Leisa S. Bodway
Director, Acquisition Business & Services Group
CMS Office of Acquisition & Grants Management
Thursday, January 8, 2015
CENTERS FOR MEDICARE & MEDICAID SERVICES
(CMS)
What kind of Agency is CMS and what do we do?
CMS is a Civilian Agency under the Department of Health & Human Services (HHS)
CMS is the Agency that administers:
•
Medicare
•
Medicaid
•
Children’s Health Insurance Program
•
Affordable Care Act (Obamacare) –
Health Insurance Marketplace
CMS insures 100 million people...
We're here to offer all Americans access to health insurance options they can afford - Options that protect
Americans from financial hardship and give quality coverage. When Americans have good quality
coverage, they're able to make the most of our health care system.
2
WHY ARE WE SO INTERESTED IN
ACCELERATING PAYMENTS TO SBS?
It turns out
that
calculating all
businesses up
to 1,500
employees
makes no
substantial
difference in
the
percentage
calculations.
Add to this the
number of
businesses
having fewer
than 500
employees and
the number of
small
businesses
comes to
27,262,983.
U.S. Census
information
from 2008
identified a
total of
27,281,452
businesses in
the US.
The number
of businesses
operated by
proprietors
with no
employees is
21,351,320.
Subtract 27,262,983 from
the total number of
businesses identified by
the census (27,281,452)
and you get the number
of businesses with more
than 500 employees:
18,586 Large Businesses
Small
Businesses
= 99 %
of all
businesses
in the
United
States.
3
PROMPT PAYMENT ACT
32.900 Scope of subpart.
This subpart prescribes policies, procedures, and clauses for implementing Office
of Management and Budget (OMB) prompt payment regulations at 5 CFR Part
1315.
4
WHAT IS AN ACCELERATED PAYMENT?
5 CFR §1315.2 Definitions.
(a) Accelerated payment means a
payment made prior to the due
date (see discussion in §1315.5).
5 CFR 1315.5 CHAPTER III: OFFICE OF
MANAGEMENT AND BUDGET
CHAPTER III: OFFICE OF MANAGEMENT AND BUDGET
SUBCHAPTER B: OMB DIRECTIVES
PART 1315: PROMPT PAYMENT
“1315.5 - Accelerated payment methods.
(a) A single invoice under $2,500. Payments may be made as soon as the contract, proper invoice,
receipt and acceptance documents are matched except where statutory authority prescribes
otherwise and except where otherwise contractually stipulated (e.g., Governmentwide
commercial purchase card.) Vendors shall be entitled to interest penalties if invoice payments
are made after the payment due date.
(b)
Such payments are not
subject to payment restrictions stated elsewhere in this part. Vendors shall be entitled to
interest penalties if invoice payments are made after the payment due date.”
6
ACCELERATED PAYMENT
REQUIREMENTS
OMB
Memorandum • Established “the Executive Branch
policy that, to the full extent
11-31,
permitted by law, agencies shall
Accelerating
make their payments to small
Payments to
business contractors as soon as
Small Business practicable, with the goal of
making payments within 15 days”
for Goods and
or receipt of relevant documents.
Services
(9/14/11).
ADDITIONAL ACCELERATED PAYMENTS
FOR LARGE BUSINESSES
OMB Memorandum M-12-16, Providing Prompt Payment
to Small Business Subcontractors (July 11, 2012)
• Establishes the Administration's initiative to accelerate
Federal payments to prime contractors, so that prime
contractors can, in turn, expedite payments to their small
business subcontractors.
8
FAR Provision - 32.9 Prompt Payment
(a) Agency heads—
(1) Must establish the policies and procedures
necessary to implement this subpart;
FAR 32.903
Responsibilities
(2) May prescribe additional standards for
establishing invoice payment due dates (see
32.904) necessary to support agency programs
and foster prompt payment to contractors;
(3) May adopt different payment procedures in
order to accommodate unique circumstances,
provided that such procedures are consistent
with the policies in this subpart;
(4) Must inform contractors of points of contact
within their cognizant payment offices to
enable contractors to obtain status of invoices;
and
(5) May authorize the use of the accelerated
payment methods specified at 5 CFR 1315.5.
