Invoicing time limits - CPFF contract

Would be curious to know if your contract has any 52.232-XX clauses in them.

Would be curious to know if your contract has any 52.232-XX clauses in them.

Only 52.232-22 Limitation of Funds.

The Limitation of Cost and Limitation of Funds clauses do not set deadlines for invoicing. Neither does the allowable cost and payment clause. My thought is that under the Contract Disputes Act of 1978 the contractor has six years to invoice from the date it incurred the costs.

The Limitation of Cost and Limitation of Funds clauses do not set deadlines for invoicing. Neither does the allowable cost and payment clause. My thought is that under the Contract Disputes Act of 1978 the contractor has six years to invoice from the date it incurred the costs.

I don't agree with Vern's assertion. In my view, the CDA provides statutory limits governing when a contractor can assert a claim -- i.e., a non-routine request for payment -- to the Government. I think my position is supported by the definition of "accrual of a claim" found at 33.201. It says (in part), "For liability to be fixed, some injury must have occurred." A routine payment request, either interim or delivery, is not an injury.

I can think of several reasons for the contractor to delay invoicing indirect costs (e.g., awaiting DCAA audit). This would be an issue if the interim billing rates were significantly lower than estimated final indirect cost rates (see 52.216-7(e)). However, I can think of only a few reasons to delay invoicing direct costs. The only one that comes to mind on the direct side would be related to a subcontractor invoice or claim to which entitlement was disputed. (That would be treated as an incurred cost for purposes of complying with the LoF Clause, per the Federal Circuit.)

Anyway, many contractors cannot invoice 100% of incurred costs for various reasons. There is no time limit, except the one found at 52.216-7(d)(5), which deals with submission of completion vouchers on physically complete contracts after settlement of final indirect cost rates.

Hope this helps.

help:

You disagree with me, but you have not answered the question: "How long does a contractor have to invoice these costs?" Just to be clear, is your answer that there is no time limit. Can a contractor submit an invoice ten years after the completion of performance? Twenty years? Thirty years?

help:

You disagree with me, but you have not answered the question: "How long does a contractor have to invoice these costs?" Just to be clear, is your answer that there is no time limit. Can a contractor submit an invoice ten years after the completion of performance? Twenty years? Thirty years?

Vern, I posted:

There is no time limit, except the one found at 52.216-7(d)(5), which deals with submission of completion vouchers on physically complete contracts after settlement of final indirect cost rates.

H2H

My thought process was that they have bigger problems than just invoicing and invoicing timelines if the contractor isn't able to provide spend letters and accurate CLIN amounts if they have a Limitation of Cost report duty.

What reason does the contractor give for the costs not being invoiced - especially if they are talking about direct costs? If the answer is that their subs haven't invoiced the prime for the sub's direct costs, the prime needs to be asking the sub the same question - why not? I know of at least one large business that is 8 years behind on getting final audited indirect rates from DCAA but that's indirects and they've got no (or very little) control over the process with DCAA. But a direct cost lagging for 4 years seems like poor business practice to me.

Well, I can't think of any clause that sets a deadline and H2H is clearly right about the accrual of a claim, so maybe he's right that there is no deadline. I don't know.

What reason does the contractor give for the costs not being invoiced - especially if they are talking about direct costs? If the answer is that their subs haven't invoiced the prime for the sub's direct costs, the prime needs to be asking the sub the same question - why not? I know of at least one large business that is 8 years behind on getting final audited indirect rates from DCAA but that's indirects and they've got no (or very little) control over the process with DCAA. But a direct cost lagging for 4 years seems like poor business practice to me.

Yes. And eight years behind is not at all the worst horror story of which I've heard tell.

It seems to me to be fundamentally unfair to assert a time limit on a contractor's ability to invoice, when the government (DCAA) refuses to self-impose a time limit on finalization of incurred costs and indirect rates. Testimony has shown that, not only is DCAA behind, it is falling behind at an increasingly accelerated rate. In other words, the more time that passes, the further behind they get.

In the last GFY, DCAA actually cancelled more audits than it completed. (Per testimony before the Commission on Wartime Contracting.) Ponder that workforce productivity metric for a second or two.

H2H

Thanks for the discussion on this. It confirms my other research that there is little we can do to get the invoices any faster than the company wants to bill it. I am only concerned with Direct Charges as I am aware that they can't do indirects until DCAA does thier audit.

I think they do have some bad business practices and part of the reason for not invoicing is they can't find supporting documentation for the charges. On the other hand having contractors deploy to a hostile environment in time frames that are far too short to organize good procedures is a fact of war but not good Government planning.

