The government will make payments to the Contractor when requested as work progresses, but (except for small business concerns) not more often than once every 2 weeks, in amounts determined to be allowable by the Contracting officer in accordance with Federal Acquisition Regulations (FAR) subpart 31.2 in effect on the date of the contract. The Contractor may submit to an authorized representative of the Contracting Officer, in such form and reasonable detail as the representative may require, an invoice or voucher supported by a statement of the claimed allowable cost for performing on the contract. (FAR 52.216-7(a))
Reimbursement of costs includes all direct costs to include labor, travel, material, equipment, subcontractor, and other direct costs. Reimbursement also includes reimbursement of indirect cost rates (fringe, overhead, G&A, etc) as negotiated at time of award or as negotiated and agreed to with DCMA as part of Provisional Billing Rates. (FAR 52.216-7(b))
Final indirect rates will be determined at the end of the contractor’s fiscal year (FY) through audit and negotiation of what is called the “final indirect cost rate proposal”, or as DCAA calls it, the “Incurred Cost Proposal” (FAR 52.216-7(d)(2)). Once final rates have been negotiated, the contractor is required to adjust FY indirect rate billings from provisional rates to the negotiated final rates. Contractors are required to make this adjustment within 120 days after final settlement (FAR 52.216-7(d)(5))
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