DoD 7000.14-R Financial Management Regulation Volume 10, Chapter 2 PDF

DoD 7000.14-R 2B Financial Management Regulation Volume 10, Chapter 2 * February 2023 VOLUME 10, CHAPTER 2: “DISCOUNT OFFERS AND REBATES/REFUNDS”...

DoD 7000.14-R 2B Financial Management Regulation Volume 10, Chapter 2 * February 2023 VOLUME 10, CHAPTER 2: “DISCOUNT OFFERS AND REBATES/REFUNDS” SUMMARY OF MAJOR CHANGES Changes are identified in this table and also denoted by blue font. Substantive revisions are denoted by an asterisk (*) symbol preceding the section, paragraph, table, or figure that includes the revision. Unless otherwise noted, chapters referenced are contained in this volume. Hyperlinks are denoted by bold, italic, blue, and underlined font. The previous version dated February 2021 is archived. PARAGRAPH EXPLANATION OF CHANGE/REVISION PURPOSE Updated hyperlinks and formatting to comply with current All Revision administrative instructions. 2-1 DoD 7000.14-R 2B Financial Management Regulation Volume 10, Chapter 2 * February 2023 Table of Contents VOLUME 10, CHAPTER 2: “DISCOUNT OFFERS AND REBATES/REFUNDS”................ 1 1.0 GENERAL......................................................................................................................... 3 1.1 Purpose........................................................................................................................... 3 1.2 Authoritative Guidance.................................................................................................. 3 2.0 DEFINITIONS.................................................................................................................. 3 2.1 Discount Date................................................................................................................. 3 2.2 Discount Period.............................................................................................................. 3 2.3 Effective Annual Discount Rate..................................................................................... 3 2.4 Entitlement Office.......................................................................................................... 4 2.5 Liquidated Damages....................................................................................................... 4 2.6 Rebate/Refund................................................................................................................ 4 2.7 Trade-in.......................................................................................................................... 5 2.8 Treasury Current Value of Funds Rate (CVFR)............................................................ 5 3.0 POLICY............................................................................................................................. 5 3.1 Discounts........................................................................................................................ 5 3.2 Rebates/Refunds............................................................................................................. 7 2-2 DoD 7000.14-R 2B Financial Management Regulation Volume 10, Chapter 2 * February 2023 CHAPTER 2 DISCOUNT OFFERS AND REBATES/REFUNDS 1.0 GENERAL 1.1 Purpose This chapter prescribes the policy for payment discounts and government purchase card (GPC) rebates. This chapter also provides information on determining if discounts should be taken and provides information on rebates offered by the GPC issuer to encourage early payment. 1.2 Authoritative Guidance The DoD will follow the supporting guidelines for taking discounts and rebates found in Title 5, Code of Federal Regulations (CFR), part 1315; Federal Acquisition Regulation, (FAR) 32.906(e); and Office of Management and Budget , (OMB) Circular A 123, Appendix B, Chapter 7. Travel card rebates are addressed in DoD Government Travel Card Regulations, promulgated under the authority of DoD Instruction 5154.31, Volume 4 - Commercial Travel Management, “DoD Government Travel Charge Card Program.” The OMB Circular A-130, Appendix II prescribes the use of electronic processes and digital signatures whenever it is possible and in the best interest of the Government. 2.0 DEFINITIONS 2.1 Discount Date As prescribed by 5 CFR 1315.2(o), the discount date is the date by which a specified payment reduction, or discount, may be taken in accordance with the discount terms. 2.2 Discount Period The discount period is the period during which a discount may be taken. The discount period begins from the invoice date placed on a proper invoice by the vendor. If the vendor did not include the invoice date on the invoice, the discount period would begin on the date a proper invoice is actually received and date stamped or otherwise annotated by the designated agency office in accordance with 5 CFR 1315.7(d) and 5 CFR 1315.9(b). See Chapter 7, paragraph 2.4 for guidance on determining the invoice receipt date. The discount period ends on the discount date. When the discount date falls on a weekend or legal holiday, the discount may be taken if payment is made on the next business day as prescribed in FAR 32.906(e). 2.3 Effective Annual Discount Rate The effective annual discount rate is the annualized value of the discount offered during the discount period. The DoD will take the discount when this rate equals or exceeds the U. S. 2-3 DoD 7000.14-R 2B Financial Management Regulation Volume 10, Chapter 2 * February 2023 Department of Treasury (Treasury) Current Value of Funds Rate (CVFR). Use the Bureau of the Fiscal Service (Fiscal Service) Discount Calculator to determine if it is economically justified to accept a discount offered by a vendor. 2.4 Entitlement Office The entitlement office is the designated activity to authorize the release of funds or other benefits to those with legally established rights granted by law or by agreement through contract. The entitlement office may also be referred to as the payment office. 2.5 Liquidated Damages As provided for in FAR 11.5, an agency may establish in a contract a predetermined rate of liquidated damages to be paid in the event of an unexcused delay in performance or delivery, or a breach of contract. Liquidated damages are paid by the contractor and are used to compensate the agency for probable damages associated with the unexcused delay or breach. Liquidated damages are not punitive or negative performance incentives. 2.6 Rebate/Refund 2.6.1. As defined by 5 CFR 1315.2(aa), a rebate is a monetary incentive offered to the DoD by GPC issuers to pay monthly GPC billing statements early. A corrective rebate is done to correct improper or erroneous payments or for an invoice adjustment. The terms “rebate” and “refund” are used interchangeably throughout the CFR, OMB guidance, and existing legislation. 2.6.2. The current General Services Administration (GSA) contract offers productivity refunds based on timeliness and/or frequency of payments and sales refunds based on the dollar volume during a specified period. As stated in OMB Circular A-123, Appendix B, Chapter 7, a refund is a monetary payment provided by a charge card issuer to the agency/organization as stated in the contract. The three types of refunds are: 2.6.2.1. Sales refunds, which represent payments from the charge card issuer to the agency/organization based on the dollar or “spend” volume during a specified time period; 2.6.2.2. Productivity refunds, which represent payments from the charge card issuer to the agency/organization based on the timeliness and/or frequency of payments made to the contractor; and 2.6.2.3. Corrective refunds, which are payments from the charge card issuer to the agency/organization to correct improper or erroneous payments or an invoice adjustment. 2.6.3. For the GSA SmartPay 3 Program, a composite refund approach is used, which combines sales and productivity refunds together. As a result, there are generally no separate sales or productivity refunds. For simplicity, the refunds under GSA SmartPay 3 are referred to as "sales" refunds. See OMB Circular A-123, Appendix B, Chapter 7.1 (note). 2-4 DoD 7000.14-R 2B Financial Management Regulation Volume 10, Chapter 2 * February 2023 2.7 Trade-in Merchandise accepted as partial payment for a new purchase is referred to as trade-in property. 2.8 Treasury Current Value of Funds Rate The CVFR is used to assess interest charges for outstanding debts owed the government, to evaluate the cost-effectiveness of a cash discount or sales/productivity refund, and to determine when agencies should pay purchase card invoices when a rebate is offered by the card issuer. Use the Fiscal Service CVFR to view current and historical CVFRs. 3.0 POLICY 3.1 Discounts 3.1.1. As prescribed by 5 CFR 1315.7(a), if a DoD Component is offered a discount by a vendor, whether stipulated in the contract or offered against an invoice, a DoD Component must take the discount if economically justified, but only after acceptance of the goods or services has occurred. FAR 32.111(b) requires FAR 52.232-8, “Discounts for Prompt Payment,” be included in all fixed-price supply and service contracts. The contractor may extend the discount period or increase the discount percentage beyond a previous offer. The offer may be in writing, or it may be oral for specific invoices. If the offer is oral, then the entitlement office must attach a conversation record to the invoice with the name and position of the person offering the discount, the discount terms, the person’s telephone number, and the date of the offer. The entitlement office has the option of requiring written confirmation of the verbal offer. 3.1.2. Entitlement offices must schedule discounted payments as close to, but not later than, the last day of the discount period. Payment is considered to be made on the date printed on the check, or on the electronic funds transfer settlement date, per 5 CFR 1315.4(h). If the payment office cannot apply the discount, payments must be made in accordance with the payment due date guidelines prescribed in 5 CFR 1315.4(g). 3.1.3. A discount is advantageous to the DoD when the discount terms yield an effective annual discount rate that equals or exceeds the CVFR, calculated using the Fiscal Service Discount Calculator cited in paragraph 2.3. DoD Component payment systems must incorporate processes that take advantage of cash discounts as a matter of routine, which eliminates any need for special handling. Such discounts must be taken when the discount terms applied in the conversion formula result in an effective annual discount rate equal to or greater than the CVFR. 3.1.4. Discounts must not be taken when the payment is made after the discount date. As prescribed by 5 CFR 1315.7(b), when an agency takes a discount after the discount date, interest must be paid on the amount of the discount taken. Interest will be calculated for the period beginning the day after the specified discount date through the payment date of the discount erroneously taken, as prescribed in 5 CFR 1315.10(a)(6). 