It just blew me away when one firm said that they were $160M behind in invoicing us at one point. How do you stay in business with that many receivables????

Is there a deadline by which a contractor must invoice for a fixed price contract?

I think they do have some bad business practices and part of the reason for not invoicing is they can't find supporting documentation for the charges. On the other hand having contractors deploy to a hostile environment in time frames that are far too short to organize good procedures is a fact of war but not good Government planning.

I draw your attention to ASBCA No. 55354, Oct. 2009, re: BearingPoint. The Court addressed the issue of "inadequate" supporting documentation in the war zone. The Judge wrote--

The contract clauses do not impose the stringent requirements of either 'nice neat little files' that Ms. Kolstrom sought or the contemporaneous records for which AID appears to be arguing. Thus, the Allowable Cost and Payment clause, which was incorporated in the contract, imposed no requirement that BearingPoint substantiate labor costs with time sheets, as Ms. Kolstrom insisted. The Audit and Records clause, which was also part of the contract, looks to ?all records and other evidence sufficient to reflect properly all costs claimed to have been incurred...in performance of this contract.? The clause prescribes no form that the ?records? or the ?other evidence? must take, and in fact we have read the clause more liberally than AID?s position suggests. ? And AID?s Documentation for Payment clause, which was incorporated, contemplates cost reporting ?prepared from the books and records of the Contractor,? without describing the requisite level of detail. These clauses are consistent with FAR 31.201-2(d), which speaks broadly of a contractor?s responsibility to maintain documentation ?adequate to demonstrate that costs claimed...are allocable to the contract.?

Perhaps if the parties read the case and applied the findings to the contract at hand (keeping DCAA out of negotiations), a path forward might be found.

Hope this helps.

I draw your attention to ASBCA No. 55354, Oct. 2009, re: BearingPoint. The Court addressed the issue of "inadequate" supporting documentation in the war zone. The Judge wrote--

The contract clauses do not impose the stringent requirements of either 'nice neat little files' that Ms. Kolstrom sought or the contemporaneous records for which AID appears to be arguing. Thus, the Allowable Cost and Payment clause, which was incorporated in the contract, imposed no requirement that BearingPoint substantiate labor costs with time sheets, as Ms. Kolstrom insisted. The Audit and Records clause, which was also part of the contract, looks to ?all records and other evidence sufficient to reflect properly all costs claimed to have been incurred...in performance of this contract.? The clause prescribes no form that the ?records? or the ?other evidence? must take, and in fact we have read the clause more liberally than AID?s position suggests. ? And AID?s Documentation for Payment clause, which was incorporated, contemplates cost reporting ?prepared from the books and records of the Contractor,? without describing the requisite level of detail. These clauses are consistent with FAR 31.201-2(d), which speaks broadly of a contractor?s responsibility to maintain documentation ?adequate to demonstrate that costs claimed...are allocable to the contract.?

Perhaps if the parties read the case and applied the findings to the contract at hand (keeping DCAA out of negotiations), a path forward might be found.

Hope this helps.

Another thing to consider, what is the color of this money and when does it cancel? I wouldn't be happy if I were the PCO and had to find current year funding to pay for something that was obligated 8-10+ years ago..

DHSGUY

You are singing to the choir about losing the funds and having to find new money, but the issue of how to force a contractor to invoice by a certain date remains. No one seems to have an answer to that.

All,

What if on future contracts/task orders we write in a clause that requires all incurred costs to be invoices in 120 days of incurrance. Can we make such a requirement or will we be sure to lose in a protest? If not protested pre-award, can we hold the contractor to the requirement? What do you all think?

DHSGUY

You are singing to the choir about losing the funds and having to find new money, but the issue of how to force a contractor to invoice by a certain date remains. No one seems to have an answer to that.

In May 2011 a new set of DFARS clauses (and associated policy statements) were promulgated. I thought one or more of those "Business Systems" clauses might be helpful to COs. It turns out not to be the case. For example, 252.242-7006 (Accounting System Administration, May 2011) lists 18 criteria that comprise an "adequate" contractor accounting system. The closest one to this issue requires billings to be reconcilable to the contractor's cost accounts.

That's it. There is nothing regarding timeliness of billings. (And, as I've mentioned, it would seem to be manifestly unfair....)

