Invoice Processing Procedures for Contracts

Purpose

To ensure that contract staff follow proper procedures for invoice processing as required by FAR Clause 52.232-25, HHSAR Subpart 332.9, 5 CFR 1315, and NIH Policy Manual Chapter 6332-9.

Procedure

Contract specialists must ensure that invoices are approved for payment within ten calendar days of receipt. This includes project officer review within five calendar days of receipt to determine if the expenditure rate is commensurate with technical progress.

Timely processing of invoices allows NIH's Office of Financial Management (OFM) to pay invoices within 30 calendar days of receipt and avoid interest penalties. These procedures are used for both cost reimbursement and fixed price type contracts.

For a graphical summary of the procedure below, see the Contract Invoice Processing Flowchart.

Step 1 -- Invoice Receipt

Contractors

• Submit an original and two copies of each invoice to the OA address designated in your contract.

Procurement Technicians

• Receive invoices in the central OA invoice bin in room 3214 of 6700B Rockledge Drive, Bethesda, MD, 20892.
• Process invoices from the bin twice daily.
• Date stamp the front of each invoice -- this is crucial. The date stamped designates the beginning of the 30 day payment period. For any invoice not date stamped, we must calculate the 30 day payment period using the contractor's invoice date instead.
• Stamp the front of the original invoice with the contracting officer stamp.
• Stamp one of the invoice copies with the project officer stamp. Be careful not to obscure the payee's name, address, or any of the accounting data.
• Fill out the NIAID Contract Invoice Transmittal Sheet and make one copy. The invoice transmittal sheet includes:
  • Date of invoice receipt at OA.
  • Date of invoice delivery to the project officer.
  • Date due from the project officer.
• Attach the copy of the transmittal sheet to the invoice copy that has the project officer stamp.
• Hand-deliver that copy and the one without the project officer stamp to the project officer. Invoices are hand carried to the program divisions daily.
• Attach the original transmittal sheet to the remaining original invoice and give it to the contract specialist.
• Once the signed invoice is returned to the bin by the project officer, deliver the signed invoice to the contract specialist.

Contract Specialists

• Receive original invoice and transmittal sheet from the procurement technician.
• Track invoice deadlines using the dates on the invoice transmittal sheet.
• Update the invoice processing dates on the transmittal sheet as tasks below are completed.

Step 2 -- Invoice Review

Contract Specialists

• Review original invoices as soon as possible, but no later than three calendar days after OA receipt.
• Determine:
• All calculations are correct.
• All costs are consistent with requirements in the contract and the contracting officer authorizations. This includes key personnel, ceilings for subcontracts, travel, and equipment.
• All necessary cost support documentation (including vendor invoices, applicable subcontracts, and COAs) have been attached to the invoice.
• A fixed fee is calculated at the proper rate and does not exceed the amount stated in the contract.
• The invoiced period is within the performance period of the contract.
• All costs are allowable and allocable to the contract.
• No other potential cost prohibitions or issues are present.
• No obvious errors or defects.
• Also, for cost-reimbursement type contracts:
  • All direct labor costs conform to the salary rate limit.
  • The proper rate and base of application have been used to calculate indirect costs.
    • If rates have expired, call the rate negotiator. Their name and number is on the rate agreement.
    • If rate negotiator does not extend the rates for payment, the indirect costs should be suspended.
• Initial the "Review Status" block at the bottom of the invoice transmittal sheet.
• Record invoices in your Excel spreadsheet. This spreadsheet itemizes the significant elements of cost, such as direct labor, indirect costs, other direct costs, and fee. If invoices or any portion of invoices need to be suspended, the Excel spreadsheet must include the suspended cost information.
• If you don't find any problems with an invoice, it is designateda proper invoice as defined under FAR Clause 52.232-25 Prompt Payment. Proceed to Step 3 -- Invoice approval.
• If you find problems with an invoice or it is designated an improper invoice, proceed to Step 4 -- Improper invoices and suspensions.

Project Officers

• Review your copies of the invoice to determine if:
  • the expenditure rate is commensurate with technical progress. See NIH Manual Issuance 6332-9.
  • all direct cost elements are appropriate, including subcontracts, travel, and equipment.
  • direct labor is appropriate, including effort, amount, mix, and key personnel.
• If you find problems with an invoice, proceed to Step 4 -- Improper invoices and suspensions.
• Fill out and sign the project officer stamp on invoice copy.
• Initial the "Review Status" block at the bottom of the invoice transmittal sheet.
• Within five calendar days of receipt, return the stamped invoice with the initialed transmittal sheet to to OA's invoice bin in room 3214.
• Retain unstamped invoice copy for your records.

