|
Interim Internal Purchasing Guidelines > 6 Contract Administration > 6.4 Payments and Financing
6.4.1 General
6.4.1.a Disputes. Contracting officers and financial personnel must ensure that
payments legitimately due are made promptly. If a dispute arises regarding
the supplier's entitlement to payment, the contracting officer must pay the
supplier any amount not in dispute, except for withholding as allowed under
6.4.4.f.
6.4.1.b Partial Payments. The contracting officer should generally approve requests
for partial payment upon delivery of supplies or services that partially fill
contract requirements. When the contract does not provide unit prices, the
contracting officer may determine an appropriate formula for payment.
6.4.1.c Cost Reimbursement. Requests for payment under contracts that are not
fixed-price must be reviewed by the contracting officer, with the assistance of
technical specialists, to determine whether they comply with the requirements
for allowability, allocability, and reasonableness (see 5.2.3).
6.4.2 Invoices
6.4.2.a General. Payment will be made only after receiving an invoice (see
paragraph g of Clause 4-1, General Terms and Conditions, or Clause B-20,
Invoices, which may be used as a substitute for paragraph g of Clause 4-1),
except for:
1. Regularly scheduled payment under real estate leases and contracts
for cleaning services, vehicle hire, and contract postal units;
2. Payments under mail transportation contracts;
3. Over-the-counter transactions for commercial items; or
4. Advance payments, when authorized.
6.4.2.b Submitting Invoices. Invoices must be sent to the office specified in the
contract or order, with a copy to the contracting officer if necessary. Invoices
sent to any other person or office are not considered properly submitted.
Invoices submitted before performance or delivery violate the certification
provision of the Invoices clause. Invoices may be submitted electronically.
6.4.3 Payment
6.4.3.a Methods. Payments may be made by check or electronic funds transfer, as
requested by the supplier and approved by the contracting officer.
6.4.3.b Time of Payment. Payment must be made as close as possible to, but not
later than, the 30th day after receiving an invoice or acceptance, whichever
occurs later, except:
1. In those limited circumstances when a specified payment date is
provided for in the contract, payment will be made as close as possible
to, but not later than, that date.
2. When a time discount is taken, payment must be made as close as
possible to, but not later than, the discount date. Discounts must be
taken from the date on which the invoice is received by the office
specified in the contract, or the date on which supplies or services are
delivered or performed, whichever is later, to the discount date.
Discounts should be taken whenever economically justified, but only
after acceptance.
6.4.3.c Interest Payments
1. Interest will be paid automatically, whether or not a supplier has
requested it, when all of the following conditions have been met:
(a) Acceptance has occurred and there is no disagreement over
quantity, quality, or other contract provisions;
(b) A proper invoice has been received, except when no invoice is
required for payment (see 6.4.2.a) or the contracting officer fails
to give notice within 7 days after receipt of an improper invoice.
2. When a prompt payment discount is taken after the discount period has
expired, the Postal Service has 10 days after expiration of the discount
period to correct the underpayment. Failure to do so will result in the
automatic payment of interest, whether or not the supplier has
requested payment.
6.4.3.d Calculating Interest
1. Except when interest is required by a government authority (e.g.,
tariffs), it will be calculated using the rate set by the Secretary of the
Treasury under section 12 of the Contract Disputes Act of 1978 (41
U.S.C. 611) in effect on the day after the due date. The rate will be
published semiannually in the Postal Bulletin, in January and July. The
rate will remain fixed during the period for which interest is calculated.
Interest will accrue daily on the invoice amount approved by the Postal
Service. It will be compounded in 30-day increments, starting with and
including the first day after the due date through the payment date.
Interest accrued at the end of any 30-day period will be added to the
approved invoice payment amount and be subject to interest if not paid
in the succeeding 30-day period.
2. For the sole purpose of computing interest under these guidelines,
acceptance will have occurred on the 7th day after the supplier has
delivered the supplies or services under the contract, unless there is a
disagreement over quantity, quality, or supplier compliance. If actual
acceptance occurs within 7 days of delivery, interest will be calculated
based on the actual date of acceptance. When necessary to inspect
and test the supplies or evaluate services, the contracting officer may
specify a longer period for constructive acceptance in the solicitation
and contract. The justification for extending the period beyond 7 days
must be documented in the contract file.
3. If the office specified in the contract for receiving invoices fails to date
stamp the invoice, the invoice due date will be the 30th day after the
date of the invoice, provided that a proper invoice was received and
there is no disagreement over the quantity, quality, or supplier
compliance with the contract.
