time to appeal from the final decision, whether it is a decision on a government claim or contractor claim, would be either 90 days for an appeal to the appropriate contract appeals board or one year for filing suit in the COFC.

Thanks, Retread. I agree. I think it would be a nonmonetary claim based on the Allowable Cost and Payment clause paragraph (d)(5) requirement to submit a final invoice within 120 days. The contractor's failure to comply would violate the terms of the clause. The government would be claiming "other relief" under the definition of claim in FAR 2.101 and making the unilateral determination and final decision on that basis.

Although the issue has not been litigated based on the Allowable Cost and Payment clause, as far as I can determine, a recent ASBCA decision is illustrative of the idea: Dynport Vaccine Co., LLC, ASBCA 59298, Jan. 15, 2015. The decision raises many questions, but a similar decision was affirmed by the Federal Circuit: General Electric Co. v. U.S., 987b F. 2d 747 (1993). See also General Electric Co., ASBCA 36005, 91-2 BCA 23958. Quite controversial at the time. Prof. Nash discussed the decisions recently in the March 2015 issue of The Nash & Cibinic Report.

Maybe too simple, but why not pursue this matter through the lens of contract closeout?  Finalize a Release of Claims and/or Refunds, Rebates, and Credits and follow-up with a deobligation modification (if applicable). 

The signed Release form will alleviate any concerns of future claims/invoices.

It's poorly written. It means:

1. A purchase order is an offer of an offer. It says that if the recipient accepts the purchase order offer, then it will get a second offer to pay if the contract chooses to perform. If the recipient accepts the purchase order offer, it will then have a unilateral contract under which the Government offers to pay if the contractor chooses to perform. If the contractor accepts the purchase order offer, the Government is bound to hold its pay for performance offer open, but the recipient is not bound to perform. The Government generally may withdraw the purchase order offer at any time prior to the recipient's acceptance.

2. Commencement of performance by the recipient will constitute acceptance of the Government's purchase order offer, at which point the recipient will have a contract option to perform in return for payment. From that point on, the Government can no longer withdraw that offer to pay for performance until its term expires, but the recipient can now choose to complete performance or not. Completion of performance will be the exercise of the option to perform in return for payment. 

3. Substantial performance by the recipient is considered tantamount to completion of performance and will thus constitute exercise of the option to perform in return for payment. From that point on the recipient is now a contractor and subject to T for D.