2-5 DoD 7000.14-R 2B Financial Management Regulation Volume 10, Chapter 2 * February 2023 3.1.5. When the discount terms in the contract and the invoice differ, DoD Components must take the most cost effective discount. 3.1.6. Compute discounts on the approved gross amount of the invoice, except as follows. 3.1.6.1. Deduct taxes or freight charges that are separately listed. 3.1.6.2. Deduct taxes that are not proper charges under international or status of forces agreements. 3.1.6.3. Compute the discount on the actual cash balance due when there is a trade- in. 3.1.6.4. When the entitlement system has the capability to trace and pay individual line items on an invoice, the invoice may be split into multiple payments. Each line item must meet the receipt and acceptance requirements to take advantage of the discount offered against the invoice. 3.1.6.5. Contract or purchase order modifications may change or add discount terms. Take the discount on any subsequent payment that is made by the new or revised discount date when new or revised discount terms apply. 3.1.7. Discounts may be taken on amounts legally withheld and later released if related amounts were paid in accordance with the discount terms. The discount period for the released payment will begin when the entitlement office receives notification of the release. 3.1.8. The following requirements are used when liquidated damages apply and a contract for supplies, services, research and development, or construction includes FAR 52.211-11, FAR 52.211-12 or Defense Federal Acquisition Regulation Supplement 252.217-7009. 3.1.8.1. When liquidated damages apply, and the contract or invoice contains an offer of a discount for early payment, compute the discount on the gross contract price without regard to the amount of liquidated damages. 3.1.8.2. When liquidated damages apply to a price that is modified, and the contract contains an offer of a discount for early payment, compute the discount based on the modified price without regard to the liquidated damages. 3.1.9. After a progress payment has been made, the government is entitled to a discount on any part of delivery payments applied in liquidation of progress payments. 3.1.9.1. When the discount terms have been met, take the discount against the gross amount of the invoice. If the discount date is not met, only take the discount against the amount of the liquidation. The discount still applies to the liquidation portion of the payment even in instances in which the discount period has expired on the balance due on the partial delivery. 2-6 DoD 7000.14-R 2B Financial Management Regulation Volume 10, Chapter 2 * February 2023 3.1.9.2. If the contractor has had the use of these progress payments, the payment office is entitled to take a prompt payment discount on them at the time they are recouped. 3.1.9.3. If the discount is offered for the first time on an invoice and the contract does not have a discount clause, then do not take the discount on the progress payment liquidation portion of the invoice. 3.1.10. In rare instances, the contractor may offer a voluntary discount after a contract is completed, including final payment. These discounts are distinguished from early payment and volume discounts in that voluntary discounts are discretionary with the contractor and do not reduce the amount obligated against the paying appropriation. Do not treat discounts received after contract completion as rebates. Such discounts must be deposited in the Miscellaneous Receipts Account of the Treasury. 3.1.11. When contracts have Free On Board Origin terms, payments made prior to the delivery of supplies to the carrier or delivery to the destination are entitled to the discount offered on the contract. 3.1.12. Components need to be cognizant of the amount of discounts lost, or not taken, as part of their overall payment operations. Tracking discounts lost can provide additional insight into the efficiency and effectiveness of payment operations, and identify opportunities to take advantage of limited budgetary resources by increasing the amount of discounts received. Entitlement or disbursement system capabilities must be in place to identify and periodically report discounts lost to management for assessment and appropriate corrective actions. 3.1.13. Components must ensure that documentation supporting the discount transactions is retained in accordance with Volume 1, Chapter 9 and is readily available to support audit efforts. The documentation must be of sufficient quality to allow an independent third party, such as an outside auditor, to understand and verify the basis of the entitlement and the determination of a discount. 3.2 Rebates/Refunds 3.2.1. Components must have internal controls and procedures in place to allow them to maximize the sales/productivity refunds, and to identify and collect the corrective rebates. Components must ensure that documentation supporting the rebate/refund transactions is retained in accordance with Volume 1, Chapter 9 and is readily available to support audit efforts. The documentation must be of sufficient quality to allow an independent third party, such as an outside auditor, to understand and verify the basis of the rebates/refunds. 3.2.2. GPC billing statements must be paid as soon as administratively possible when the rebate offered is greater than the cost of funds as defined in 5 CFR 1315.8. The Defense Finance and Accounting Service must determine and make available, as needed, GPC payment data that compares the Current Value of Funds to the rebate discount points, for the payment cycle day. This data must be used to assist Components and the payment office in performing a cost and benefit analysis as part of their consideration of the cost of early payment. This cost is the interest 2-7 DoD 7000.14-R 2B Financial Management Regulation Volume 10, Chapter 2 * February 2023 amount the DoD will earn at the CVFR for each day the payment is not made. Specifically, a comparison will be made between the basis points offered by the card issuer and the corresponding basis points of the Treasury’s CVFR. DoD Components must forward their approved GPC billing statements to the payment office to allow sufficient time to process the payment, receive a rebate for early payment, and avoid interest penalties per 5 CFR 1315.8. 3.2.3. DoD Components may use the Fiscal Service Rebate Spreadsheet, which automatically calculates the net savings to the government and whether the DoD Component must pay earlier than the normal contractual payment terms. The only variables required for input to this spreadsheet are the CVFR, the maximum discount rate (that is, the rate from which basis points offered by the card issuer are derived), and the amount of money owed. If the DoD Component elects not to use the spreadsheet, a manual computation can be performed as described in 5 CFR 1315.17. 3.2.4. The charge card issuer is required to calculate the rebate and return that amount to the DoD customer designated in the contract. DoD Component entities subject to the receipt and use of the rebates/refunds must employ the necessary internal controls and procedures to ensure that rebates are received when due as per the terms of their GPC contract, and that the rebates received from the charge card issuer are calculated properly. 3.2.5. Pursuant to Title 10, United States Code, section 4754, DoD rebates attributable to the use of the GPC may be credited to operation and maintenance, and/or research, development, test, and evaluation accounts which are current when the rebates are received. For example, if a rebate is received in the new fiscal year against a bill that was paid in September of the previous fiscal year, the rebate may be credited to the operation and maintenance and/or research, development, test, and evaluation account(s) current after October 1 of the new fiscal year. This includes the operational portion of a nonappropriated or working capital fund account. 2-8 DoD 7000.14-R 2B Financial Management Regulation Volume 10, Chapter 7 * November 2022 VOLUME 10, CHAPTER 7: “PROMPT PAYMENT ACT” SUMMARY OF MAJOR CHANGES Changes are identified in this table and also denoted by blue font. Substantive revisions are denoted by an asterisk (*) symbol preceding the section, paragraph, table, or figure that includes the revision. Unless otherwise noted, chapters referenced are contained in this volume. Hyperlinks are denoted by bold, italic, blue, and underlined font. The previous version dated May 2021 is archived. PARAGRAPH EXPLANATION OF CHANGE/REVISION PURPOSE All Updated hyperlinks and formatting to comply with current Revision administrative instructions. 2.6.4 Clarified policy regarding accelerated payment dates as a Revision result of a revision to Title 10, United States Code, section 3801, based on Section 814 of the Fiscal Year 22 National Defense Authorization Act. 7-1 DoD 7000.14-R 2B Financial Management Regulation Volume 10, Chapter 7 * November 2022 Table of Contents VOLUME 10, CHAPTER 7: “PROMPT PAYMENT ACT”....................................................... 1 1.0 GENERAL......................................................................................................................... 3 1.1 Purpose................................................................................................................. 3 1.2 Authoritative Guidance........................................................................................ 3 2.0 PROMPT PAYMENT ACT POLICY.............................................................................. 3 2.1 Application........................................................................................................... 3 2.2 Exemptions.......................................................................................................... 4 2.3 Required Documentation Type, Function, and Purpose...................................... 4 2.4 Determining the Invoice Receipt Date................................................................. 8 2.5 Determining the Payment Due Date.................................................................... 8 2.6 Timely Payment................................................................................................... 9 2.7 Discounts............................................................................................................ 10 2.8 Interest Penalties................................................................................................ 10 2.9 Interest Payment Funding.................................................................................. 