FACILITIES DIVISION

FACILITIES CONTRACTS BRANCH

Standard Operating Procedures

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  DATE: September 27, 2004

  SUBJECT: Invoice Handling Procedures

  NUMBER: CSOP-04-002

  EFFECTIVE DATE: Immediately Until Replaced or Superseded
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1\. [References]{.underline}

5 CFR 1315, Prompt Payment Act

Federal Acquisition Regulation (FAR)

FAR Part 32.9, Prompt Payment

2\. [Purpose]{.underline}

The purpose of this CSOP is to provide guidance and procedures on the
proper handling and processing of invoices for construction and A-E
contracts and task orders.

3\. Background

The Prompt Payment Act (Final Rule, 5 CFR 1315) requires agencies to pay
commercial obligations within certain time periods and to pay interest
penalties when payments are late. It was enacted to ensure that
companies doing business with the Federal Government are paid in a
timely manner. It requires the Government to make payments within 30
days after receipt of a proper invoice or Government acceptance of
supplies delivered or services rendered and 14 days for construction
contract payments. Final payment for construction contracts are to be
made within 30 days after receipt of final invoice.

4\. [Procedures]{.underline}

a\. Contents of a Properly Prepared Invoice

Payment will be based on the receipt of a proper invoice

> and satisfactory contract performance. The required contents should be
> clearly stated in every contract. The following information is
> necessary to constitute a complete and proper invoice:
>
> a\. Name and address of Contractor
>
> b\. Invoice date and invoice number
>
> c\. Contract/task/purchase order number
>
> d\. Description, quantity, unit of measure, unit
>
> price, and extended price of supplies delivered or
>
> services performed
>
> e\. Shipping and payment terms, if applicable
>
> (e.g., shipment number and date of shipment,
>
> discount for prompt payment, etc.)
>
> f\. Name and address of contractor official to whom
>
> payment is to be sent
>
> g\. Name, title, phone number, and mailing address of
>
> person to be notified in the event of a defective
>
> invoice
>
> h\. Taxpayer Identification Number (TIN)
>
> i\. Electronic Funds Transfer (EFT) banking
>
> information
>
> j\. For construction contracts, contractor's
>
> certification as required by the clause, Payments
>
> under Fixed-Price Construction Contracts at FAR
>
> 52.232-5(c)
>
> k\. Other documentation as required by the contract
>
> (e.g., itemization of work completed, certified
>
> payrolls, etc.)

b\. Receipt of Invoices

> All contracts must include the name of the Government employee to whom
> invoices are to be sent. Invoices should be sent in an original and
> one (1) copy. Contractors will normally send their invoices via
> overnight mail services directly to the person named in the contract.
> In order to expedite the process, it is recommended that the name of
> the Procurement Technician (PT) now be included as the addressee,
> along with Contracting Officer (CO), rather than the Engineering
> Project Manager (EPM).
>
> When an invoice is received all copies and attachments must be date
> stamped the same day it is received in Facilities Division (FD). This
> will start the clock on the payment due date as required by the Prompt
> Payment Act.
>
> c\. Review and Annotation of Invoices
>
> After the invoices are date stamped, the PT will give the original
> invoice to the cognizant EPM and give the copy to the CO. The EPM has
> two (2) working days from receipt to review the document, provide
> their recommendation for approval or disapproval annotated on the
> invoice and initial and date the invoice and return it to the PT. The
> CO is to review the invoice for sufficiency concurrently with the
> EPM's review.
>
> NOTE: If the EPM is out of the office for the duration of this time
> period, the invoice is to be processed without the EPM's review. (Any
> discrepancies noted by the EPM upon their return to the office can be
> dealt with on the next invoice.)
>
> d\. Preparation of Invoice Transmittal Sheet
>
> Upon receipt of the annotated invoice from the EPM, the PT will
> retrieve the payment file folder. They will prepare and complete the
> ARS-305, Transmittal of Invoice for Payment, based on the information
> from the file, the contractor's invoice, and the EPM. The PT will also
> update the Record of Payment sheet. Then they will attach the invoice
> and the ARS-305 to the file and give it to the cognizant CO for review
> and signature. The CO will have two (2) working days to sign the
> transmittal sheet and return it to the PT for distribution. If the
> cognizant CO is out of the office during this period, the CO's back up
> will review and sign the transmittal sheet.
>
> If there are changes to the invoice and billing amount that the CO
> wishes to make (e.g., either retainages or minor corrections) AND the
> CO chooses not to return the invoice, the change(s) must be clearly
> and concisely annotated on the invoice and ARS-305 in the "Remarks"
> section. The CO must notify the contractor of the change(s) either by
> letter or e-mail with a copy of this notification maintained in the
> contract file.
>
> e\. Distribution of Invoices
>
> When the PT receives the signed invoice transmittal from the CO, they
> will make the appropriate number of copies as indicated by the "cc"
> list and transmit the originally signed package to the Financial
> Management Division (FMD) official for processing in the FFIS system
> for contracts with Buildings & Facilities (B&F) funds (except for B&F
> projects for the Beltsville Agricultural Research Center (BARC) and
> U.S. National Arboretum (USNA)) or to the National Finance Center
> (NFC) for all other funds, including BARC and USNA B&F projects.
> Distribution of the original and specified copies is to be completed
> within 2 calendar days of the CO\'s signature.

5\. [Improper/Deficient Invoices]{.underline}

All invoices must contain the information cited in paragraph 4a. If an
invoice is not proper or contains incorrect information that should only
be corrected by the contractor, the CO must return it to the contractor
within seven (7) days of receipt of the invoice and provide the
contractor a written explanation as to the reason(s) why it is not a
proper invoice in accordance with FAR 32.905(b)(3). If the invoice is
not returned within this timeframe, interest will begin to accrue after
the seventh day it was received.

6\. [Determining the Payment Due Date]{.underline}

The Prompt Payment Act outlines standards that determine the payment due
date and the date on which interest will begin to accrue if a payment is
late. The payment due date for construction contracts is 14 days after
the start of the payment period and 30 days for final payment. For A-E
services, the payment due date is 30 days.

To determine the start of the payment period, an invoice is considered
received on the later of:

> a\. The date a proper invoice is received by the designated agency
> office as long as it was properly date stamped or date annotated. If
> the invoice is not properly date stamped or date annotated when
> received, the date on the invoice will be used, or
>
> b\. The seventh calendar day after the date the services are performed
> unless the agency accepts the services before the seventh day, in
> which case the acceptance day will be used; or a longer acceptance
> period is specified in the contract to allow for inspection, testing
> and acceptance.

7\. [Payment Date and Interest Penalties]{.underline}

The payment date is considered to be the date on which a check for
payment is dated or the date of an electronic fund transfer (EFT)
payment. Interest penalties will be calculated from the day after the
payment due date through the payment date at the interest rate in effect
on the day after the payment is due. (The rate of interest penalty is
determined by the Department of Treasury, published every January and
July, and can be found at the following website:
"[**www.treas.gov/prompt/index.html**](http://www.treas.gov/prompt/index.html).)"

8\. [Contact Information]{.underline}

Further information may be obtained by contacting the Facilities
Contracts Branch on 301-504-1171.

/s/ Brenda A. Wood

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BRENDA A. WOOD

Chief

Facilities Contracts Branch