5-11.4 Withholding

The CO may decide to reject an invoice and consequently not pay the supplier. Nonpayment may be damaging to the supplier’s business and may jeopardize performance, as well as harming the working relationship between the Postal Service and the supplier. Therefore, the CO must carefully consider the reasons for withholding or refusing payment and must address problems regarding payment expeditiously.

The CO may refuse to pay the supplier or may withhold payments otherwise due, in whole or in part, when:

• The contract provides for withholding (for instance, when retainage [a percentage of a contract price retained from the supplier as assurance that subcontractors will be paid and that contract performance will be completed] is authorized).
• Elements of the amount invoiced by the supplier are not allowable.
• 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.
• The supplier owes the Postal Service money for reasons unrelated to the contract.
• As a result of judicial action or applicable law, parties other than the supplier have made claims against the Postal Service or have not waived rights exercisable against the Postal Service.