12 7-2 DoD 7000.14-R 2B Financial Management Regulation Volume 10, Chapter 7 * November 2022 CHAPTER 7 PROMPT PAYMENT ACT 1.0 GENERAL 1.1 Purpose This chapter prescribes the financial management policy for payments to vendors and contractors and primarily focuses on timely payment, determination of appropriate due dates, penalty for late payment, required documentation, receipt dates, acceptance dates, and payment discounts. Paragraph 2.2 lists exemptions to this policy. 1.2 Authoritative Guidance The policies prescribed throughout this chapter pertaining to prompt payment are based primarily upon the Prompt Payment Act (PPA), Title 31, United States Code (U.S.C.), Chapter 39, as implemented under Title 5, Code of Federal Regulations (CFR), part 1315. Acquisition policy implementing the PPA provisions at 5 CFR 1315 is in the Federal Acquisition Regulation (FAR) 32.9, and the Defense Federal Acquisition Regulation Supplement (DFARS) 232.9. The Office of Management and Budget (OMB) Circular A-130, Appendix II, prescribes the use of electronic processes and digital signatures whenever it is possible and in the best interest of the Government. Policies pertaining to timely payment have been revised by the National Defense Authorization Act (NDAA) Fiscal Year (FY) 2022 Section 814 and (NDAA) Fiscal Year (FY) 2021 Section 815, as presented in subparagraphs 2.6.3 and 2.6.4. 2.0 PROMPT PAYMENT ACT POLICY 2.1 Application The payment terms ordinarily imposed by contract, or the PPA and its implementing regulations, may be replaced by the payment terms imposed by another governmental authority. For the purposes of this chapter, days refer to calendar days unless stated differently. The PPA applies to the following, unless these payments meet one of the exemptions in paragraph 2.2: 2.1.1. Procurement Contracts. All payments for contracts for the procurement of goods or services; 2.1.2. Vendor Payments. All vendor payments and payments to persons, organizations, or business concerns engaged in a profession, trade, or business and any not-for-profit entity operating as a vendor; and 2.1.3. Utility Payments. All utility payments, including payments for telephone service, are subject to the PPA. Where state, local, or foreign authorities impose generally applicable late 7-3 DoD 7000.14-R 2B Financial Management Regulation Volume 10, Chapter 7 * November 2022 payment rates for utility payments, those rates must take precedence, and thus, PPA interest rates will not apply. 2.2 Exemptions 2.2.1. In accordance with 5 CFR 1315.1(a)(1)(ii) and 5 CFR 1315.1(b)(1), the following payments are exempt from the PPA: 2.2.1.1. Payments directed by military authority exercised in the field in time of war or in occupied territory as stated in 5 U.S.C. § 551(1)(G); and 2.2.1.2. Contract financing payments, as defined in 5 CFR 1315.2(h). 2.2.2. In accordance with 5 CFR 1315.1(b)(2), the following payments are exempt from the PPA: 2.2.2.1. Payments related to declared states of emergency directing any federal agency to utilize its resources in support of federal, state, and local disaster assistance efforts, as defined in the Robert T. Stafford Disaster Relief and Emergency Assistance Act; 2.2.2.2. Payments related to the release, or threatened release, of hazardous substances, as defined in 42 U.S.C. § 9601; and 2.2.2.3. Certain payments related to military contingency operations, as defined in 10 U.S.C. § 101(a)(13). 2.2.3. DFARS 232.901 defines conditions where emergencies or contingency operations affecting normal business processes will dictate a determination to exempt payments from FAR 32.9 requirements. This determination, and all subsequent determinations, will be clarified by the specific clause in the individual contract. Chapter 8 contains additional policy on certifying payments made in support of emergencies and contingency operations, a matrix tool to assist certifying officials in identifying the critical data elements, and the documentation necessary for proper certification. 2.3 Required Documentation Type, Function, and Purpose Before making an invoice and/or interest payment, and in support of future financial audits, DoD Components must ensure that appropriate payment documentation is established and matched. This documentation includes the contract, receipt/acceptance report, and a proper invoice, unless not required by the contract. Subparagraphs 2.3.1 and 2.3.2 identify unique circumstances when an invoice and/or receipt/acceptance report may not be required. Acquisition policy in DFARS 232.70 prescribes DoD policies and procedures for submitting and processing payment requests and receiving reports in electronic form. It also specifies exceptions and prescribes Wide Area Workflow as the accepted electronic form for submission of payment requests and receiving reports. It further permits the use of TRICARE Encounter Data System as the electronic format for receiving reports for rendered health care services. Ensure payment 7-4 DoD 7000.14-R 2B Financial Management Regulation Volume 10, Chapter 7 * November 2022 documentation is retained in accordance with Volume 1, Chapter 9 and is readily available to support future audit efforts. Original payment documentation, and associated supporting documentation, must also be retained in accordance with Chapter 8, paragraph 4.1. 2.3.1. Contract. The contract is an enforceable agreement between the agency and the contractor or vendor that provides the necessary information to support payment of invoices and interest penalties. Contracts must contain the data elements required under 5 CFR 1315.9(a) as part of the payment documentation. If errors exist in a contractual document that affect payment processing, the entitlement office must notify the contracting office to request corrective action. The payment office must not change contract terms. Contract terms may only be changed through a formal modification to the contract. 2.3.2. Proper Invoice. DoD payments must be based on the receipt of a proper invoice, unless an invoice is not required by the contract (e.g., monthly rental payments), and satisfactory contract performance. FAR 32.905(b) provides details on the information required for a proper invoice. As stated in FAR 32.905.b.2, an interim payment request under a cost-reimbursement contract for services constitutes a proper invoice if it includes all of the information required by the contract. Note that payment requests under cost-reimbursement service contracts are deemed proper when they conform to the contract. The office designated by the purchase order, agreement, or contract first to receive and review invoices, hereafter referred to as the designated activity, must immediately annotate the receipt date and review invoices within 7 days after receipt. If an invoice is improper, then the designated activity must return the invoice to the vendor/contractor. 2.3.2.1. Notice of an Improper Invoice. When the designated activity returns an invoice as improper, they must provide details on why the invoice is being returned and why it is improper. The designated activity’s request to the vendor/contractor for a corrected invoice must be clearly marked as such. Notification must be within 7 days of receipt of the invoice (5 days for perishable agricultural commodities, dairy products, edible fats or oils, and food products prepared from edible fats and oils; and 3 days for meat, meat food, fish, and seafood products). If a DoD Component fails to provide notification of an improper invoice within the prescribed timeframes, the computation of the payment due date will be affected, in that the number of days allowed for payment of the corrected proper invoice will be reduced by the number of days delayed beyond the allowable invoice return notification requirement. For example, a typical invoice payable in 30 days is returned as improper on the 11th day after receipt, minus 7 days allowed, equaling a 4- day delay and reducing the payment due date of the corrected/resubmitted invoice by 4 days. As a result of the 4-day delay, the corrected invoice is now payable in 26 days upon receipt before interest begins to accrue. In accordance with FAR 32.906(b)(4), if a designated activity erroneously rejects a proper invoice, then the original invoice receipt date will be used to compute the payment due date and any interest penalties due. 2.3.2.2. Delivery Ticket as an Invoice. A delivery ticket may be used as an invoice when allowed by the contract. When used as an invoice, the delivery ticket must contain the information required by FAR 32.905(b) unless otherwise stipulated in the contract. 7-5 DoD 7000.14-R 2B Financial Management Regulation Volume 10, Chapter 7 * November 2022 2.3.3. Receipt and Acceptance Report 2.3.3.1. A receiving report performs two functions. It provides evidence of the date goods are received, and it provides evidence of the date goods or services are accepted. Receiving reports are written or electronic evidence of the receipt of goods or services by a government official. Receiving reports must minimally contain the information stated in FAR 32.905(c) unless otherwise stipulated in the contract. 2.3.3.2. Receipt of goods does not ordinarily provide a basis for payment. Payment must be based upon acceptance of the goods or services as authenticated by the signature of the government official. Acceptance must occur as a condition of payment except in the following instances. 2.3.3.2.1. Interim Payments on Cost-Reimbursement Contracts for Services as Stated in FAR 32.905(c). Contract terms for interim payments may still require receipt and acceptance documentation, or stipulate other related requirements be met before a request for payment for services can be certified and disbursed. 2.3.3.2.2. Contracts Incorporating the “Fast Payment Procedure” clause at FAR 52.213-1. For contracts with this clause, payment offices may use the contractor’s submission of an invoice as certification of the delivery of supplies and as the basis for authorizing payment. Payment of these invoices must be made within 15 days after the receipt of the invoice. Component policies and controls must be in place to follow up after payment to ensure receipt of acceptance documentation for the payment and contract files. The acquisition requirements and rules governing the fast payment procedure are found in FAR 13.4 and DFARS 213.4. Refer to section 7.0 of Chapter 10 for additional fast payment procedure financial management policy. 