Even if there was a criterion associated with timely submission of invoices, think how the oversight/enforcement would work. The CO would request a DCAA audit. That audit would take from 6 months to 60 years to complete. The CO would receive the report and make an initial determination that the contractor's accounting system was inadequate. The contractor would argue or, at best, concur and submit a corrective action plan. The CO would then make a determination that, notwithstanding the CAP, the accounting system was inadequate. Then, by DCMA policy, that decision would have to run through at least one and perhaps three Review Boards. If the Review Board(s) approved the determination, then the system would be determined to be inadequate and payment withholds would begin.

By that point the average CO would have been rotated out/transferred to another assignment....

Or perhaps I'm just cynical?

H2H

DHSGUY

You are singing to the choir about losing the funds and having to find new money, but the issue of how to force a contractor to invoice by a certain date remains. No one seems to have an answer to that.

All,

What if on future contracts/task orders we write in a clause that requires all incurred costs to be invoices in 120 days of incurrance. Can we make such a requirement or will we be sure to lose in a protest? If not protested pre-award, can we hold the contractor to the requirement? What do you all think?

Think this trhough a little bit. There are several reasons why a contractor may not bill for costs incurred in a warzone. You say one of the reasons why they have not billed is because they have not been able to locate adequate supporting data. Have you asiked why they cannot? Could it be that the data was destroyed through hostile action? I know of a contractor here that had its offices in World Trade Center 7 on 9-11. An engine from one of the planes went through its office destroying several records. As a side note, the New York City procurement office was in the World Trade Center. It, and all its records, were destroyed in the attack.

Next, have you determined whether all events that permit the determination of the allowability of costs have occurred? For many costs, such as litigation costs covered by 31.205-47, third party liabilities that may be covered by insurance and environmental clean-up costs, allowability cannot be determined for several years after the cost has been incurred.

Finally, as Help (I believe) indicated, amounts owed subcontractors would be direct costs of the contract. If the subcontractors have not had final indirect cost rates established, the prime generally cannot close those subcontracts and submit b illings that include those costs.

I think you need to do some more fact finding to determine what the real problem is before you develop a solution in search of a problem.

Hi all,

I need to resurrect this topic for your thoughts on another angle. The contractor created a special operations unit just for our extremely large contract. This unit does no other work than our contract. This includes their accounting and invoicing departments. What is an indirect cost on some contracts ends up a direct cost for us. Since they are not supposed to invoice for any work done after the task order has expired, we have extended the POP just for the program office to close subs, find lost documents and invoice costs. They are almost at 2 years now charging us thier staff. It is time to extend again and our program office demands we let the task order expire and stop paying for the program office to do this work. They say they don't want to pay his inefficiencies any longer and he can file a certified claim with a final invoice if he chooses.

What do you think of this? Is this a viable way to deal with this or is it just creating more trouble. I know it is my issue to solve but I am interested in hearing what everyone thinks.

Initial instinct is to agree with the program office but I'd probably do a quick cost analysis on what you've spent on the special unit as direct costs over the last few months versus what you spent on OH and G&A charges during the last few months of actual performance. And then factor in what measurable progress has been made on getting the various incurred but not billed costs reduced. The numbers may tell you it is worth the money to extend again.

Boof,

How long will it take them to 'find' these lost documents. I wonder if they will keep needing additional time all the way up until you fund them no more, then poof they have found the missing documents. So part of it would be how much is it currently costing you and how much are you willing to keep paying this. Do you even have an idea of what their progress is on what they are doing to finish this contract off? Is there an end in sight?

I was going to suggest going for a FFP mod and then using "accord and satisfaction" to stop any future cost claims. But the problem is that I don't know what the contractor's issues are. Is everybody waiting for a DCAA audit of the subKs in order to finalize rates/costs? (If so, you will be waiting a long, long time.) Is the missing documentation likely to be found? Has the contractor shown you a project schedule that has some credibility to it?

It's hard to recommend a good course of action when the circumstances aren't known.

Wish I could help more.

The contractor created a special operations unit just for our extremely large contract. This unit does no other work than our contract... Since they are not supposed to invoice for any work done after the task order has expired, we have extended the POP just for the program office to close subs, find lost documents and invoice costs. They are almost at 2 years now charging us thier staff. It is time to extend again and our program office demands we let the task order expire and stop paying for the program office to do this work. They say they don't want to pay his inefficiencies any longer and he can file a certified claim with a final invoice if he chooses.

I'm not sure that I understand. You say: "[O]ur program office demands we let the task order expire and stop paying for the program office to do this work." You use the term "program office" twice in that sentence, but seemingly refer to different entities.

Here is what I do understand: The contractor has formed some kind of work unit and charges the cost of that unit directly to the task order. The unit's work includes "close subs, find lost documents and invoice costs." You keep extending the task order so that the unit can finish its work. (That sounds to me like a "do loop." As long as you extend the task, how can it ever finish its work?)