4. The interest amount, interest rate, and the period for which the interest
was computed, will be stated separately on the check or accompanying
remittance advice. If requested by the supplier, adjustments must be
made for errors in calculating interest.
5. For contracts awarded on or after October 1, 1989, a penalty amount
(calculated according to Office of Management and Budget regulations)
will be paid, in addition to the interest, if the supplier:
(a) Is owed interest;
(b) Is not paid the interest within 10 days after the date the invoice
amount is paid; and
(c) Makes a written demand that the Postal Service pay such a
penalty not later than 40 days after the date the invoice amount is
paid.
6. When a prompt payment discount is taken after the discount period has
expired, interest must be calculated on the amount of discount taken
improperly. The interest must be calculated for the period beginning
with the first day after the end of the discount period through the date
when the supplier is paid.
7. If the office specified in the contract for receiving invoices fails to notify
the supplier of a defective invoice within 7 days after its receipt, the due
date on the corrected invoice must be adjusted. The number of days
taken beyond the 7-day period must be subtracted from payment due
date. Any interest owed the supplier must be based on this adjusted
due date.
6.4.3.e Alternate Provisions. The provisions on time of payment may be changed by
agreement of the parties, but no interest may be paid by the Postal Service
except as provided in 6.4.3.c.
6.4.3.f Final Payment. Final payment under any contract involving progress
payments, retainage, payment or performance guarantees, or construction
may not be made until the contracting officer receives a release from the
supplier.
6.4.4 Withholding Payments
6.4.4.a General. The contracting officer may refuse to pay a supplier or may withhold
payments, in whole or in part, when:
1. The contract provides for withholding (for instance, when retainage is
authorized to withhold money to ensure debts are paid);
2. Elements of the amount invoiced by the supplier are not allowable (see
5.2.3);
3. The supplier has been overpaid or otherwise owes the Postal Service
money as a result of the supplier's actions or inactions under the
contract;
4. The supplier owes the Postal Service money for reasons unrelated to
the contract; or
5. As a result of judicial action or law, parties other than the supplier have
made claims against the Postal Service, or have not waived rights that
may be exercised against the Postal Service.
6.4.4.b Actions by the Contracting Officer
1. Nonpayment may be damaging to a supplier's business and may
jeopardize performance. Therefore, the contracting officer must
carefully consider the reasons for withholding or refusing payment, and
must process disputes regarding payment quickly.
2. The contracting officer must notify the supplier of any intended
withholding and must provide the supplier an opportunity to object. If
time permits, the notice should be in writing.
6.4.4.c Disallowing Costs
1. At any time during the performance of a contract that is not fixed price,
the contracting officer may issue the supplier a written notice of intent to
disallow specified incurred or planned costs (see Clause B-17,
Disallowance of Costs). However, before issuing the notice, the
contracting officer should make a reasonable effort to reach a
satisfactory settlement.
2. If the supplier disagrees with the deduction from current payments, the
supplier may:
(a) Request in writing that the contracting officer consider whether
the unreimbursed costs should be paid and discuss the matter
with the supplier;
(b) File a claim under Clause B-9, Claims and Disputes, which the
contracting officer must process according to the procedures in
39 CFR 601; or
(c) Do both of the above.
3. Supplier discounts, rebates, and refunds offered voluntarily or provided
for by contract clauses are not subject to this part and may be taken by
adjustments to invoices or other procedures acceptable to the
accounting service center.
6.4.4.d Setoffs and Recoupments
1. At any time during performance of a contract, the contracting officer
may issue the supplier a written notice of intent to set off or recoup
amounts due the Postal Service from payments otherwise due the
supplier. However, before issuing the notice, the contracting officer
should make a reasonable effort to reach a satisfactory settlement
through negotiation.
2. If no settlement is reached, the contracting officer may withhold the
amounts due the Postal Service by setoff or recoupment. A "setoff" is a
deduction from payments due to the supplier under one contract for
amounts due the Postal Service under one or more other contracts.
"Recoupment" is a deduction of amounts due the Postal Service (for
example, for damages for delay or defective performance, warranty
costs, or repair costs) from the payment due the supplier under a single
contract.
3. If the supplier disagrees with the intended setoff or recoupment, the
provisions of 6.4.4.c.2 apply.
4. When contract payments have been assigned (see 6.4.7), the
contracting officer must have the concurrence of counsel to use setoffs
or recoupments.
6.4.4.e Third-Party Claims. The Postal Service may be subject to claims by third
parties for money due a supplier. When a claim is filed with the contracting
officer, assigned counsel must be notified immediately. Assigned counsel will
provide instructions for handling the claim, disposing of the fund, and
notifying the supplier.
