BILLING SYSTEM: Getting Paid on a Government Contract 16 April 2014. ANNOUNCEMENTS.
BILLING SYSTEM:Getting Paid on a Government Contract16 April 2014
Trish Carlin, CPASr. Consultant, Carlin Consulting GroupJoshua HarlorSupervisory Auditor, Defense Contract Audit AgencyLinda HildebrantDirector of CAS Compliance, Morpho DetectionDale EnglishSupervisory Contract Specialist, NAVFAC SW
Adequate Billing SystemContract Invoicing ProvisionsContract BriefFAR 52.216-7 Allowable Cost & PaymentProvisional Billing RatesFee Withhold
Invoicing FormsPublic VoucherProgress PaymentInvoice & Receiving ReportWide Area Workflow (WAWF)DCAA Oversight/MonitoringGovernment Acceptance & Approval
Adequate Billing System
BillingSystemshould provide reasonable assurance that billings applicable to Government contracts are prepared in accordance with applicable laws and regulations, and contract terms; and that material misstatements are prevented, or detected and corrected in a timely manner.
The Billing System should include processes for:
Key Processes Include:
Billing system policies and procedures
Billing reviews and approvals
Training of employees
Key Processes Include
Reconciliation of recorded and billed cost
Adjustment of cost and rates
Exclusion of non-billable costs
Subcontractor progress payments, performance-based and commercial financing payments
Key Processes Include
Estimate to complete, estimate of costs of delivered/invoiced items
Loss contract procedures
Contract overpayments, refunds and offsets
Billing system – IT system internal controls
Contract BriefDCAA Contract brief guidanceDCAA Contract brief templates
FAR 52.216-7 Allowable Cost & Payment(a) Invoicing(b) Reimbursing costs(c) Small business concerns(d) Final indirect rates(e) Billing rates(f) Quick closeout procedures(g) Audit(h) Final payment
Provisional Billing RatesPurpose of Provisional Billing Rates (PBRs)What are the procedures for establishing PBRs?When should we submit?What information should we provide?DCAA reviewMonitoringCommon deficienciesFrequently asked questions
One criterion for an adequate accounting system is that it provide for billings that can be reconciled to the cost accounts for both current and cumulative amounts claimed and comply with contract terms. Interim payments on cost-type contracts are allowed as specified in the contract provisions.
Reimbursement of indirect costs in these interim payments is generally made through provisional billing rates.
Provisional Billing Rates are established to approximate the contractor’s final year-end rates, as adjusted for any unallowable costs.
Provisional Billing Rates are used for interim purposes until settlement is reached on the final indirect rates for the contractor’s fiscal year.
FAR 42.704-Billing Rates-provides procedures and guidance for establishing PBRs.
Note: Vouchers and progress payments may be REJECTEDif submitted without using properly established billing rates
The contracting officer or auditor shall establish PBRs on the basis of information resulting from recent review, previous rate audits or experience, or similar reliable data or experience of other contracting activities.
When the contracting officer or auditor determines that the contract value does not warrant submission of a billing rate proposal, PBRs may be established by making appropriate adjustments from the prior year’s indirect cost experience to eliminate unallowable and nonrecurring costs.
Also, contractors may voluntarily submit a billing rate proposal to assist the responsible official in establishing rates (Preferred).
It is important to discuss the requirements with the contracting officer or cognizant auditor.
Contractors submit provisional billing rates to its DCAA Office or Administrative Contracting Officer
Electronic submissions are encouraged
Provide in excel format on a CD or through e-mail
Prior to the beginning of the fiscal year (once budgets are complete) or when the established billing rates are no longer representative of final year end rates due to unforeseen events or circumstances.
The PBRs should represent a 12-month period (the contractor’s fiscal year).
PBRs should be submitted at least annually
Vouchers and progress payments can be returned if submitted without properly established billing rates.
Proposed billing rate calculations (Pool and Base) with brief rationale
Prior fiscal year (FY) pool and base
Current FY to date pool and base
Current FY budget pool and base, if available
Comparative analysis withexplanation of any significant differences
NOTE: If PBRs are adjusted, use the new rate on the current year cumulative expenses
Fee WithholdThree contract clauses (FAR 52.216-8, -9, and -10) regulate how the Government will pay fees under CPFF and CPIF contracts
Public VoucherContractor ResponsibilitiesPreparation of VouchersElectronic Submission of VouchersCommon Deficiencies
Common deficiencies found during voucher reviews:
Progress PaymentFAR 32.5 – Progress Payments Based on CostsSF 1443 – Contractor’s RequestInvoice & Receiving ReportWAWF's Receiving Report takes the place of the DD250 and MIRR
Wide Area Workflow (WAWF)
Wide Area Workflow (WAWF)Document types used to create, submit, inspect, accept, certify, or process payment on the following document types:Invoice Document Types (Seven)Receiving Report Document Types (Six)Receiving Report and Invoice Document Types (Four)Financing Document Types (Three)Voucher Document Types (Five)Property Document Type (One)
Wide Area Workflow***Billing to the correct Contract Line Item Number (CLIN) on the Contract is critical***DFARS Clause 252.232-7006 Wide Area Workflow Payment InstructionsAttached to the invoice/voucher, must be supporting documentation, if required by the contract
DCAA Oversight/MonitoringPeriodic Audits by DCAA. When contract financing is cost-based, such as interim cost reimbursement (interim vouchers) or cost based progress payments, the billing system and the contract costs are subject to periodic audits by DCAA. DCAA will, at a minimum, verify that the costs billed have been incurred in performance of the contract, that they are in agreement with the accounting records, and that they are in accordance with the contract terms.
Government Acceptance & Approval
Reports & Invoices
WAWF transmits payment actions EDI 810C, 856, & 861 via GEX to DoD pay system
FTP Data Upload
Web Input using Web Forms
Authorize transfer of funds
Via EFT to Vendor’s bank
Local Processing Office
Accepting / Receiving Activity
Invoice requirements are listed in The Federal Acquisition Regulations (FAR) (FAR Part 32.905). Company must be registered in System for Award Management to receive electronic payments (EFT) (https://sam.gov)Federal Agencies use different electronic payment systems such as: - Wide Area Work Flow (WAWF) - DoD- PayWeb - ONR -Payment Management System (PMS) – DHHS
Be proactive before submitting invoice:- Read your contract- Understand your contract- Ask questions of your Contract Specialist- Follow the invoicing instructions- Know who is responsible for actions needed- Monitor your invoices progress
For more information about our organizations visit