This memorandum concerns the processing of Payment Applications.

Recently, the payment application process has been the subject of review and discussion. Therefore, this memorandum is being issued to provide further clarification of previously issued policy and procedures.

As you all know, processing of payments begins with submission of invoices or vouchers by the contractor, usually monthly, with documentation supporting the claimed costs.

The Contracting Officer and the Contracting Officer's Technical Representative (COTR) should review the invoices or vouchers to determine whether the amounts are appropriate for payment. The COTR's technical background and knowledge of the contractor's progress will aid in evaluating the items and amounts submitted for payment. The depth of the Contracting Officer's review depends on the contract type, but at a minimum the following specific actions should be accomplished before payment is made:

1. Date stamp all copies of the invoice the day of receipt and process the invoice for payment in a timely manner as prescribed by the prompt Payment Act;
2. Check the mathematical computations of the invoice for accuracy, and balance to modified contract amount and previously paid invoice amounts;
3. Check the invoice against the contract prices and terms;
4. Reject the invoice if it is incorrect, and return it to the contractor within 7 days of receipt;
5. Check to assure that the requirement for which the invoice covers has been received and accepted;
6. Route a copy to the COTR by close of business the day of receipt, and obtain a payment recommendation from the COTR within 5 days of receipt by their respective office;
7. Identify and document any required withholdings or deductions (liquidated damages, deductions for services not received, retainage);
8. Approve payment amount and forward to the Central Office Business Office (COBO) for payment within 2 days of receipt from COTR.
9. Explain to the contractor any differences between the amount of the invoice and what is approved for payment; and
10. Retain copies of all payment files in the contract file under flap D.

It is the Contracting Officer's responsibility to ensure that COBO receives a memorandum, when transmitting the initial contract award and each approved payment application, indicating the appropriate Prompt Payment Act payment terms (14 or 30 days). In addition, the approved payment application memo should also identify the designated billing office per the contract, and indicate when the correct payment application was received by the designated billing office.

Please review, retain, and utilize this memorandum as appropriate. If you have any questions, please let me know.