SMALL BUSINESS FEDERAL GOVERNMENT CONTRACT BILLING

SAMPLE GOVERNMENT CONTRACT BILLING ON STANDARD FORM 1034

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FEDERAL GOVERNMENT CONTRACT BILLING
A recent poll revealed that in excess of 40% of the visitors who voted on the topics listed at this site wished to see a feature on government contract billing. Billing under federal government contracts can cause difficulty for small businesses because they often do not recognize that setting up complete contract identification information on the government billing form is vital to smooth invoice processing.
Another major feature not recognized by businesses new to government contracting is the relationship between inspection and acceptance records and invoice approval.
The type of contract also drives invoice preparation and requirements for supporting information.
The below article is an extract from the Navy SBIR site and is one of the most informative discussions I have seen by a government agency on the topic of billing. Following that article below is a special notice from the Defense Finance Accounting Service regarding electronic billing and links to tools insuring that mode is achieved correctly.
HOW TO GET PAID ON TIME
1. Instructions for Invoicing and Vouchering are usually included in Section G of the contract. The instructions will include the location where vouchers shall be sent. If the contract requires the contractor to send vouchers to the sponsoring DoD organization for approval, the DoD organization would forward vouchers, after approval, to the appropriate DFAS for payment. The appropriate DFAS will usually appear at block 12 on page one of the contract. It is important for contractors to follow specific instructions contained in Section G of the contract. If there are any questions, they should call the contracting officer. This procedure should reduce the time required to process payments.
2.. Additional information on submission of vouchers is available from the Defense Contract Audit Agency. Contractors may request a copy of a guide entitled "Information for Contractors" (DCAAP 7641-90), August 1996, from Headquarters, Defense Contract Audit Agency, Operating Administrative Office, 8725 John J. Kingman Road, Suite 2135, Fort Belvoir, VA 22060-6219; Telephone No. (703) 767-1066; Telfax No. (703) 767-1061. This is an excellent source of information for contractors and its use is strongly recommended. A contractor may determine its local DCAA office by calling (703) 767-3274.
3. The type of contract will usually impact how, when, and under what circumstances the contractor will receive payments. The contract should be reviewed for payment schedules and procedures prior to signature. The contractor should understand how and under what circumstance each payment will be made. The following information is provided to help contractors better understand the payment process:
If the contract is Fixed-Price, the clause at FAR 52.232-2 will be included in the contract. This clause provides that contractors should be paid promptly as portions of work are completed. In order to provide for payment for a portion of the work, that portion of the work and price must be separately stated in the contract. If this is not done, the contractor will not be able to receive payment for portions of the work. The only other method of receiving interim payments on a fixed-price contract would be through progress payments, which can be authorized by the clause at FAR 52.232-16. Progress payment procedures are more complicated than partial payments and the contractor must have an approved accounting system if the progress payments clause is included in the contract.
If the contract is Cost-Plus-Fixed-Fee,a Cost-Reimbursement type of contract, the clause at FAR 52. 216-7 will be included in the contract. This clause allows for submission of vouchers approximately twice each month for actual costs incurred. The clause also allows a small business to voucher for recorded costs for items or services purchased directly for the contract, even though they have not yet paid for those items or services.
If the contract is incrementally funded (not fully funded at time of award) the contract will require the contractor to notify the contracting officer when additional funds will be required to continue performance.
If a fixed-price contract is incrementally funded, the clause at DFARS 252.232-7007 Limitation of Government’s Obligation will be included in the contract. This clause requires the contractor to notify the contracting officer in writing at least ninety days prior to the date when, in the contractor’s best judgment, the work will reach the point at which the total amount payable by the Government, including any cost for termination for convenience, will approximate 85 percent of the total amount then allotted to the contract. The notification will state the estimated date when that point will be reached and an estimate of additional funding needed to continue performance. This clause also provides that if such additional funds are not to be allotted, the contracting officer will terminate any items for which additional funds have not been allotted. However, the contract may be modified, by mutual agreement of the parties, to change the funding schedule and, if necessary, the period of performance.
If a cost-reimbursement contract is incrementally funded, the clause at FAR 52.232-22 Limitation of Funds will be included in the contract. This clause requires the contractor to notify the contracting officer in writing when costs expected to be incurred within the next sixty (60) days (may be varied from 30 to 90 days) will exceed 75 percent (may be 75 to 85 percent) of the total amount allotted. This notice should state the estimated amount of the additional funds required to continue performance. This clause also provides that if additional funds are not to be allotted by the end of the period specified in the schedule or another agreed-upon date, upon the contractor’s written request, the contracting officer will terminate the contract.
4. The clause at FAR 32-232.25 Prompt Payment is included in most SBIR contracts. The following information applies to prompt payment procedures:
The clause at FAR 32-232.25, among other things, provides that the due date for making an invoice payment by the designated payment office shall be the 30th day after the designated billing office has received a proper invoice from the contractor and/or the 30th day after Government acceptance.