2.3.3.3. The agency receiving official must forward the receiving report, or other government documentation, to the designated payment office by the 5th working day after government acceptance or approval, unless other arrangements have been made. 2.3.3.4. Government acceptance is commonly deemed to occur constructively on the 7th day after the contractor delivers supplies or performs services in accordance with the terms and conditions of the contract, unless there is a disagreement over quantity, quality, or contractor compliance with a contractual requirement. A longer acceptance period can be specified in the contract, in which case the date of the actual acceptance or the date on which such acceptance period ends will substitute for the commonly applied 7th day after the delivery date (refer to DFARS 232.904). The date on which the designated acceptance period ends is referred to as the constructive acceptance date. Constructive acceptance is used to calculate PPA interest and applies to both destination acceptance and source acceptance contract terms. Regardless, government proof of acceptance must be forwarded to the designated payment office. 2.3.3.4.1. If actual acceptance occurs within the constructive acceptance period, the determination of any interest penalty must be based on the actual date of acceptance. 7-6 DoD 7000.14-R 2B Financial Management Regulation Volume 10, Chapter 7 * November 2022 2.3.3.4.2. If actual acceptance occurs after the constructive acceptance period, the determination of any interest penalty must be based on the constructive acceptance date. 2.3.3.4.3. The constructive acceptance requirement does not compel DoD Components to accept supplies or services or make payment prior to fulfilling their designated responsibilities and internal control activities. 2.3.4. Follow up for Required Documents. If payments cannot be made due to the non- receipt of receiving reports, copies of contracts, contract modifications, or other required documentation, the entitlement office will follow up with the contracting or receiving office to ensure these documents are forwarded in a timely manner. These follow-up requests should be made in time to prevent the possible loss of economically justified discounts (if possible) and avoid the unnecessary payment of late payment interest penalties. 2.3.5. Emergency and Contingency Operations. When authorized, the head of the contracting activity of an operational area, in consultation with the cognizant comptroller supporting their contracting activity, will make the determination of whether a contract and related payment will be subject to the requirements of FAR 32.9 and include the applicable payment clause in the contract. 2.3.5.1. For payments that have been determined to be exempt from FAR 32.9, certifying officers involved in supporting contingency operations may use Appendix 1 of Chapter 8 to identify the documents and information needed to ensure the entitlement to payment is valid prior to certification. Certification guidelines for these payments are contained in paragraph 7.6 of Chapter 8. 2.3.5.2. For payments that are subject to the requirements of FAR 32.9, PPA interest payments will be made only as specified in the contract clause. 2.3.6. Progress Payments on Construction Contracts. Progress payments may be made if the payment request meets the requirements specified in the contract clause FAR 52.232-5(b) and any other applicable terms of the contract. These payments are made monthly, or at more frequent intervals, as determined by the contracting officer. According to FAR 52.232-5(d), payment of any portion, or all, of a certified request for progress payment that fails to conform to the specifications, terms, and conditions of the contract is referred to as an “unearned amount.” FAR 52.232-5(d) also requires that if the contractor, after being paid upon submitting a certified request for progress payment, discovers that a portion, or all of such payment, involves an unearned amount, the contractor is then obligated to notify the contracting officer of the performance deficiency and is required to pay DoD interest on any unearned amount from the 8th day after the date of receipt of the unearned amount until: 2.3.6.1. The date the contractor notifies the contracting officer that the performance deficiency has been corrected; or 7-7 DoD 7000.14-R 2B Financial Management Regulation Volume 10, Chapter 7 * November 2022 2.3.6.2. The date the contractor reduces the amount of any subsequently certified request for progress payment by an amount equal to the unearned amount. 2.3.7. Payment for Partial Deliveries on Fixed-Priced Supply, Fixed-Priced Services, or Non-Regulated Communication Service Contracts. FAR 32.906(c) instructs contracting officers, if the nature of the work permits, to write contract statements of work and pricing arrangements that allow contractors to deliver supplies or services and receive invoice payments for discrete portions of the work as soon as completed and found acceptable by the Government. The inclusion of the payment clause at FAR 52.232-1 in the contract, unless specifically prohibited elsewhere in the contract, allows the contractor to be paid for accepted partial deliveries of supplies or partial performance of services that comply with all applicable contract requirements, and for which prices can be calculated from the contract terms. The contract clause may stipulate additional payment requirements; however, a proper invoice and documentation of government receipt and acceptance are required before the payment can be made. 2.4 Determining the Invoice Receipt Date The date the contractor’s invoice or payment request is received must be recorded on the invoice immediately upon receipt by the billing office designated in the contract to receive the invoice. This annotation must be clearly identifiable to the designated activity that will be processing the payment. The receipt date is an integral part of determining the payment due date, the date by which an improper invoice must be returned, and the date on which interest will begin to accrue if a payment is late. If the designated activity fails to annotate the receipt date, then the invoice receipt date is the date placed on the invoice by the contractor. For invoices electronically transmitted, the invoice received date is the date a readable transmission is received by the designated activity, or the next business day if received after normal working hours. For invoices that are made electronically available in feeder systems such as the Government purchase card bank system or the transportation Third Party Payment System, the invoice receipt date is the date on which the invoice is made available to the DoD, versus when invoices are transmitted to the entitlement office (Chapter 23, paragraph 5.6). 2.5 Determining the Payment Due Date For payments subject to the requirements of FAR 32.9, the payment due date is the date on which payment must be made to avoid paying PPA interest. 2.5.1. If the payment due date is not specified in the contract, the date by which a proper invoice must be paid is the later of: 2.5.1.1. Thirty days after the date on which the designated activity receives the proper invoice; or 2.5.1.2. Thirty days after government acceptance of supplies delivered, services performed, or the applicable date of constructive acceptance, whichever is earlier. 7-8 DoD 7000.14-R 2B Financial Management Regulation Volume 10, Chapter 7 * November 2022 2.5.2. An example of applying subparagraph 2.5.1 in determining the payment due date is as follows: Supplies are received on April 20th and accepted on April 29th, and a proper invoice is received on May 1st. The payment period will begin by using the later date of when a proper invoice is received (May 1st), or the constructive acceptance date (April 27th, which is the 7th day after receipt). In this example, the payment period begins on May 1st and ends 30 days later on May 31st. The interest penalty begins accruing on June 1st. Refer to FAR 32.904 for additional policy on determining the payment due date. 2.5.3. A contract modification may be required in order to determine when a payment is to be made (the payment due date), e.g., an award fee. If a payment cannot be entitled without a contract modification, the payment clock will start with the effective date of the modification. 2.5.4. If the contract does not require an invoice, then the due date is the date designated in the contract (FAR 32.904(b)(2)). 2.6 Timely Payment The PPA requires both timely and proper cash management of government resources. DoD will make payments no more than 7 days prior to the payment due date, but as close to the due date as possible, unless the Secretary of Defense or designee has determined, on a case-by-case basis for specific payments, that earlier payment is necessary (FAR 32.906). This authority must be used cautiously, weighing the benefits of making a payment early against good stewardship inherent in effective cash management practices (5 CFR 1315.4(j)). 2.6.1. When the conditions in 5 CFR 1315.5 are met, a DoD Component may use an accelerated payment method. 2.6.2. For interim payments under cost-reimbursement service contracts, DoD may make payments at the standard due date of 14 days after the receipt of a proper invoice (DFARS 232.906(a)(i)) when the contract specifies the use of FAR 52.232-25, Alternate I. For purposes of computing late payment interest penalties that may apply, the due date for payment is the 30th day after the designated billing office receives a proper invoice (refer to FAR 52.232-25). 2.6.3. In accordance with 10 U.S.C. § 3801(b)(1) and NDAA FY 2021 Section 815, for a prime contractor that is a small business concern, DoD must, to the fullest extent permitted by law, establish an accelerated payment date with a goal of 15 days after receipt of a proper invoice for the amount due. * 2.6.4. In accordance with 10 U.S.C. § 3801 (b)(2) and NDAA FY 2022 Section 814, for a prime contractor that subcontracts with a small business concern, DoD must, to the fullest extent permitted by law, establish an accelerated payment date with a goal of 15 days after receipt of a proper invoice for the amount due if the prime contractor agrees to make payments to the subcontractor in accordance with the accelerated payment date, to the maximum extent practicable, without any further consideration from or fees charged to the subcontractor. 7-9 DoD 7000.14-R 2B Financial Management Regulation Volume 10, Chapter 7 * November 2022 2.6.5. Payment is considered to be made on the date printed on the check, or on the Electronic Funds Transfer (EFT) settlement date. In order to avoid late payment interest fees, the EFT settlement date (the date funds are credited to the vendor’s financial institution) must be no later than the calculated due date. 2.6.6. Checks will be mailed or transmitted on the same day the check is dated. 2.6.7. Payments due (including discount periods) on Saturday, Sunday, or legal holidays may be paid on Monday, or the next working day, without interest; however, this does not change the official payment due date as specified in paragraph 2.5. 