The Federal Government can normally be relied upon to pay contractors on a timely basis. It’s the responsibility of the contractor to submit accurate and timely invoices to ensure prompt payment. The implementation of the Wide Area Workflow (WAWF) system has provided a way to submit invoices electronically which are approved and processed electronically. WAWF provides a tracking system allowing the contractor to know where every invoice is at every step in the payment process. When invoices are rejected, the reasons for the rejection can be found in the system and there is opportunity to amend the invoice and/or provide additional supporting information.
A prime contractor walked away from millions of dollars in unpaid invoices after failing to stay on top of the payment process. The work was performed overseas, and the contract required that the Contracting Officer Representative (COR) approve all invoices. During the first couple of years of performance payments were made but with occasional delays because the COR was often traveling to remote locations in the war zone. Due to contractor organizational changes which resulted in a novation of the contract from one contractor legal entity to another, changes in personnel assigned to the billing and accounts receiving functions. and compounded by replacement of the COR on the government side, a significant number of invoices remained unpaid for more than a year. The contract performance period ended with no resolution.
The contractor put together a tiger team of contracts, accounting, and project control personnel to work the payment backlog. The government Contracting Officer (CO) had not changed but she proved to be no help at all in working the issues on the government side. Weeks were spent compiling all the backup requested, a 4-inch binder full of documents and a detailed spreadsheet listing all the invoices, when submitted, when and why rejected (if rejected), and the contractor’s responses, additional backup and occasional corrections to those rejections. By this time, the COR who would likely have approved the invoices was long gone and there was no replacement. Resolution was solely in the hands of the uncooperative CO.
To finally resolve the issues, a telcom was set up with the contractor tiger team supported by representatives of the legacy organization that originally had the contract, the government CO and her Contract Specialist. It took half a day to go through each invoice but finally the CO agreed that about 90% of the invoices were valid as submitted and could be paid. The remaining 10% she needed time to review the additional backup provided. Shortly after that meeting, the CO was reassigned, and no payments were received. The issue was elevated to the Division Chief for whom the CO worked. Despite promises to “look into it”, no action was taken. Contractor Senior Management got involved, again to no avail. Threats to file a claim were ignored.
The contractor parent company wrote off the unpaid millions when it sold the subsidiary. It was one of the most disappointing situations I ever dealt with in my years in government contracting. Although the contractor was not without fault in waiting so long to press the payment issues, the government’s failure to pay invoices that were proven to be valid is indefensible.