bill of collections and overpayments – federal contracts november 10 , 2011 midwest sblo meeting

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Bill of Collectionsand Overpayments –

Federal Contracts

November 10, 2011

Midwest SBLO Meeting

Introduction

Presented by

Ray Suennen

Governmental Contracts

Compliance Coordinator

Integrys Energy Services, Inc

[email protected]

Introduction

This presentation is focused on

Bill of Collection notices and

Overpayments as related to compliance

issues and operational processes

One of the factors involved in the

evaluation process for awarding

contracts is Past Performance

The responsiveness to Bill Of Collections

and the handling of overpayments is

a performance issue

Past Performance

FAR 42.1501

Past Performance information is

relevant information, for future source

selection purposes, regarding a

contractor’s actions under

Previously awarded contracts.

Past Performance

FAR 42.1501

It includes ….. the administrative aspects of performance; the contractor’s history of reasonable and cooperative behavior,

and commitment to customer satisfaction, …. the contractor’s record of integrity and

business ethics, and generally, the contractor’s business-like concern for the

interests of the customer,

Past Performance

Contracts may include the following;

“Prompt actions taken by the offeror to

correct performance problems will be

a reflection of management concern

for customer satisfaction.”

Past Performance

Bill of Collections

and Overpayments

are administrative aspects

that are part of performance

and are part of

Past Performance

Past Performance

Bill of Collection Notices

A Bill of Collection (BOC) is a notice that states

- “you are indebted to the United States

Government in the amount of $x,xxx.xx”

- please remit a check within 30 days of

the date of this letter

- One paragraph describes your rights

- One page describes the collection process

if you do not timely pay


The notice is sent either by

- Email to the CCR “Accounts Receivable

POC” (point of contact)

make sure the CCR email address is

a current address and the person

knows what to do if a BOC is received

- US mail to the company’s name and

address - with no person identified


Bill of Collections

- come without prior warning

- are often more than a year after the date of the

payment in question

- are generated by an “auditor type” functioning

person who is at a central payment

processing location


Bill of Collections

- give generic reasons

Erroneous - wrong vendor

Duplicate payment

A deposit was made in error identifying a date and a tracer number


Department of Defense BOC notices

- Come from the Defense Finance

and Accounting Service (DFAS)

- Are assigned a BOC # (11032112345C65)

- Identifies a contract number, either

Your contract number or

An inter-agency contract number

Overpayments

The reasons for our BOC notices (Action)

- Paid another vendor’s invoice (refund)

- Paid balance due

Included prior invoice amount (refund)

Included over payment credit (offset)

- Paid same invoice twice (refund)

The Government pays by ACH with little identifying data to work with

Scenario Issues

A scenario that can occur

- Overpayment occurs – wrong vendor paid

- Payment is posted to the account

- Subsequent invoice reflects credit

- Government takes credit and pays net amount

- Contract period ends

- Customer account balance is zero

- Contract is closed (6 months later)

- BOC notice is received (12 months later)

Scenario Issues

Resolution

- Document and schedule what has happened

Identify Government took credit

Account balance is zero

Refund will mean re-billing for amount refunded

- DFAS demands payment, because

Paid another vendor’s invoice

Can not correct their records without refund

Scenario Issues

Resolution

- Notify your Contracting Officer

Provide the correspondence with DFAS

Request that CO provides a contact person

to work with for approval of the re-bill

The re-billing of the refunded amount will need either a new expenditure appropriation or to re-open the closed original contract

-

Scenario Issues

Resolution

Send refund

By check

To specific address

Send DFAS contact copy of check

Obtain verification from DFAS of the satisfactory payment of

the Bill Of Collection

-

Bill Of Collection Examples

Timing – For receipt of the payment for the re-bill

43 days – 102 days (our experience)

Overpayment amounts

$1,049.24 BOC - applied/credit/rebill

$8,672.72 BOC - applied/credit/rebill

$341,893.90 Refunded at time of receipt

$2,042,771.85 Refunded at time of receipt

BOCs have not included any interest or other fees

Timing ExamplesExample # 1 - $8,672.72 Payment error

7/7/08 Payment received & posted to

account as unapplied

Sep & Oct Adjusted rates & issued credits

2/19/09 Received (net balance) payment

6/20/11 BOC issued (1 year & 121 days)

6/24/11 Issued payment to DFAS

6/24/11 Invoiced for returned amount 10/4/11Received payment

(3 months & 10 days to collect)

Timing Examples

Example # 2 - $341,893.90 Paid twice4/29/09 Invoice created

6/2/09 Payment # 1 received

6/12/09 Payment # 2 received

9/17/09 Refunded payment # 2

---------- 1 yr & 4+ months later

1/31/11 BOC issued

2/16/11 Replied & requested cancellation

2/16/11 Located repayment & closed

Timing Examples

Example # 3 - $2,019,768.22 Payment error

Paid us for another vendor’s invoice

3/3/11 Received payment

3/15/11 Notified DFAS of overpayment

4/6/11 Funds withdrawn from our account

Timing Examples

Example # 4 - $8,947.42 Paid invoice twice

6/1/10 8,947.42 Invoice created for May

6/17/10 (8,947.42) Received payment # 1

6/24/10 (8,947.42) Received payment # 2

7/2/10 10,462.95 Invoice created for June

7/20/10 (1,515.53) Payment for June (net)

10/6/11 BOC issued

10/24/11 Request payment reclass

11/4/11 DFAS approval & cancel

Overpayments

Overpayments FAR 52.212-4 (i)(5)

The Contractor shall remit the

overpayment to the payment office cited

in the contract along with a

description of the overpayment ….

----------------------------------

If no payment office cited, request

directions from Contracting Officer

Summary

Recommendations

When payments do not match billings, request clarification (if real late – interest may be added)

Notify Contracting Officer of overpayments

Refund overpayments (be timely)

Maintain a documentation file for overpayments - could be a past performance issue

Summary

Recommendations

Do not allow Government personnel to take overpayments as credits on subsequent invoices

Should minimize the number of Bill of Collections

Makes responding to BOC easier

Overall collection process should be shorter

Will save your employees time and effort

Summary

Questions,

& Comments

bill of collections and overpayments – federal contracts november 10 , 2011 midwest sblo meeting

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