Information Technology (IT) invoicing question: We received an invoice from the contractor for the full amount of the base year contract. How do we handle these invoices and payments? – Contracting Officer's Representative Answers

Joseph Feibel – January 7, 2018

Question:

We received an invoice from the contractor for the full amount of the base year contract. How do we handle these invoices and payments?

The attached invoice is on hold for payment pending submission of a receiving report. A copy of the invoice is attached for your review. Please submit your receiving report within seven calendar days of receiving the invoice.

If you reject the invoice in part (returned for correction) or in total, be sure that you provide an explanation to IBC.

Answer:

The contract should have a section on invoicing; it should specify when the contractor should invoice.

Please note that FTC has decided to accelerate ALL payments to vendors effective March 15, 2013 based on OMB guidance memoranda 11-32, “Accelerating Payments to Small Businesses for Goods and Services,” and 12-16, “Providing Prompt Payment to Small Business Subcontractors.”

If there are multiple lines to the contract, please be sure that those listed on the invoice are active and funded. In accordance with the Invoice Requirements clause in the “FTC Clauses and Special Provisions” section of the supplier’s contract, the invoice MUST refer to the contract line item being billed. Under the Prompt Pay rules and Part 52.212-4 of the FAR, we have the authority to reject any invoice that is not in conformance with this requirement. As long as the service has been initiated and is functioning, the invoice for the total annual payment is acceptable. As this is a software-type purchase, it is not unusual to pay the annual fee and receive the service for the entire period. Therefore, as long as the service is up and running as specified within the contract, there shouldn’t be an issue paying the total cost upfront.

I suggest reading this U.S. Government Accountability Office (U.S. GAO) case relating to advance payment and computer software.(http://www.gao.gov/products/403305#mt=e-report).

If you have any questions as to how this invoice should be charged, please contact your contracting officer in Acquisitions.