2.7 Discounts If a vendor/contractor offers a DoD Component a discount, whether stipulated in the contract or offered on an invoice, the Component should take the discount if economically justified, but only after acceptance has occurred. 2.7.1. When a discount is taken, payment will be made as close as possible to, but no later than, the discount date. 2.7.2. The Bureau of the Fiscal Service’s website contains a discount calculator to assist in determining whether the discount is economically justified. 2.7.3. In accordance with FAR 32.907(b), if a DoD Component takes the discount after the deadline, an interest penalty on any amount remaining unpaid will be due. 2.7.4. Refer to Chapter 2 for additional financial management policy concerning discounts. 2.8 Interest Penalties When DoD Components fail to make payment by the payment due date, interest accrues from the day after the payment due date through the payment date. 2.8.1. Automatic Interest. In accordance with FAR 32.907(a), the designated payment office will pay an interest penalty automatically, without request from the contractor, when all of the following conditions, if applicable, have been met: 2.8.1.1. The designated billing office received a proper invoice; 2.8.1.2. The Government processed a receiving report or other government documentation authorizing payment, and there was no disagreement over quantity, quality, or contractor compliance with any contractual requirement; 2.8.1.3. In the case of a final invoice, the payment amount is not subject to further contract settlement actions between the Government and the contractor; 7-10 DoD 7000.14-R 2B Financial Management Regulation Volume 10, Chapter 7 * November 2022 2.8.1.4. The designated payment office paid the contractor after the due date; and 2.8.1.5. In the case of interim payments on cost-reimbursement contracts for services, when payment is made more than 30 days after the designated billing office receives a proper invoice. 2.8.2. Incorrect Banking Information. If the vendor/contractor provides incorrect banking information, then interest does not begin to accrue until 7 days after the correct information is received (provided the vendor has been given notice of the incorrect banking information within 7 days after the agency is notified that the information is incorrect). Refer to 5 CFR 1315.10 for additional regulations. 2.8.3. Late Payment. Interest will be accompanied with a notice stating the amount of the interest penalty, the number of days late, and the rate used (5 CFR 1315.10(b)(2)). 2.8.4. Interest Penalty Requirements. The specific interest rate will be applied to the total penalty period (maximum 1 year interest) regardless of whether the interest period carries over into different interest rate periods. No further interest will accrue after 1 year beyond the original due date or after the contractor files a claim for such penalties under the Contract Disputes Act of 1978 (5 CFR 1315.10(a)(5)). Interest calculations are to be based on a 360-day year. 2.8.5. Additional Penalties. Vendors/contractors may be entitled to an additional penalty payment when the vendor/contractor is owed a late payment interest penalty by DoD of $1.00 or more, the contractor receives a contract payment dated after the due date that does not include the interest penalty also due, and the interest penalty is not paid within 10 days after the actual contract payment date (5 CFR 1315.11). The vendor/contractor entitlement to additional penalties is also dependent upon, among other things, its timely submission of a claim for the additional penalty. For further information on additional penalties, refer to 5 CFR 1315.11 and FAR 32.907(c). 2.8.6. Interest Penalties Due Under Construction Contracts. Title 5 CFR 1315.14(c) provides for interest penalties to be paid on payments under construction contracts when a progress payment request has been approved as payable by the designated agency office, and remains unpaid for a period of more than 14 days, or longer if specified in the contract, after receipt of the payment request by the designated agency office. Interest penalties may also be applicable to final payments, based on completion and acceptance of work, and payments for partial performance that has been accepted by the agency. Refer to 5 CFR 1315.14 for additional details on payments and interest penalties under construction contracts. 2.8.7. Exceptions to Interest Penalties Due. Title 5 CFR 1315.10(c) identifies exceptions to when interest penalties are due. These exceptions generally include instances such as when interest penalties due are less than $1.00, the contractor provided incorrect EFT information, payments are solely for financing purposes, or contract payments are delayed due to disputes between the Government and contractor over the payment amount or compliance with the terms of the contract. More detailed information regarding these, and other exceptions, is contained in 5 CFR 1315.10(c). 7-11 DoD 7000.14-R 2B Financial Management Regulation Volume 10, Chapter 7 * November 2022 2.8.8. Computation of Interest Penalties. The Government will compute interest penalties in accordance with the OMB prompt payment regulations at 5 CFR 1315.10 and FAR 32.907. The Bureau of the Fiscal Service website contains both a simple daily interest calculator and a monthly compounding interest calculator to assist in interest calculations. 2.9 Interest Payment Funding DoD will pay any late payment interest penalties from either the funds available for the administration of the program for which the penalty was incurred (refer to 5 CFR 1315.10(b)(5)), or from funds financing the operation of the Military Department or Defense Agency with which the invoice or contract payment is associated (refer to 31 U.S.C. § 3902). All interest payments will be charged to the fiscal year(s) in which they accrue. If the interest is accrued at the end of the fiscal year, but not paid until the beginning of the next fiscal year, the prior year’s funds will be cited. If interest is accrued at the end of the fiscal year, and additional interest is accrued in the new fiscal year, the total interest penalty will be funded citing each respective fiscal year’s funds where the interest was accrued, thus ensuring the interest fund cite represents the bona fide need of the year in which the obligation arises. If the appropriation to which the interest would otherwise be charged is cancelled, the appropriation current on the date of payment will be charged pursuant to 31 U.S.C. § 1553 (b)(1). 2.9.1. Entitlement offices are required to maintain detailed records in support of their determinations, and are to make these records available upon request of any activity determined to have caused a late payment. 2.9.2. A contractor may waive interest entitlement by returning the amount of interest paid by separate check or by returning the government check and requesting payment only in the amount invoiced. In addition to returning interest penalties already received, a contractor may waive their right to PPA interest by either express written statement or by acts and conduct which indicate intent to waive. All requests made in writing must be submitted to the applicable payment office established in the contract, be specific to each invoice/payment, and be for interest that is already earned/accrued. A contractor may not request a waiver of interest for potential interest not yet accrued, or a blanket waiver for a group of contracts/invoices. Interest waiver request documentation must be retained with payment supporting documentation. 2.9.3. Interest retained or waived is collected as a refund to the appropriation originally cited for the payment of interest. All refunds of interest or penalties from contractors will be credited to the same line of accounting classification (including fiscal year) that was charged at the time interest was paid. If the appropriation is cancelled or closed, then refunds will be applied to Miscellaneous Receipts of the U.S. Department of the Treasury. 2.9.4. The Foreign Military Sales (FMS) Trust Fund will fund late payment interest penalties pertaining to procurements financed by a FMS contract. Refer to Volume 15, Chapter 7 for additional information concerning FMS pricing. 7-12 DoD 7000.14-R 2B Financial Management Regulation Volume 10, Chapter 8 * April 2022 VOLUME 10, CHAPTER 8: “COMMERCIAL PAYMENT VOUCHERS AND SUPPORTING DOCUMENTATION” SUMMARY OF MAJOR CHANGES Changes are identified in this table and also denoted by blue font. Substantive revisions are denoted by an asterisk (*) symbol preceding the section, paragraph, table, or figure that includes the revision. Unless otherwise noted, chapters referenced are contained in this volume. Hyperlinks are denoted by bold, italic, blue, and underlined font. The previous version dated March 2020 is archived. PARAGRAPH EXPLANATION OF CHANGE/REVISION PURPOSE Updated hyperlinks and formatting to comply with current All Revision administrative instructions. This administrative revision includes a renumbering/ restructuring of the entire chapter to comply with the Office of the Under Secretary of Defense, Comptroller initiative to All Revision improve user navigation. References to other Financial Management Regulation volumes/chapters that are still in the prior numbering format are shown highlighted in yellow. 8-1 DoD 7000.14-R 2B Financial Management Regulation Volume 10, Chapter 8 * April 2022 Table of Contents VOLUME 10, CHAPTER 8: “COMMERCIAL PAYMENT VOUCHERS AND SUPPORTING DOCUMENTATION”.................................................................................................................... 1 1.0 GENERAL.................................................................................................................... 4 1.1 Overview.............................................................................................................. 4 1.2 Purpose................................................................................................................. 4 1.3 Authoritative Guidance........................................................................................ 4 2.0 POLICIES AND REQUIREMENTS........................................................................... 4 2.1 Federal Acquisition Regulation (FAR)................................................................ 4 2.2 Defense Federal Acquisition Regulation Supplement (DFARS)......................... 5 2.3 Prompt Payment Act (PPA)................................................................................. 5 2.4 Payment Prevalidation......................................................................................... 5 2.5 Requirements for Disbursing Transactions.......................................................... 5 2.6 Payment Certification Requirements................................................................... 6 2.7 Taxpayer Identification Number (TIN)............................................................... 