Laurel:

I agree with everything that has been said. But I have a question for you: Have you asked the contractor for his/her explanation? The two of you might find that this problem is simply resolved if you talk it over instead of drawing battle lines.

By joel hoffman on Wednesday, January 12, 2000 - 10:50 pm:

I don't know if you have a liquidated damages clause or if you have a performance bond requirement for your task order.

Assuming that you do, you not only have the right, you have the responsibility to protect both the Government's and the Surety's rights in the event of a default by with holding retainage from a Contractor in danger of default. If the Contractor is beyond the required completion date (and not entitled to a time extension) you'd best strongly consider retainage from progress payment earnings, equivalent to the accrued liquidated damages - and take swift action to issue a show cause letter. You need to contact your legal counsel, ASAP. Retainage protects the Surety's interest in the event of default. There are several management actions you must take to properly terminate a Contractor in default - so as not to overpay. As the Surety will be left holding the bag, you have a legal duty to preserve funds from the contract balance to be made available to the Surety to pay any assessed L.D.'s and to complete outstanding task order work.

The premature pay estimate you refer to might be an attempt by the Contractor to get his funds before you or the Bonding Company can preserve them. Happy Sails! Joel

One other thought related to your payment and possible T for D concerns: In addition to Vern's advice on obtaining clarification of your payment responsibilities, I would add that it is imperative to do your homework before you withhold a dime from the contractor.

When you fail to pay the contractor for work performed (which is what a progress payment is), you are either a) breaching your contract, or b) asserting an affirmative claim against the contractor based on some theory of entitlement under your contract. If you are terminating for default, and you are concerned about recouping either liquidated damages (if any) or reprocurement costs, you need to quantify and forecast those damages/costs to make sure that the amount you withhold from the contractor is reasonable.

By joel hoffman on Saturday, January 8, 2000 - 04:26 pm:

Laurel,

What are you referring to by "30 days" vs "14 days"? That sounds like the Prompt Payment Clause requirement for payment due date after receipt of the invoice. The separate Payments Clause uses the term "monthly" (not a specific number of days like 30 or 14),unless the Contracting Officer agrees to more frequent progress payments.

Once a month is the norm for construction progress payments. Our Resident Engineers always establish a cut-off date and standard date for invoice submission with the Contractor during the post award (pre-construction) conference.

It is good practice to ask the Contractor to submit a draft invoice to review, markup and return in time for him to formally submit by the normal invoice date.
Happy Sails! Joel

By Vern Edwards on Saturday, January 8, 2000 - 02:02 pm:

Laurel:

I think that most people would side with you and interpret "monthly" to mean at intervals of 30 days, i.e., 30 days apart. But I suppose that one could argue that "monthly" means once within each month, so that an invoice could be submitted on December 21st and another on January 6th.

But remember that construction progress payments are made "as the work proceeds" and are based on the contracting officer's estimates of work accomplished, i.e., net percentage of work completed acceptably since the previous invoice period. What period of work does the Dec 21st invoice cover? The Jan 6th invoice? Did the contractor make progress during those periods? How much? Is the invoice consistent with the estimate of progress? Is the contractor entitled to a progress payment?

Is it possible that the Dec 21 invoice covers work done in November and the Jan 6 invoice covers work done in December? Perhaps the contractor was late submitting the invoice for November work, which would explain why the two invoices are so close together.

Finally, payment procedures are usually discussed during a preperformance conference, which should have been documented in the contract file. Was there a preperformance conference and is there any documentation of a discussion of payment procedures? What did the CO tell the contractor about invoicing?

Unless the contractor was late submitting its December invoice, which could explain why the Jan invoice followed the Dec invoice so closely, the fact that your contractor is invoicing in this way could indicate that it has cash flow problems. This is worrisome since you say that it is behind schedule and that you are contemplating T for D. Have you asked the contractor why it is invoicing again so soon?

Vern

Hello Vern,

Yes, this project is an individual task order. Each order is paid for separately by the office who has issued it, on a monthly basis. The only exception is when the duration of the contract is less than 30 days, the contractor receives one payment at the completion of the work.

FAR 52.232-5 is included in the basic contract, and all clauses in the basic contract apply to each order.

My question is, I just processed an invoice a couple days ago for this contractor on this task order, and yesterday received another invoice. It has only been about 2 weeks (15 days I think) since the receipt of the other invoice. Normally, a month elapses between invoices, but in this case it hasn't. The clause just basically states that payments will be made monthly, which I would take to mean, about 30 days apart. I hope this makes it clearer. Thanks!

By Vern Edwards on Friday, January 7, 2000 - 12:04 pm:

Laurel:

You say that you are having a problem with a "construction" contractor and that the contract is IDIQ, so I assume that you are issuing task orders for individual construction projects. Is that right?

If that's right, does the contract require that the contractor submit a single, consolidated monthly invoice for all work done under the contract, or does it allow the contractor to submit a separate monthly invoice for each task order?

What payment clause do you have in the contract? Is it FAR 52.232-5, Payments under Fixed-Price Construction Contracts, (MAY 1997)? If so, I think that it could be interpreted to apply to each individual task order. Does the contract contain a supplemental clause that requires the contractor to consolidate its task order invoices into one monthly submission?

I urge you obtain clarification about the proper interpretation of the contract. Failure to pay a contractor in accordance with the terms of the contract is a material breach and could have serious consequences for your agency.

By Laurel on Friday, January 7, 2000 - 09:56 am:

I am currently involved with a construction contractor who is driving me crazy. Here is my latest problem with him, concerning payments. The contract that I am referring to is one of a set of multiple-award, IDIQ Contracts. There is supplement to the payment provisions that these are 30 day payments rather than 14 day payments. I don't know why this is exactly, as I didn't write the master contract.

The payment clauses in the contract continuously refer to monthly invoices, monthly payment meetings, etc. etc. I recently processed a payment for this contractor that was received in this office on December 21. I received another invoice January 6 for payment. Its my opinion that the intent of these payment clauses is to pay a contractor only once in every 30 day (monthly period), however, I'm not sure about this as the clauses do not seem to get that specific. Technically, this is a new month, January, and the last payment was in December. But it has only been about two weeks since the contractor sent in his last invoice for payment. Does anyone have a spin on this, or even better, point me in the right direction where I can see something in the FAR that addresses this?
I do not want to process this payment right now. This contractor is way behind, should have been completed actually, and with a T for D possibly looming, I don't want to pay any more than I have to.