For whom is that unit working? Who gets the benefit of its work?

DHSGUY

You are singing to the choir about losing the funds and having to find new money, but the issue of how to force a contractor to invoice by a certain date remains. No one seems to have an answer to that.

All,

What if on future contracts/task orders we write in a clause that requires all incurred costs to be invoices in 120 days of incurrance. Can we make such a requirement or will we be sure to lose in a protest? If not protested pre-award, can we hold the contractor to the requirement? What do you all think?

This was posted a few years ago and I'm wondering if there's any update? Is there anything requiring vendors to invoice within XX days of physical completion of a contract or any other happening (like the end of an option period). I work with some behemoth companies for which I'm trying to close contracts/award for fiscal year 2013, 2014 and sometimes before that. I'm having difficulty in fathoming why when you have a FFP award for 12 months at $X.XX , they can't submitt final invoices withot having to beg for 10 or 12 months? So much for meeting close out standards.

gittist, look at FAR 52.216-7 which requires contractors to submit completion vouchers within 120 days after costs for all years covered by a contract have been settled. The big hang-up on this now is DCAA audits of proposed final indirect cost rates. Also, look at 52.232-7 which requires a contractor to submit a completion voucher on T&M/LH contracts within 120 days after the contract is complete.

I've posted this before -- prime contractors don't need a DCAA audit in order to finalize rates with their subcontractors and close-out their subcontracts. The government doesn't have privity.

Primes who say they can't close out subcontracts because DCAA hasn't audited, and DCMA (or whomever) hasn't negotiated final rates, simply don't understand how the prime/subK relationship works with respect to 52.216-7. And more likey than not, they simply aren't bothering to fulfill their responsibilties as prime by performing timely subK close-outs.

H2H

This was posted a few years ago and I'm wondering if there's any update? Is there anything requiring vendors to invoice within XX days of physical completion of a contract or any other happening (like the end of an option period). I work with some behemoth companies for which I'm trying to close contracts/award for fiscal year 2013, 2014 and sometimes before that. I'm having difficulty in fathoming why when you have a FFP award for 12 months at $X.XX , they can't submitt final invoices withot having to beg for 10 or 12 months? So much for meeting close out standards.

Please allow me to clarify. I am working with awards issued with FAR Part 12 clauses and 99% are Firm Fixed Price.

FAR 12.213 allows contracting officers to draft terms and conditions (such as an invoice deadline requirement) and to include those terms and conditions contracts for commercial items.

Here's an example. The following words appear in GSA's IWAC ITSS Invoicing Instructions:

#1 - Invoices Instructions

The contractor shall invoice for the entire delivery order amount upon completion of the project unless otherwise specified in the individual contract/delivery/purchase order.

* * * *

Final Invoice (if required): Invoices for final payment must be so identified and submitted within 60 days from delivery completion (i.e. delivery) and no further charges are to be billed. A copy of the written acceptance of delivery completion must be attached to final invoices. The contractor shall request from GSA an extension for final invoices that may exceed the 60-day time frame.

Here's another example, from a Town of Fairfax contract:

G. The CONSULTANT will be reimbursed, as promptly as fiscal procedures will permit upon receipt by the LOCAL AGENCY’s Contract Manager of itemized invoices. Invoices shall be submitted no later than 45-calendar days after the performance of work for which the CONSULTANT is billing.

FAR 12.213 allows contracting officers to draft terms and conditions (such as an invoice deadline requirement) and to include those terms and conditions contracts for commercial items.

...provided the terms and conditions are not inconsistent with customary commercial practice or a waiver has been granted (see FAR 12.302( c )).

I think FAR 12.213 already limits CO-written terms and conditions to those based on commercial practices -- no need to reach to FAR 12.302.

I think FAR 12.213 already limits CO-written terms and conditions to those based on commercial practices -- no need to reach to FAR 12.302.

That's interesting. ji20874 thinks that one can reasonably infer the limitation on the use of terms and conditions inconsistent with customary commercial practice (which is expressed at FAR 12.302( c )) from the paragraph below. Does anyone else read it that way?

It is a common practice in the commercial marketplace for both the buyer and seller to propose terms and conditions written from their particular perspectives. The terms and conditions prescribed in this part seek to balance the interests of both the buyer and seller. These terms and conditions are generally appropriate for use in a wide range of acquisitions. However, market research may indicate other commercial practices that are appropriate for the acquisition of the particular item. These practices should be considered for incorporation into the solicitation and contract if the contracting officer determines them appropriate in concluding a business arrangement satisfactory to both parties and not otherwise precluded by law or Executive order.