Step 3 -- Invoice Approval

Contract Specialists

• Receive invoice copy with project officer signature from procurement technican within five calendar days of invoice receipt. Failure to obtain a project officer signature should not delay provisional invoice payment. Project officer signature is not required for provisional payment of cost reimbursement invoices. However, every attempt should be made to secure project officer signature within the allotted time frame.
  • If signed invoice copy has not been received by the sixth calendar day, send a notice to the project officer requesting the delinquent invoice.
  • If project officer signature is not obtained within five calendar days on a final invoice or an invoice under a fixed price contract, the contract specialist must notify the OA branch chief and attempt to obtain signatures from an alternate project officer or scientific division branch chief.
• Forward original invoice with attached invoice transmittal sheet to the contracting officer.
  • Obtain contracting officer signature on the invoice certifying that the invoice payment is proper and any suspensions are accurate and appropriate.
  • Obtain contracting officer initials in the "Review Status" block of the invoice transmittal sheet.
• Enter the full amount of the invoice into the Administrative Database (ADB) system. For any suspensions, include the amount of payment suspended, the amount allowed, and a brief explanation of the suspension. For instructions on using the ADB system, refer to the ADB User's Guide and the OA ADB Guidance.
• Notify OA branch chief that invoice is ready for approval in ADB and ensure approval occurs within ten calendar days of receipt of invoice.
• If the invoice has not been approved in ADB within 16 calendar days after invoice receipt, prepare a memo to the file and forward through the applicable contracting officer, OA branch chief, and OA director. This memo describes the circumstances resulting in the late processing, the estimated OFM payment date, and the projected interest penalty.
• After OA branch chief approval in ADB, print out the ADB screen showing the approved invoice information. File the printout in the orange contract file.
• File both the original invoice with the contracting officer's signature and the invoice copy with the project officer's signature in the orange contract file.

OA Branch Chiefs

• Within ten calendar days of receipt of invoice, approve invoices in ADB.

Step 4 -- Improper Invoices and Suspensions

NIAID may withhold some or all funds from an invoice if it is discovered that the costs billed are unallowable, unreasonable, or otherwise warrant suspension. In that case, take the following steps.

Contract Specialists

• If an invoice has been determined to be improper and payment is withheld in full:
  • Immediately notify the project officer that no further technical review is required at this time.
  • Ask the contractor to revise the invoice and resubmit to OA with a new invoice date. The revised receipt date triggers a revised 30-day prompt payment invoice processing period. Once the revised invoice is received, start the invoice processing procedure again with Step 1.
• If some or all funds are being suspended from an invoice, complete Form NIH-2522, Notice of Improper Invoice Suspension to identify the error within seven calendar days from the invoice receipt date.
  • Make two copies of the Form NIH-2522. Forward one copy to the project officer and forward the other copy to the contractor.
  • On the original invoice, identify the amount being paid and the amount being suspended on the contracting officer stamp and attach the original of the Form NIH-2522 to the front of the invoice. Go to Step 3 to continue the invoice approval process.
  • After entering the invoice and suspension information into ADB, send an email to Robin Herring in OFM at herrinr@mail.nih.gov. The subject line of the email should read "Suspension Contract No. ________ Invoice No. __________". Copy the contracting officer and the OA branch chief on the email. The suspension is not considered final until OFM approves it in their system.
  • File in the orange contract file:
    • Original invoice signed by the contracting officer with attached Form NIH-2522.
    • ADB printout from Step 3.
    • Invoice copy signed by the project officer.
    • Copy of the email to OFM.

Project Officers

• Within five calendar days after receipt of the invoice:
  • Alert the contract specialist to any unauthorized, questionable, or unallowable expenses on an invoice. Identify the expense, invoice page number, and the amount of the cost element.
  • Sign the project officer review stamp on the invoice copy. Indicate the recommended amount to be paid and the recommended amount to be suspended.
  • Initial the "Review Status" block at the bottom of the invoice transmittal sheet.
  • Return the signed invoice with the initialed transmittal sheet and a description of the questionable expense to OA's invoice bin in room 3214.
  • Retain unstamped invoice copy for your records.
• At the completion of the suspension process, you will receive a copy of the form NIH-2522 from the contract specialist. Retain this copy in your files.

Contacts

See the OA staff listing for the appropriate contract specialist.

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Links

Contract Closeout SOP

ADB User's Guide

HHS Project Officer's Contracting Handbook

FAR Part 32.9, Contract Financing, Prompt Payment

HHSAR Subpart 332.9 Prompt Payment

HHSAR Subpart 342.70 Contract Monitoring