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    Are we required to for his leave or is it the responsibility of the contractor (his employer). I always thought it was the contractors responsibility. Thanks for your assistance. Benita


    Answer

    1. The FAR references quoted below in pertinent part are applicable to this response.

    FAR subpart 9.1 -- Responsible Prospective Contractors
    FAR 9.105-1(b)(2)(ii)
    … [T]he contracting officer shall obtain from the auditor any information required concerning prospective contractors' … adequacy of their accounting systems, and [its] suitability for use in administering the proposed type of contract.

    FAR 16.301-3 -- Limitations
    (a) A cost-reimbursement contract may be used only when --
      (3) The contractor’s accounting system is adequate for determining costs applicable to the contract or order

    FAR 31.202 -- Direct Costs
    (a) No final cost objective [i.e., an individual contract] shall have allocated to it as a direct cost any cost, if other costs incurred for the same purpose in like circumstances have been included in any indirect cost pool to be allocated to that or any other final cost objective.

    FAR 52.216-7 -- Allowable Cost and Payment
    (a) Invoicing.
      (1) The Government will make payments to the Contractor when requested as work progresses… in amounts determined to be allowable by the Contracting Officer in accordance with Federal Acquisition Regulation (FAR) Subpart 31.2 in effect on the date of this contract and the terms of this contract.

    FAR 52.232-25 -- Prompt Payment
    (a) Invoice payments --
      (3) Contractor’s invoice. The Contractor shall prepare and submit invoices to the designated billing office specified in the contract. A proper invoice must include the items listed in paragraphs (a)(3)(i) through (a)(3)(x) of this clause. If the invoice does not comply with these requirements, the designated billing office will return it within 7 days after receipt … with the reasons why it is not a proper invoice.
      (iv) Description, quantity, unit of measure, unit price, and extended price of supplies delivered or services performed.

    2. Clause FAR 52.222-41, Service Contract Labor Standards, only sets forth the minimum wages and fringe benefits that the contractor must pay its employees that are covered under the Service Contract Labor Standards statute (formerly known as the “Service Contract Act (SCA)) and does not address contract requirements for invoicing for the delivered services. Depending upon the contract type, either FAR 52.232-25 or FAR 52.216-7 specify the contract requirements pertaining to the proper invoicing for the delivered services.

    3. If this is a fixed-price services contract, then clause FAR 52.232-25 applies to payments under the contract. In accordance with FAR 52.232-25(a)(3)(iv), any invoice for deliverable services must match the “Description, quantity, unit of measure, and unit price” of such services described in the contract to be deemed a proper invoice. If there is no “Description, quantity, unit of measure, and unit price” specified in the contract for the separate payment of annual leave and sick leave reimbursement, then the invoice in question would not be a proper invoice and pursuant to FAR 52.232-25(a)(3) should be rejected and sent back to the contractor with an explanation of the reasons why it is not a proper invoice under the terms of the contract.

    4. If this is a cost-reimbursement services contract, then clause FAR 52.216-7 applies to payments of allowable costs under the contract. Pursuant to FAR 16.301-3(a)(3), a cost-reimbursement may not be awarded unless the contractor has an adequate accounting system for determining costs applicable to the contract. Therefore, we would presume that in accordance with FAR 9.105-1(b)(2)(ii), the contracting officer had obtained clearance from the cognizant Government auditor that the contractor’s accounting system was approved for use in administering cost-reimbursement type contracts.

    5. As stated in clause FAR 52.216-7(a)(1), payments are made to the contractor as work progresses in amounts determined to be allowable in accordance with FAR subpart 31.2. Pursuant to FAR 31.202(a), no contract may have allocated to it as a direct cost if other costs incurred for the same purpose in like circumstances have been included in any indirect cost pool to be allocated to that or any other contract. Therefore, if the contractor’s approved accounting system normally allocates annual leave and sick leave costs as an indirect expense that is spread across all contracts (normally the case), then charging these costs directly to an individual cost-reimbursement contract would not be allowable under FAR 52.216-7(a)(1). Consequently, such costs cannot be paid in this fashion, and the invoice must be rejected as a nonconformance with the contractor's approved accounting system.

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