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  • Question

    How much time should we give the contractor to sign the bilateral deobligation modification under $3,000 before we can issue unilaterally (if he never signs and get back to us in that timeframe)? Why can't we send it out unilaterally if the services have been received and he has already invoiced, but he invoiced for lesser amount. What is the time limitation for a contractor to complete all his invoices especially if he's already invoiced for past services/supplies that have been received by our customers?


    Answer

    It is important for the PCO or ACO to issue a deobligation modification to remove excess funds as early as possible, but also important to avoid deobligating funds that may be required for final payment. Two weeks isn't that long of a time period to wait for signed deobligation modifications to be signed and returned. Some offices routinely wait a month or more before sending out written reminders. I'm unaware of any regulatory time limit. There was a FAR case back in 2007 that addressed this issue:

    Comment: Recommendations were made to require submittal of a final invoice within 60 days of Government acceptance, or to establish a one-year time limit for contractors to submit the final invoice, after which time the contracting officer can unilaterally close the contract without further payment to the contractor.
    DPAP Response: DPAP believes that this issue is adequately addressed in FAR 4.804-1, which authorizes the contracting officer to close out fixed-price contracts within six months after the date on which the contracting officer receives evidence of physical completion. No evidence has been presented that indicates the six-month period is
    causing a significant delay in closing out contracts.

    The Audit paragraph of the Payments under Time-and-Materials and Labor-Hour Contracts clause gives the contractor one year to submit a final voucher, and I have also seen mention of offices giving contractors a "one year" time limit on firm-fixed-price contracts. If an invoice is not submitted within the one year limit, the contracting officer may unilaterally deobligate any unliquidated balances remaining on the contract. Unfortunately I cannot point you to more specific guidance for your situation, but the contracting officer should consider the information above when deciding how to proceed.

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