6.4.4.f Withholding Payment Under Contract Clauses. Some contract clauses, such
as Clause 2-10, Liquidated Damages, and Clause 2-8, Warranty, provide for
withholding payment in certain circumstances. In addition, some contract
clauses provide for withholding a percentage or portion of payments to
induce continued acceptable performance. The contracting officer must
strictly enforce such clauses and keep a complete record of the amounts
withheld under any clause, the basis for withholding them, and the disposition
of funds withheld.
6.4.5 Progress Payments
6.4.5.a General. The Postal Service only makes progress payments, when provided
for by the contract, in return for demonstrated progress toward completion of
performance.
6.4.5.b Computing Progress Payments
1. Progress payments for nonconstruction contracts must be based on
costs incurred in performance. However, as provided in Clause 1-3,
Progress Payments, the contracting officer may reduce or suspend
payments where incurred costs vary substantially from actual progress
under the contract. In such cases, the contracting officer should obtain
the advice of technical personnel and assigned counsel before
computing the amount justified.
2. Progress payments for construction contracts are made according to
Clause B-48, Payment (Construction).
6.4.5.c Supervision. The extent to which progress payments need to be supervised
depends on the supplier's accounting system and controls and the supplier's
experience, performance record, reliability, management, and financial
strength.
6.4.5.d Administration
1. The contracting officer must obtain monthly progress reports from the
supplier, showing progress on the work in relation to progress
payments made.
2. The contracting officer may, in approving progress payment requests,
rely on the supplier's accounting system and certification without
prepayment reviews. However, post-payment reviews (including audits,
when necessary) must be made periodically, or when necessary to
determine the validity of progress payments already made or expected
to be made.
3. Clause 1-3, Progress Payments, gives the Postal Service the right to
reduce or suspend progress payments, or to increase the liquidation
rate, under specified conditions. The contracting officer may take such
actions only in accordance with the contract terms and only after:
(a) Notifying the supplier and providing an opportunity for discussion;
(b) Evaluating the effect of the action on the supplier's operations, on
the basis of the supplier's financial condition, projected cash
requirements, and existing or available credit arrangements; and
(c) Considering what is equitable in the particular situation.
4. The contracting officer may take immediate unilateral action only if
warranted by circumstances such as overpayments or unsatisfactory
contract performance. The contracting officer must always:
(a) Act in a reasonable and business-like manner;
(b) Base decisions on substantial evidence; and
(c) Document the contract file.
5. Progress payments are recouped by deducting liquidations from
payments that would otherwise be due the supplier for completed
performance. Usually, the liquidation rate is the same as the progress
payment rate; and at the beginning of a contract, only this method may
be used. Any liquidation method other than the usual method must be
approved by a Portfolio manager, or one of the following: the manager,
Supply Management Infrastructure; the manager, SM Operations; or
the manager, Supply Chain Management Strategies.
6.4.6.a Administration
1. When a contract contains Clause 2-31, Limitation of Cost, or Clause
2-32, Limitation of Funds, and the supplier has notified the contracting
officer that incurred costs are approaching the estimated cost of the
contract or the funding limit, the purchase team must promptly obtain
funding and information regarding the contract's continuation. The
contracting officer must notify the supplier in writing that:
(a) Additional funds have been allotted, or the estimated cost has
been increased, in a specified amount;
(b) The contract is not being funded further, and the supplier should
submit a proposal for a fee adjustment, if any, based on the
percentage of work completed in relation to the total work called
for under the contract; or
(c) The contract is to be terminated.
2. The supplier is entitled by the contract terms to stop work when the
funding or cost limit is reached, and any work beyond the funding or
cost limit is at the supplier's risk.
6.4.6.b Effect of a Modification. The contracting officer may issue a change order, a
direction to replace or repair defective items or work, or a termination notice
without immediately increasing the funds available. Since a supplier is not
obligated to incur costs above the estimated cost in the contract, the
contracting officer must ensure that funds are available for directed actions.
The contracting officer may direct that any increase in the estimated cost or
amount allotted to a contract be used for the sole purpose of funding
termination or other specified expenses.
6.4.7 Assignment of Claims
6.4.7.a General. A supplier may assign money that will be due under a Postal
Service contract to a single bank or other financial institution, with the
approval of the contracting officer (see paragraph b of Clause 4-1). Any other
attempted assignment may be treated as a breach of contract.
6.4.7.b Approval. Contracting officers may approve any authorized assignment that
does not jeopardize contract performance. See also the discussion of
novation agreements in 6.5.4.
6.4.7.c Assignments by Law. This part does not pertain to assignments ordered by a
court or law. Contracting officers should consult with assigned counsel in
such cases.
|