6 2.8 System for Award Management (SAM).............................................................. 6 2.9 Electronic and Digital Signatures........................................................................ 6 2.10 Contract Payments Using the Government Purchase Card (GPC)...................... 7 3.0 SUPPORTING DOCUMENTS REQUIRED TO PROCESS PAYMENTS............... 7 3.1 Follow-up for Required Documents.................................................................... 7 3.2 Contract................................................................................................................ 8 3.3 Receiving Report................................................................................................. 9 3.4 Invoice................................................................................................................ 11 3.5 Payment Voucher............................................................................................... 13 4.0 DOCUMENT RETENTION...................................................................................... 14 4.1 Period of Retention............................................................................................ 14 4.2 Electronic Document Access (EDA)................................................................. 14 5.0 FOREIGN LANGUAGE DOCUMENTS.................................................................. 14 5.1 Documents Prepared in a Foreign Language..................................................... 14 5.2 Multiple Invoices............................................................................................... 15 5.3 Translation Certificate....................................................................................... 15 6.0 PROCESSING ALTERED DOCUMENTS............................................................... 15 6.1 Prohibited Pen and Ink Changes........................................................................ 15 6.2 Allowable Pen and Ink Changes........................................................................ 16 8-2 DoD 7000.14-R 2B Financial Management Regulation Volume 10, Chapter 8 * April 2022 Table of Contents (Continued) 7.0 EMERGENCIES AND CONTINGENCY OPERATIONS....................................... 16 7.1 Definitions.......................................................................................................... 16 7.2 Prompt Payment Act (PPA) Exemption............................................................ 17 7.3 Simplified Acquisition Threshold...................................................................... 17 7.4 Standard Form (SF) 44....................................................................................... 17 7.5 Government-wide Purchase Card...................................................................... 17 7.6 Certification Guidelines..................................................................................... 17 7.7 Written Justification........................................................................................... 18 7.8 Transportation Cost............................................................................................ 18 7.9 Control of Funds................................................................................................ 18 APPENDIX 1. MATRIX FOR PAYMENTS IN SUPPORT OF EMERGENCIES AND CONTINGENCY OPERATIONS.......................................................................................... A-1 8-3 DoD 7000.14-R 2B Financial Management Regulation Volume 10, Chapter 8 * April 2022 CHAPTER 8 COMMERCIAL PAYMENT VOUCHERS AND SUPPORTING DOCUMENTS 1.0 GENERAL 1.1 Overview Commercial payment vouchers, and the related processing requirements addressed in this chapter, apply to payments made to contractors and vendors (used interchangeably throughout the chapter) as part of the contract and vendor payment environments covered by the Federal Acquisition Regulation (FAR), Defense Federal Acquisition Regulation Supplement (DFARS), and other authorities identified in paragraph 1.3. The preparation and certification of a payment voucher by the entitlement office based on the proper supporting documentation, as well as those externally certified, advises the disbursing officer (DO) that the contractual conditions for payment have been met. 1.2 Purpose This chapter prescribes policy for the entitlement and preparation of commercial payment vouchers and the documentation required to support the payment vouchers. It also identifies the forms most often used for contracts, receiving reports, and vouchers; the document retention requirements; and the related electronic submission and processing requirements. 1.3 Authoritative Guidance The policies prescribed throughout this chapter pertaining to the entitlement and preparation of commercial payment vouchers, including supporting documentation, are based primarily upon the FAR Parts 13, 16, 32, 43, and 52; FAR Subparts 2.1, 4.1, 4.5, and 4.9; the DFARS Parts 204, 213, 225, 232, 243, and 252; Titles 15, 31, and 41 of the United States Code (U.S.C.); and Titles 5, 31, and 48 of the Code of Federal Regulations (CFR). 2.0 POLICIES AND REQUIREMENTS 2.1 Federal Acquisition Regulation (FAR) Title 41, U.S.C., Section 1302 establishes the Federal Acquisition Regulatory Council. Pursuant to 41 U.S.C. § 1303, the Council issues and maintains a single Government-wide procurement regulation known as the FAR. The FAR is the primary regulation used by all Federal executive agencies for the acquisition of supplies and services with appropriated funds. 2.1.1. FAR 4.5 provides policy for the establishment and use of electronic commerce in federal acquisition as required by 41 U.S.C. § 2301. 2.1.2. FAR 32.11 requires contract financing and delivery payments to contractors be made by Electronic Funds Transfer (EFT). FAR 32.1103 and 31 CFR 208.4 prescribe limited exceptions 8-4 DoD 7000.14-R 2B Financial Management Regulation Volume 10, Chapter 8 * April 2022 to the EFT requirement. Volume 5, Chapter 11 provides additional EFT policy information concerning disbursements and collections. 2.2 Defense Federal Acquisition Regulation Supplement (DFARS) The DoD implementation and supplementation of the FAR is issued in the DFARS. 2.2.1. DFARS subpart 232.70 prescribes DoD acquisition policies requiring the submission and processing of contractor payment requests and receiving reports in electronic form to comply with 10 U.S.C. § 2227. 2.2.2. Acceptable electronic submission forms prescribed in DFARS 232.7002(b)(1) include, but are not limited to: 2.2.2.1. The Wide Area Workflow (WAWF) module within the Procurement Integrated Enterprise Environment (PIEE); 2.2.2.2. DoD-approved electronic third party payment systems, or other exempted vendor payment/invoicing systems, which have been determined to be acceptable for commercial transportation services provided under a Government rate tender or contract for transportation services; and 2.2.2.3. TRICARE Encounter Data System for rendered health care services. 2.3 Prompt Payment Act (PPA) The PPA (31 U.S.C. Chapter 39 and 5 CFR Part 1315) requires DoD Components to pay their bills on time and pay interest penalties when payments are made late. Regulations promulgated under the PPA state that federal agencies should take discounts only when payments are made by the discount date and the discount is economically justified. Refer to Chapter 7 for additional policy specific to the PPA. 2.4 Payment Prevalidation Public Law 104-61 Sec. 8102, DoD Appropriations Act, 1996, requires certain disbursements be matched to a particular obligation before the disbursement is made (prevalidation). Refer to Chapter 1, Section 0103, for additional policy specific to prevalidation. 2.5 Requirements for Disbursing Transactions Volume 5, Chapter 9 prescribes policy and requirements pertaining to disbursing transactions. Additionally, the Treasury Financial Manual (TFM), Volume 1, Part 4 prescribes requirements for disbursing payment vouchers. 8-5 DoD 7000.14-R 2B Financial Management Regulation Volume 10, Chapter 8 * April 2022 2.6 Payment Certification Requirements Title 31 U.S.C. § 3325 authorizes a DO to disburse money only when provided a voucher certified by a properly appointed certifying officer. 2.6.1. Certifying officers are individuals designated in writing (appointed) who are required to perform their duties in accordance with Volume 5, Chapter 5. DoD Directive (DoDD) 5118.03 delegates authority to appoint certifying officers under 31 U.S.C. § 3325(a)(1) and (b), to the Under Secretary of Defense (Comptroller). Refer to Volume 5, Chapter 5 for additional policy concerning re-delegation authority. 2.6.2. All certifying officers must be appointed using a Department of Defense (DD) Form 577, Appointment/Termination Record-Authorized Signature. As prescribed by Volume 5, Chapter 5, certifying officers who certify electronic vouchers must submit an electronic DD 577. Certifying officers who certify manual vouchers, or submit manual certifications of electronic payments, must submit an original, manually-signed DD 577. By certifying a voucher, the certifying officer attests that the payment is legal, correct, and proper. As prescribed by 31 U.S.C. § 3528 and Volume 5, Chapter 5, certifying officers are pecuniarily liable for payments they certify that do not meet these requirements. For specific policy related to the successive certification of an externally certified voucher received by the payment office, refer to Volume 5, Chapter 5, paragraph 050504. 2.6.3. The Secretary of Defense has delegated authority to the Director, Defense Finance and Accounting Service, or designee, to make the required determinations and grant or deny relief on all requests for relief of liability. Refer to Volume 5, Chapter 6, Section 0607 for policy regarding decisions of liability. 2.7 Taxpayer Identification Number (TIN) Title 31 U.S.C. § 7701(c) requires all payees, subject to the U.S. Internal Revenue Code, doing business with the DoD to furnish their TIN (which may be a Social Security Number (SSN) for individuals). Payments are not to be authorized without a TIN or SSN on record for required payees (FAR 4.902). 2.8 System for Award Management (SAM) In accordance with FAR 4.11, contractors and vendors doing business with the Federal Government must register in SAM, except as noted in FAR 4.1102. Contractors and vendors are responsible for keeping all SAM information current. 2.9 Electronic and Digital Signatures Title 15 U.S.C. § 7001 authorizes DoD to use electronic and digital signatures. Volume 5, Chapter 1, paragraph 010305.C prescribes the minimum requirements for electronic and digital signatures. 8-6 DoD 7000.14-R 2B Financial Management Regulation Volume 10, Chapter 8 * April 2022 2.10 Contract Payments Using the Government Purchase Card (GPC) The FAR 13.301 authorizes the use of the GPC to make payments on contracts. 