I would say that this paragraph provides guidance for incorporating terms and conditions that are consistent with customary commercial practice and is silent on the issue of incorporating terms and conditions inconsistent with customary commercial practice.

Don,

Please don't start again with your bullying. You misrepresent what I think. What I wrote is true: FAR 12.213 allows contracting officers to incorporate commercial practices as terms and conditions in commercial contracts. FAR 12.213 only provides authority for incorporating commercial practices, so a contracting officer who honorably works under FAR 12.213 will never need to worry about violating FAR 12.302.

FAR 12.213 only addresses commercial practices, and provides the standard for incorporating commercial practices as terms and conditions; namely, the contracting officer determines them appropriate in concluding a business arrangement satisfactory to both parties and not otherwise precluded by law or executive order.

You're point is based on faulty logic. A commercial practice allowed as a term and condition under FAR 12.213 cannot possibly be inconsistent with commercial practice under FAR 12.302, so there is no time when the use of 12.213 will be limited by 12.302. See? I hope this display will work:

• FAR 12.213 allows a contracting officer to incorporate a commercial practice as a term and condition in a commercial item contract, and
• FAR 12.302 allows a contracting officer to incorporate a term and condition inconsistent with commercial practice in a commercial item practice.

gittist,

I hope my posting in no. 28 is helpful to you. If it is a commercial practice in your segment of the marketplace for buyers and sellers to agree on invoice submission deadlines, then FAR 12.213 gives you the authority to incorporate such a term and condition in your commerical item solicitations and contracts. But even if this isn't a commercial practice, you can still incorporate such a term and condition if you can get the waiver contemplated by FAR 12.302.

ji20874:

Contradiction is not bullying. I see nothing even close to bullying in Don's post. I see him being precise, which is entirely appropriate.

In Post #28 you wrote:

FAR 12.213 allows contracting officers to draft terms and conditions (such as an invoice deadline requirement) and to include those terms and conditions [in] contracts for commercial items.

In Post # 29, Don responded by saying that a CO could include such terms and conditions only if they are not inconsistent with commercial practices and that they would need a waiver under 12.302( c ) to incorporate noncommercial practices.

In Post # 30, you responded:

I think FAR 12.213 already limits CO-written terms and conditions to those based on commercial practices -- no need to reach to FAR 12.302.

Don challenged you in Post # 31, writing:

I would say that [FAR 12.213] provides guidance for incorporating terms and conditions that are consistent with customary commercial practice and is silent on the issue of incorporating terms and conditions inconsistent with customary commercial practice.

Then, in Post # 32, you said:

FAR 12.213 allows contracting officers to incorporate commercial practices as terms and conditions in commercial contracts. FAR 12.213 only provides authority for incorporating commercial practices, so a contracting officer who honorably works under FAR 12.213 will never need to worry about violating FAR 12.302.

in my view, FAR 12.213 neither "limits" COs from doing anything nor "provides authority" for COs to do anything. Of the four sentences in FAR 12.213, the operative one is this:

These [other commercial] practices should be considered for incorporation into the solicitation and contract if the contracting officer determines them to be appropriate to concluding a business arrangement satisfactory to both parties and not otherwise precluded by law or Executive Order.

That's guidance. All that says is that a CO "should consider" doing something if certain conditions are met. It is a long reach to infer from that sentence a prohibition against the use of noncommercial practices. In fact, there is no absolute prohibition, since FAR 12.302( c ) permits the incorporation of noncommercial practices under a waiver. Moreover, FAR 12.213 does not "provide authority" for a CO to tailor commercial items clauses to incorporate other commercial practices. It says only that a CO should consider doing something when certain conditions are met. At most, permission is implied, not express. It is FAR 12.302 that provides authority to tailor commercial item terms to incorporate other commercial practices and that prohibits the use of noncommercial practices without a waiver. The claim that a CO may rely on FAR 12.213 and "never need" worry about FAR 12.302 is dead wrong. There is no "may", "may not", or "shall not" in FAR 12.213.

Don made no error in logic, and he is not bullying because he publicly contradicted you. Really, you needn't have responded to Don's Post # 29 at all, except, perhaps, to say, Thanks, Don. That's correct.

I would not have stuck my nose into this had it not been for the"bullying" remark.

Vern

My quick look at this does not find any bullying. I have to leave for an hour but will review this later.

My apologies to Don.

No worries, ji.