Understanding that there are funding restrictions under a UCA, is there a regulation that allows the USG to withhold payments on invoices submitted under a UCA?
The UCA should contain the clause 52.216-26 (“Payments of Allowable Costs Before Definitization”) that would direct that you would not be receiving payment for 100% of the costs incurred while awaiting definitization. Generally speaking, you will be reimbursed for no more than 85% of your allowable costs, without any profit or fee, during the time between commencement of performance and final contract definitization.
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Further, the requirement that only allowable costs be invoiced means that the UCA needs to be treated as a cost-type contract, even if the final definitized contract action will be firm, fixed-price. While you are receiving—a FFP contract award, the receipt of a cost-type UCA comes with audit rights. As such, the award of the undefinitized purchase order is a cost-type contract requiring a finding that the contractor has an adequate accounting system however, award of an FFP contract does not have that same requirement.
For further guidance, you should contact your corporate contracting and legal personnel.