2.10.1. Pursuant to FAR 32.1110(d), contracting officers must insert the clause at FAR 52.232-36, Payment by Third Party, if payment under a written contract will be made by a charge to a Government account with a third party such as a Government-wide commercial purchase card. However, pursuant to FAR 32.1108(b)(1), payment by a purchase card may also be made under a contract that does not contain the clause to the extent the contractor agrees to accept that method of payment. 2.10.2. When it is contemplated that the Government-wide commercial purchase card will be used as the method of payment, and the contract or order is above the micro-purchase threshold, contracting officers are required to verify (by reviewing the SAM) whether the contractor has any delinquent debt, subject to collection under the Treasury Offset Program (TOP), prior to order placement and contract award. In accordance with FAR 32.1108(b)(2)(ii), contracting officers must not authorize the Government-wide commercial purchase card as a method of payment during any period the SAM indicates that the contractor has delinquent debt subject to collection under the TOP. 2.10.3. The Department of Defense Government Charge Card Guidebook for Establishing and Managing Purchase, Travel, and Fuel Card Programs provides additional policy and procedures pertaining to the uses and limitations of the GPC in paying contracts. 3.0 SUPPORTING DOCUMENTS REQUIRED TO PROCESS PAYMENTS As part of entitling and certifying a payment, DoD Components must ensure that appropriate payment documentation is established and retained to support payment of invoices and interest penalties. This documentation normally includes the contract/purchase order, receipt/acceptance report, and a proper invoice. Refer to 5 CFR 1315.9 for additional information on required documentation. Paragraph 3.3 defines the exceptions in which receiving reports are not required prior to payment. 3.1 Follow-up for Required Documents If the entitlement and certification of contractor/vendor invoices cannot be accomplished due to the non-receipt of receiving reports, copies of contracts, contract modifications, or other required documentation, the entitlement office must follow up with the contracting or receiving office to ensure that these documents are forwarded in a timely manner. The entitlement office, contracting office, and receiving activity must address these actions timely to prevent the potential loss of economically justified discounts and to avoid the unnecessary payment of late payment interest penalties. 8-7 DoD 7000.14-R 2B Financial Management Regulation Volume 10, Chapter 8 * April 2022 3.2 Contract 3.2.1. Definition. As defined by FAR 2.101, a contract is a mutually-binding, legal relationship obligating the seller to furnish the supplies or services (including construction) and the buyer to pay for them. Contracts must contain the information prescribed by 5 CFR 1315.9(a) in order to support payment of contractor/vendor invoices. If the entitlement office discovers an error in a contractual document, they must notify the contracting office to request corrective action. The entitlement office may not change contract terms. Contract terms may only be changed through a formal modification to the contract. FAR 4.5 requires the use of electronic commerce in Federal acquisition whenever practicable or cost effective. 3.2.2. Contract Types. FAR 16 describes the types of contracts that may be used in acquisitions. 3.2.3. Contract Clauses. FAR 52 and DFARS 252 contain: 3.2.3.1. Instructions for using provisions and clauses in contracts, and 3.2.3.2. Contract clauses prescribed in specific FAR and DFARS provisions. 3.2.4. Contract Award. Forms commonly used for contract award include, but are not limited to: 3.2.4.1. Standard Form (SF) 26, Award/Contract; 3.2.4.2. SF 33, Solicitation, Offer, and Award; 3.2.4.3. SF 44, U.S. Government Purchase Order - Invoice - Voucher; 3.2.4.4. SF 1449, Solicitation/Contract/Order for Commercial Items; 3.2.4.5. DD 1155, Order for Supplies or Services; 3.2.4.6. SF 1442, Solicitation, Offer, and Award (Construction, Alteration or Repair); and 3.2.4.7. Optional Form 307, Contract Award. 3.2.5. Contract Modifications 3.2.5.1. FAR 43 and DFARS 243.2 contain the policy and requirements for preparing and processing contract modifications. 3.2.5.2. SF 30, Amendment of Solicitation/Modification of Contract is a form that may be used for contract modifications. 8-8 DoD 7000.14-R 2B Financial Management Regulation Volume 10, Chapter 8 * April 2022 3.2.6. Contract Distribution. FAR 4.201 and DFARS 204.201 prescribe distribution procedures for contracts and contract modifications that include the requirement to make distribution to the appropriate accounting and payment offices. 3.3 Receiving Report 3.3.1. Definition. As defined by FAR 2.101, a receiving report is written evidence documenting the Government’s acceptance of supplies delivered or services performed. 3.3.1.1. Acceptance must occur as a condition of payment in all cases except contract financing payments, interim payments on cost-reimbursement contracts for the acquisition of services, and use of the fast payment procedure as defined in Chapter 10, Section 7.0. These requirements for payment processing do not negate the documentation requirements established in Volume 4, Chapter 9, Section 2.2. 3.3.1.2. As stated in DFARS 232.7002, contractors must submit payment requests and receiving reports in electronic form. DFARS 232.7002(b)(1) identifies the acceptable electronic submission forms, which includes the WAWF module of the PIEE (or other limited authorized electronic means as indicated in DFARS 232.7002(b)(1)(i)). The WAWF module of PIEE, Enterprise Resource Planning systems, and third-party payment systems accomplish electronic receipt and acceptance of materials or services with the use of an electronic signature. 3.3.2. Forms. If approved by the contracting officer and stated in the contract, non- electronic forms that may be used as a receiving report include, but are not limited to the following: 3.3.2.1. DD 250, Material Inspection and Receiving Report. The form used for documenting receipt and acceptance of goods and services is the DD 250. The DFARS, Appendix F, Part 3 contains preparation instructions for the DD 250; 3.3.2.2. DD 1155. The verification of receipt by an authorized Government representative constitutes a valid receiving report; 3.3.2.3. SF 44. General procedural instructions governing the form’s use are printed on the form and on the inside front cover of each book of forms. For additional policy, including conditions that must be satisfied in order to use the SF 44, see paragraph 7.4; 3.3.2.4. Bill of Lading. In accordance with FAR 47.302(c)(2), when the Government accepts title of supplies at origin, and the contract specifies transportation terms of free on board to destination (contractor bears the expense of transportation), the contractor may be paid upon acceptance of title at origin, provided the invoice is supported by a copy of a signed commercial bill of lading or other document containing the carrier's signature, indicating the goods were received by the carrier. If the contractor fails to provide this documentation, return the invoice to the contractor as an improper invoice; or 3.3.2.5. SF 1449. The SF 1449 is prescribed for use in solicitations and contracts for commercial items. 8-9 DoD 7000.14-R 2B Financial Management Regulation Volume 10, Chapter 8 * April 2022 3.3.3. Follow-up for Receiving Report. If payment cannot be made due to non-receipt of a receiving report, the entitlement office must follow up with the contracting officer and/or receiving office to ensure the documentation is forwarded in a timely manner. 3.3.4. Receiving Report Not Required. In certain situations, such as contract financing and the fast payment procedure, a receiving report may not be required prior to payment. 3.3.4.1. Contract Financing Payments. As defined in 5 CFR 1315.2(h), contract financing payments provide for an authorized disbursement of monies prior to acceptance of goods or services. 3.3.4.1.1. As defined by FAR 32.001, contract financing payments include advance payments, progress payments based on cost, progress payments (other than under construction contracts) based on a percentage or stage of completion, performance-based payments, and interim payments on cost-type contracts (other than under cost-reimbursement contracts for the acquisition of services). Title 5, CFR 1315.4(d) and (e) provide for an exception, whereby interim payments under a cost-reimbursement service contract are treated like contract financing payments in that they are also excluded from requiring a receiving report and acceptance prior to payment authorization. 3.3.4.1.2. Contract financing payments do not include invoice payments, payments for partial deliveries, lease and rental payments, progress payments under construction contracts based on a percentage or stage of completion, or interim payments under cost- reimbursement service contracts. 3.3.4.2. Contracts Incorporating the Fast Payment Procedure. Use of the fast payment procedure allows payment prior to verification that supplies have been received and accepted under the limited conditions listed in FAR 13.402 and DFARS 213.402. Refer to Chapter 10, Section 1007 for additional fast payment procedure policy. 3.3.5. Variation in Quantity. Quantity variations in contracts may be authorized for both supply contracts and construction contracts as cited in FAR 11.7. Variations result when total quantities delivered for a line item deviate from contracted quantities. The contract will cite permissible variations as a percentage of contracted quantity and may be defined as an increase, a decrease, or a combination of both (e.g., plus or minus 10% variance). 3.3.5.1. When a shipment is short of the quantity ordered, the entitlement office will pay, in compliance with the PPA (5 CFR 1315), the amount of the invoice that supports the quantity received and accepted, unless specifically prohibited by the contract. 3.3.5.2. When the receiving report or invoice indicates that the shipment is final, but there are undelivered items remaining per the contract terms, the entitlement office will pay, in compliance with the PPA (5 CFR 1315) and the variation authorized in the contract, the amount of the invoice that supports the quantity received and accepted. The entitlement office must also collaborate with the contracting officer, as needed, to advise and assist in resolving the differences. 