The cost-plus-award-fee contract provided for payments to the contractor “when requested as work progresses.”  The contract contained the standard FAR Prompt Payment clause (52.232-15) that provides for payment of interest penalties for late “invoice payments” which also mentions “contract financing payments” are not subject to interest penalties.  The contractor submitted customary public vouchers every two weeks on Standard Form 1034 for reimbursement of costs and because payment for most of the invoices was late submitted a claim of $172,000 for interest penalties.

The government asserted the payments were “contract financing payments” which are disbursements to a contractor prior to acceptance of supplies and services by the government.  The contractor maintained the government continuously inspected and accepted services under the contract’s Inspection and Acceptance clause which meant its invoices amounted to requests for payment for partial performance of services.  The Board disagreed with the contractor saying its vouchers did not purport to be payments for particular services accepted.  The Board pointed to a revision to the FAR Prompt Payment Act in March 1997 (FAR 32.903(f) that indicates partial payments are not available for cost type contracts where the invoiced price cannot be determined until after settlement of total contract costs (e.g. until after incurred cost proposals are settled).  Hence the contract is not eligible for interest penalties until final cost and fee amounts have been settled (Johnson Controls World Services Inc., ASBCA No. 51640).

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