Chapter 10
Documentation
The Prompt Payment Final Rule specifies the minimum documentation required to support the payment of invoices and interest penalties. The three broad categories of documentation are contracts, invoices, and receiving reports.
133. What information from a contract is required as documentation to support an invoice or interest payment?
The Final Rule lists nine specific required pieces of information.1
The payment due date, which will be one of the following:
A specific stated payment date
In accordance with discount terms when discounts are offered and taken
In accordance with accelerated payment methods
Thirty days after the start of the payment period (as defined in the Final Rule), if not otherwise specified in the contract, if discounts are not taken, and if accelerated payment methods are not used.
A notation in the contract that partial payments are prohibited, if applicable.
For construction contracts, specific payment due dates for approved progress payments or milestone payments for completed phases, increments, or segments of the project.
If applicable, a statement that the special payment provisions of the Packers and Stockyards Act of 1921 (7 U.S.C. 182(3)), the Perishable Agricultural Commodities Act of 1930 (7 U.S.C. 499a(4)), or the Fish and Seafood Promotion Act of 1986 (16 U.S.C. 4003(3)) shall apply.
Where considered appropriate by the agency head, the specified acceptance period following delivery to inspect and test goods furnished or to evaluate services performed.
Name (where practicable), title, telephone number, and complete mailing address of officials of the government’s designated agency office and of the vendor receiving the payments.
Reference to requirements under the Prompt Payment Act, including the payment of interest penalties on late invoice payments (including progress payments under construction contracts).
Reference to requirements under the Debt Collection Improvement Act (Public Law 104-134, 110 Stat. 1321), including the requirement that payments must be made electronically except in situations in which the EFT requirement is waived under 31 CFR 208.4. When electronic payment is required, the contract will stipulate that banking information must be submitted no later than the first request for payment.
If using Fast Payment, the proper FAR clause stipulating Fast Payment.
134. I work in a paying office, and I often receive contracts that are incomplete. What should I do?
You should identify all deficiencies in the contract that will delay or prohibit payment and notify the contracting office of the need for a contract modification. If you receive invoices your office may not be able to pay in time, tell the contracting office that discounts will be lost or interest will accrue unless it issues the contract modification by a date that you specify.
135. If the contracting office has promised me a modification so that I can make payment, but I haven’t received it yet, can I go ahead and make payment prior to its receipt?
Making payment without having the proper documentation on hand would violate the Prompt Payment rules. This could subject your office to an auditor’s finding or, even worse, possibly result in an erroneous payment carrying pecuniary liability. You should hold up payment until the proper documentation is received.
136. What constitutes a proper invoice?
The following information constitutes a proper invoice and is required as documentation for payment.2
Name of vendor
Invoice date
Government contract number or other authorization for delivery of goods or services
Vendor invoice number, account number, or any other identifying number agreed to by contract
Description (including, for example, contract line/sub-line number), price, and quantity of goods and services rendered
Shipping and payment terms (unless it has been mutually agreed that this information is only required in the contract)
Taxpayer Identification Number (TIN), unless agency procedures provide otherwise
Banking information, unless agency procedures provide otherwise, or except in situations where the EFT requirement is waived under 31 CFR 208.4
Contact name (where practicable), title, and telephone number
Other substantiating documentation or information required by the contract.
When a delivery ticket is used as an invoice (this must be stipulated in the contract before it can be done), agency procedures will specify what information is required on the delivery ticket, so the ten items above do not apply.
137. When I receive an invoice, what are my responsibilities in terms of ensuring proper documentation?
The designated agency office, the office stipulated in the contract as the government office to which the vendor submits the invoice, must review each invoice as soon as practicable after receipt to determine whether the invoice is a proper invoice. If the invoice is received by mail, it must also be date-stamped or otherwise annotated on the date of receipt with the date of receipt.3
If an invoice is determined to be improper, the agency must return the invoice to the vendor as soon as practicable after receipt, but no later than seven days after receipt. All defects in the invoice must be identified and the vendor informed why the invoice is being returned. The notification to the vendor must request a corrected invoice, which should be clearly marked as such.4
Failure to return a defective invoice within seven days will reduce the time available to pay the corrected invoice by the amount of time in excess of seven days.5
138. How strict should an agency be in identifying defects? For example, we received an invoice dated February 30. There is no February 30, and it was clear from the invoice that this was a typographical error and should have read February 20. Should we have sent it back?
The Prompt Payment Act and the Final Rule are designed to stream line proper payments, not throw up roadblocks to payment. The GAO Principles of Federal Appropriations Law references a 1991 decision in which the deferral of interest accrual pending invoice correction does not contemplate frivolous rejections. An agency had rejected an invoice because of essentially harmless typographical errors. In that decision, interest was found to be payable from the date of initial receipt.6 So long as the nature of an invoice error does not create the possibility of an erroneous payment, such minor errors should be overlooked. Agencies have considerable discretion in such matters.
139. What are the documentation requirements for receiving and acceptance reports?
There are three kinds of documents that fit this category, and all require the same information as payment documentation. The three documents are:7
Receiving reports, which are the written or electronic evidence of receipt of goods or services by a government official.
Delivery tickets, which are vendor documents supplied at the time of delivery that indicate the items delivered. A delivery ticket may also serve as a proper invoice if made part of the contractual agreement.
Evaluated receipts, in which the acceptance document is contractually designated as the invoice.
These documents simply indicate receipt and acceptance by the government. They must include the following information:
Name of vendor
Contract or other authorization number
Description of goods or services
Quantities received, if applicable
Date(s) goods were delivered or services were provided
Date(s) goods or services were accepted
Signature (or electronic alternative when supported by appropriate internal controls), printed name, telephone number, and mailing address of the receiving official, and any additional information required by the agency.
140. Is a receiving report different from an acceptance report?
“Receiving report” is the generic term for the documentation needed to support a payment. The receiving report indicates the date of acceptance of the goods or services. The necessary documentation can be presented in a few different ways:
The receiving report might indicate that acceptance has taken place and list the date of acceptance.
Sometimes, one organization receives the items and another accepts the items. You might then receive a report showing receipt and a separate report showing acceptance.
Some organizations use a form for the receiving report that has two signature blocks: one for receipt and a separate one for acceptance.
These methods are all acceptable. The essential point is that the documentation sent to the paying office must include the seven types of information listed above—including the date of acceptance.
141. We often have trouble getting timely receiving reports from field offices. To avoid paying an invoice late, can we make payment without proof of receipt and acceptance?
Except in the case of Fast Payment contracts, the answer is no. Payments should not be made without proof of acceptance. When paying offices do not receive timely receiving reports, they must remind the field office that they need the receiving report and that interest penalties may accrue if quick action is not taken.
142. Does constructive acceptance, rather than actual acceptance, allow for payment?
No. Constructive acceptance, for most commodities, occurs seven days after receipt of the goods or completion of the services rendered. On that date, the goods or services are deemed to have been accepted. But keep in mind that constructive acceptance is merely a device to set the Prompt Payment clock in motion. Its purpose is to determine due dates and the accrual of interest penalties. Actual acceptance is required before payment is made, even if that means paying late and incurring interest penalties.
NOTES
1. Office of Management and Budget, § 1315.9(a).
2. Ibid., § 1315.9(b).
3. Ibid., § 1315.4(c)(2).
4. Ibid.
5. Ibid., § 1315.4(g)(4).
6. Government Accountability Office, Chapter 12, 12-231.
7. Office of Management and Budget, § 1315.9(c).