8-10 DoD 7000.14-R 2B Financial Management Regulation Volume 10, Chapter 8 * April 2022 3.4 Invoice 3.4.1. Definition. As defined by FAR 2.101, an invoice is a contractor/vendor’s bill, or written request for payment under the contract, for supplies delivered or services performed. In accordance with DFARS 232.70, contractors/vendors, with few exceptions (refer to DFARS 232.7002(a)), are required to invoice electronically using the WAWF module of the PIEE. 3.4.2. Submission Requirements 3.4.2.1. When using contracting officer approved/designated electronic techniques for submission of invoices and electronically certified vouchers, it is not necessary to transfer paper documentation to the payment office for examination if the same supporting data are readily available and accessible in electronic media or through an electronic process. 3.4.2.2. The certifying officer must further ensure that the transmitted data relied upon in entitling and certifying a payment contains the necessary PPA information required by 5 CFR 1315.9 and FAR 32.905(b). As prescribed by Chapter 1, Section 0102, processes, controls, and routine testing must be established to ensure the completeness, accuracy, authorization, and validity of the electronic data received via system interfaces/transmission. 3.4.2.3. When contractors/vendors are permitted to invoice in a non-electronic manner, they may submit invoices on any type of form, provided all required items of a proper invoice are included on the document, unless their contract prescribes a specific form of invoicing. 3.4.3. Proper Invoice. DoD payments must be based on satisfactory contract performance and the receipt of a proper invoice, unless an invoice is not required by the contract (e.g., monthly rental payments). Title 5, CFR 1315.9(b)(1) and FAR 32.905(b) identify the items that must be included on a proper invoice. 3.4.4. Improper Invoice. If an invoice is improper, or does not meet the contract requirements prescribed by FAR 32.905(b), then the designated activity must return the invoice to the contractor/vendor and provide all details regarding invoice deficiencies. 3.4.4.1. An invoice must be returned as improper if the entitlement office has not been provided a valid TIN for any designated payee subject to the U.S. Internal Revenue Code. If the TIN is not in the SAM, Corporate Electronic Funds Transfer, or within the supporting documentation (to include the invoice or contract), then the contracting officer must provide the contractor’s TIN to the appropriate payment office (FAR 4.203(e)(2)). 3.4.4.2. An electronically-transmitted payment request is treated the same as a paper payment request and must contain identical data elements as a proper, paper payment request (FAR 32.905(b)). Electronically-transmitted payment requests that are returned to the contractor will be returned in the same manner that they were received, or in a manner practical for the entitlement system. An electronic message reporting the reason for the return must accompany the returned electronically-transmitted payment request. 8-11 DoD 7000.14-R 2B Financial Management Regulation Volume 10, Chapter 8 * April 2022 3.4.5. Forms. Non-electronic forms that may be used as an invoice, if approved by the contracting officer and included in the contract, include, but are not limited to: 3.4.5.1. DD 250; 3.4.5.2. SF 44; 3.4.5.3. Delivery Ticket, refer to Chapter 7 (2.3.2.2.); and 3.4.5.4. SF 1449. 3.4.6. Recurrent Payments/Fixed Amounts. Payments for services of a continuing nature (e.g., rents, janitorial services), which are performed under agency-vendor contracts providing for payments of definite amounts at fixed periodic intervals, may be made without submission of invoices or bills by the vendor if allowed by the contract. 3.4.6.1. The contract must specify the payment due date. The voucher prepared by the payment office to support payments of this nature must show, at a minimum, the contract number, the period covered by the payment, the name of the vendor, the amount of the payment, and the account/appropriation to be charged. The payment voucher must be certified for payment the same as are the vouchers for all other types of payments. 3.4.6.2. To comply with TFM Volume 1, Part 4A, Chapter 2000, Section 2055, internal controls must be established, and periodically tested, to ensure that recurrent payments being made are: on unexpired contracts or agreements, for correct amounts, for services actually received or leased space actually under contract, and are not duplications of previous payments made for the same goods or services. 3.4.7. Lost or Destroyed Invoices. If an original invoice has been lost or destroyed, then a duplicate must be obtained from the original submitter of the invoice to support the voucher. Mark the invoice obtained as a duplicate. A full explanation of the loss or destruction of the original invoice, and a statement that steps have been taken to prevent duplicate payments, must be placed on, or attached to, the duplicate invoice. If the information has already been input from the invoice into the entitlement system, payment can be made from the information contained in the entitlement system prior to obtaining a duplicate invoice. In those situations where a duplicate invoice cannot later be obtained from the contractor, an annotation must be made documenting that payment was made based on existing records, a hardcopy duplicate invoice could not be obtained, and the original invoice was lost or destroyed. The specific existing records relied upon must be identified and documented, and management review and approval of such payment must occur and be documented prior to the disbursement. Refer to TFM Volume 1, Part 4A, Chapter 2000, Section 2045.05. 3.4.8. Invoices Requiring Administrative Contracting Officer (ACO) Approval. The Defense Contract Audit Agency (DCAA) is the authorized representative of the ACO for approving interim contract payment vouchers for provisional payment, including interim vouchers for non-commercial and commercial Time and Material (T&M) and Labor Hour (LH) contracts, 8-12 DoD 7000.14-R 2B Financial Management Regulation Volume 10, Chapter 8 * April 2022 subject to final audit. In accordance with DFARS 242.803, DCAA utilizes sampling methodologies to select interim vouchers for review prior to sending them to the payment office. Interim vouchers not selected for pre-payment review will be considered to be provisionally approved and will be sent directly to the payment office. All provisionally-approved interim vouchers are subject to later audit of actual costs incurred. DCAA does not provisionally approve the contractor’s final voucher on a contract. Approval of final vouchers is required to be performed by the contracting officer. Refer to DoDD 5105.36 for additional information regarding DCAA’s roles and responsibilities in this process. The following invoices and vouchers require ACO approval before payment: 3.4.8.1. Completion vouchers under cost-plus, fixed-fee, or other cost- reimbursement type contracts; 3.4.8.2. Vouchers and invoices for termination costs under supplemental agreements, unless the termination modification specifies the costs to be paid; 3.4.8.3. Completion vouchers under T&M and LH contracts; 3.4.8.4. Invoices for progress and performance-based payments under fixed-price type contracts; 3.4.8.5. Vouchers and invoices where the contract requires approval by the ACO before payment; 3.4.8.6. Invoices for the release of "withhold" amounts previously instituted by the ACO; and 3.4.8.7. Any payment request where a DO requires an ACO signature. 3.5 Payment Voucher For specific policy and requirements concerning payment vouchers, refer to Volume 5, Chapter 9. TFM Volume 1, Part 4A, Chapter 2000 contains policy related to scheduling payments and required payment voucher data. Forms that may be used as a payment voucher include, but are not limited to: 3.5.1. SF 44, 3.5.2. SF 1034, Public Voucher for Purchases and Services Other than Personal, and 3.5.3. DD 1155. 8-13 DoD 7000.14-R 2B Financial Management Regulation Volume 10, Chapter 8 * April 2022 4.0 DOCUMENT RETENTION 4.1 Period of Retention Original payment documentation and associated documents must be retained as Government records in a format readily accessible to the entitlement office. Refer to Volume 1, Chapter 9, Figure 9-1, for specific policy and timeframes regarding record retention. Electronic record storage requires adequate controls to ensure that the digital images accurately represent the corresponding paper documentation and prevent changes to an original digital image (FAR 4.805(a)). The retention of documentation, both paper and electronic records, is the responsibility of the certifying officer. 4.2 Electronic Document Access (EDA) EDA is a mandatory DoD-centralized repository of all unclassified contracts, orders, and modifications in accordance with the DFARS, Procedures, Guidance, and Information 204.201. The system is also used as a repository for Contract Deficiency Reports, Government Bills of Lading, vouchers, and receiving reports. 5.0 FOREIGN LANGUAGE DOCUMENTS 5.1 Documents Prepared in a Foreign Language 5.1.1. Invoices and supporting documents prepared in a foreign language must be translated before payment to ensure their contents satisfy requirements of the contractual document. Refer to DFARS 225.1103 for additional policy related to contracts that may involve documentation written in a foreign language. 5.1.2. The documents must be translated in enough detail (contract number, item identification, unit of measure, price, and extension) to enable someone unfamiliar with the language to determine that receipts (material or services) satisfy the contract terms. 5.1.2.1. Documents containing technical terms that cannot be translated by entitlement office personnel should be forwarded to the ordering or requiring activity for translation. 5.1.2.2. If terms are so technical that a translation cannot be made, then a descriptive translation is adequate, provided the ordering or requiring activity certifies receipt and acceptance of the items, and provides the names and contact information, along with the signature accompanying this translation certificate if not performed electronically. 5.1.2.3. If not properly translated, return the invoice to the vendor as improper. Refer to paragraph 3.4.4 and Chapter 7, for information on improper invoice policy. 8-14 DoD 7000.14-R 2B Financial Management Regulation Volume 10, Chapter 8 * April 2022 5.2 Multiple Invoices If several invoices contain basically the same format and wording, then a single translation is adequate provided like invoices support the same payment voucher, and: 5.2.1. The required certification shows that all data not translated on other identified documents are the same as that translated, 5.2.2. All non-common data on all invoices are identified and translated in enough detail to allow an audit by persons not familiar with the language, and 5.2.3. A separate translation is attache