FAR 32.903(a) and (b) requires that the Government NOT make an invoice or contract financing payment earlier than 7 days prior to the due date specified in the contract.
The Defense Federal Acquisition Supplement (DFARS) states, at subparagraph 232.905(2), that "designated payment offices are encouraged to pay small disadvantaged business (SDB) concerns as quickly as possible after invoices are received and before normal payment due dates established in the contract. The restrictions of FAR 32.903 prohibiting early payment do not apply to invoice payments made to SDBs. Contractors shall not, however, be entitled to interest penalties if invoice payments are not made before the normal payment due dates established in the contract."
5. There are a number of things that contractors may do to help decrease the period of time between the submission of an invoice and receipt of payment:
Submit invoices directly to the designated billing office. Call the point of contact at that office to insure that acceptance has been accomplished and that the invoice has been sent to the designated payment office.
Contact the designated payment office to obtain status of invoices. (FAR 32.904(a)(4) states that contractors shall be informed of points of contact within their cognizant payment offices to enable them to obtain status of invoices.) Verify the due date for the invoice with the payment office – what do they consider the due date to be? If the payment office indicates a due date that is more than 30 days after the designated billing office accepted the supplies or services, point out that FAR 32.905(a)(ii) states "In the event that actual acceptance occurs within the constructive acceptance period, the determination of an interest penalty shall be based on the actual date of acceptance." (The "constructive" acceptance period is 7 days.) Therefore, the due date should be 30 days after Government acceptance - commonly at the billing office.
Offer discount for prompt payment. FAR 32.905(g) states: that "when a discount for prompt payment is to be taken, payment will be made as close as possible to, but not later than, the end of the discount period. Payment terms are specified in the clause at 52.232-8, Discounts for Prompt Payment." For example, a discount of "1/2% - 14 days" offered on a $10,000 invoice should result in a payment of $9,950 within 14 days after the date of the invoice. The discount for prompt payment procedure should help in at least two ways. (1) the due date would be computed from the date of the invoice rather than the date of acceptance (Note: acceptance must occur prior to payment and the invoice should be mailed on the date it is submitted), and (2) the "discount for Prompt Payment" offer would overcome the requirement at FAR 32.903(b) that the Government shall not make invoice payments earlier than 7 days prior to the due date specified in the contract. The offer for a discount for prompt payment should appear prominently on the invoice (perhaps underlined). It may be helpful to discuss this with the designated paying office in order to get their recommended format. It is not the intent of DoD to encourage or discourage use of the discount for prompt payment procedure. The purpose of this paragraph is to provide sufficient information for the contractor to make that choice.
IMPORTANT NOTICE FOR COMPANIES BILLING THE DEFENSE FINANCE ACCOUNTING SERVICE (DFAS)
Important Notice: Effective 12/31/07, the interfaces between WINS/EDI and MOCAS for commercial invoices and public vouchers will be disconnected. For further assistance, please contact the WAWF helpdesk:
You can obtain learning tools for WAWF at the following web sites:
DFAS EC End Users Tool Box - Go here to obtain user guides, interactive tutorials and reference links to assist you with WAWF.
WAWF Web-Based Training Site - Go here to learn how to use WAWF via self paced, online training. This training is an excellent place to begin learning about WAWF.
WAWF Training Practice Web Site - Go here to practice using the WAWF
application.
Wide Area Work Flow - Receipts and Acceptance (WAWF-RA) is a Paperless Contracting DoD-wide application designed to eliminate paper from the receipts and acceptance process of the DoD contracting lifecycle. The goal is to enable authorized Defense contractors and DoD personnel the ability to create invoices and receiving reports and access contract related documents.
In the traditional DoD business method, three documents are required to make a payment - the contract, the receiving report and the invoice. Each of these may arrive at the payment office separately - if they are paper. They are processed individually as they arrive. Information is then manually keyed in to the payment system. Using WAWF-RA, electronic documents are shared, eliminating paper and redundant data entry. Data accuracy is increased and the risk of losing a document is greatly reduced.
The contract is available through a seamless interface with an application called Electronic Document Access (EDA). Contractors have electronic options for submitting invoices and receiving documents. They can submit documents on the Web, through FTP, or through EDI.
Authorized DoD personnel receive notification electronically of pending actions and have a virtual folder of documents accessible. Digital signatures are used to authenticate the users and to digitally sign documents. In some cases, user id and password can be used in lieu of a digital signature.
WAWF-RA supports DoD's efforts to reduce unmatched disbursements in the DoD receipt, acceptance, entitlement and payment process through data sharing and electronic processing. The benefits to DoD are global accessibility of documents, reduced need for re-keying, improved data accuracy, real-time processing, and secure transactions with audit capability. For vendors, benefits include the capability to electronically submit invoices, reduction of lost or misplaced documents, and online access to contract payment records.
For security purposes, with WAWF-RA, user identity is assured through the use of digital signatures and certificates or user id and password over an SSL connection. The online data transmissions are protected with encryption.
For additional information, please see the WAWF-RA website at
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