Direct Billing Requirements Kathy Sieber, CPA Direct Billing What is it? Allows the Auditor to authorize contractors to submit interim public vouchers directly to the Government. DFARS 242.803(b)(i)(C) DCAA Policy Agency policy is to obtain the maximum contractor participation in the direct billing program. FAO’s should actively work with contractors to eliminate billing deficiencies and encourage participation. Why? The direct billing program will reduce the administrative effort (both Government and contractor) related to interim public vouchers processing for contractors with adequate billing systems. Criteria For Direct Billing Participation Major Contractors Billing system and related internal controls is considered adequate through DCAA audit (11010) Timely submission of Incurred Cost Proposal in accordance with FAR 52.216-7 Submit final vouchers within 120 days after settlement of indirect rates in accordance with FAR 52.216-7(d)(5) Criteria For Direct Billing Participation Non-Major Contractors Maintain an Accounting System acceptable for Government contract costing (i.e. Pre-Award Survey 17740) Establish billing rates in accordance with FAR 42.704. Maintain Cumulative Allowable Costs by contract. Adjust Billing Rates to reflect actual year-end allowable costs. FAR 42.704(c) Criteria For Direct Billing Participation Non-Major Contractors Brief Contracts Submit Incurred Cost proposal in accordance with FAR 52.216-7 Submit final vouchers within 120 days after settlement of indirect rates FAR 52.216- 7(d)(5) Determining Eligible Contractors A separate audit should not be generally initiated to determine eligibility. Information to make the decision should be readily available in perm files. Notification Procedures When a FAO determines a contractor is eligible, then it will send a notification letter to the contractor requesting their participation in the program. Copies of the notification letter, along with the authorization will be sent to the cognizant ACO and appropriate Government Paying Office. Continued Participation Based on results of on-going surveillance of the contractor’s billing system. – Majors: Cyclical ICAPS audits and Annual testing of Paid Vouchers – Non-Majors: Annual Testing of Paid Vouchers Rescinding Direct Billing Authority May Rescind Direct Billing if: – Contractor fails to submit its incurred cost proposals. – Audit report issued citing significant internal control weaknesses. – A DCAA Form 1 was issued. – Contractors failed to submit final vouchers in accordance with FAR 52.216-7(d)(5). Rescinding Direct Billing Authority However: A contractor with delinquent final vouchers may continue to participate if it submits to the contracting officer for approval, with a copy to DCAA, an acceptable plan to get current. FAO’s will rescind direct billing if the plan is rejected by the CO and an extension is not granted. Rescinding Direct Billing Authority FAO is required to provide the contractor and ACO with written notice of direct billing rescission. FAO will also notify paying office(s) by fax or email within 24 hours. – Examples are available on DCAA intranet and APPS under Direct Billing Letters. Rescinding Direct Billing Authority FAO may rescind direct billing on a contract by contract basis. For example: DCAA Form 1 was issued that applies to only one contract. FAO may require the contractor to submit only vouchers for the affected contract to DCAA for approval. Remaining vouchers on other contract may be submitted to the paying office. Reinstated Direct Billing Authority DCAA can reinstate the contractor’s direct billing authority whenever the conditions causing the rescission have been resolved by issuing a new DCAA Authorization Memorandum. Wide Area Workflow WAWF The DoD initiated the Wide Area Workflow (WAWF) Receipts and Acceptance System to eliminate paper transactions from the contracting process. The purpose of WAWF is to enable vendors and government officials to electronically access and process the documentation needed to generate payment for goods and services. WAWF All vouchers should be submitted through WAWF unless contract terms require hard copy vouchers to be submitted. Contractors can submit vouchers through WAWF even though they are not approved for direct billing. – Vouchers will be submitted to DCAA first for approval and then to DFAS for payment. Questions?
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