This response is based on the information provided.  We suggest you discuss with your contracting team, program manager and/or legal department as appropriate. 

We cannot control what DFAS does, but we can give guidance (using Section G) as to how we want the contract paid out.  We suggest direct contact with DFAS.

We are not clear as to why the government will not accept work the contractor has completed.  The fact the government is not ready to use what the contractor is ready to deliver is not a reason not to pay the contractor, assuming other provisions of the contract, such as delivery schedule, do not come into play.

If we are not accepting items because the contractor has not met all requirements of the contract, then we do not owe it early payment.  If the contractor has met all requirements, we should pay the contractor even if we then require it to keep the items until the government is ready to use them.