(See Slides 2 & 3)
9
FAR PROVISION – 32.009
PROVIDING ACCELERATED PAYMENTS TO SMALL BUSINESS
SUBCONTRACTORS.
• 32.009-1 General - Pursuant to the policy provided by OMB
Memorandum M-12-16, Providing Prompt Payment to Small
Business Subcontractors (and as extended by OMB Memorandum
M-13-15 and M-14-10, both titled, Extension of Policy to Provide
Accelerated Payment to Small Business Subcontractors),
and upon receipt of accelerated
payments from the Government. This acceleration does not provide
any new rights under the Prompt Payment Act and does not affect the
application of the Prompt Payment Act late payment interest
provisions.
• 32.009-2 Contract clause - Insert clause 52.232-40, Providing
Accelerated Payments to Small Business Subcontractors, in all
solicitations and contracts.
10
FAR 32.9 PROMPT PAYMENTS
32.906 Making payments.
(a) General. The Government will not make invoice payments earlier than 7
days prior to the due dates specified in the contract unless the agency head
determines—
(1) To make earlier payment on a case-by-case basis; or
(2) That the use of accelerated payment methods are necessary (see
32.903(a)(5)).
FAR 32.903 Agencies may pay
SBs as quickly as
possible…
11
FAR 52.232-40 PROVIDING ACCELERATED PAYMENTS
TO SMALL BUSINESS SUBCONTRACTORS
52.232-40 Providing Accelerated Payments to Small Business Subcontractors. As prescribed in
32.009-2, insert the following clause:
Providing Accelerated Payments to Small Business Subcontractors (Dec 2013)
(a)
Upon receipt of accelerated payments from the Government, the Contractor shall
make accelerated payments to its small business subcontractors under this contract,
to the maximum extent practicable and prior to when such payment is otherwise
required under the applicable contract or subcontract, after receipt of a proper
invoice and all other required documentation from the small business subcontractor.
(b)
The acceleration of payments under this clause does not provide any new rights under
the Prompt Payment Act.
(c)
Include the substance of this clause, including this paragraph (c), in all subcontracts
with small business concerns, including subcontracts with small business concerns for
the acquisition of commercial items.
12
WHAT MEASURES DID CMS TAKE TO ENSURE THAT
PRIME CONTRACTORS PAY SMALL BUSINESS
SUBCONTRACTORS ON AN ACCELERATED TIMETABLE?
CMS
Invoice/Voucher
Payment Policy
• Establishes processes for review and
payment of invoices/vouchers;
• Establishes a process for 15-day
accelerated payments to Small
Businesses (SB) in accordance with
(IAW) OMB Memorandum 11-31; and,
• Establishes a process for accelerated
payments to Large Businesses (LB)
with SB subcontractors IAW OMB
Memorandum M-12-16.
13
ALL CMS CONTRACTOR INVOICES AND VOUCHERS SHALL BE PAID
IN ACCORDANCE WITH THE TIME FRAMES ESTABLISHED IN THE
CHART BELOW:
INVOICE/VOUCHER REVIEW/APPROVAL PROCESSING TIME FRAMES
Contract Payment Category Types ($ = Total Contract Value)
Days = Calendar Days
TYPE I
TYPE II
TYPE III
Type IA
Type IB
Type IIIA
Type IIIB
TYPE IV
Simplified
Acquisitions
$3K to
$150K
(Small
Businesses)
Simplified
Acquisitions
$3K to $6.5M
(Large
Businesses)
All Large
Business
Prime
Contracts w/
Small
Business
SubCtrs
TEAM
MEMBER
All Small
Businesses
(No $ Limit)
All QIOs
(No $ Limit)
All Other
Contracts
(No $ Limit)
OFM
7 Days
7 Days
14 Days
7 Days
22 Days
12 Days
COR
4 Days
0 Days
8 Days
8 Days
8 Days
8 Days
CO/KO/CS
4 Days
8 Days
8 Days
N/A
N/A
8 Days
Total
Processing
15 Days
Not-toExceed 30
15 Days
Not-toExceed 30
15 Days
Not-toExceed 30
28 Days
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Not-to-Exceed
HOW DO WE COMMUNICATE THE
CONTRACT PAYMENT CATEGORY TYPES?
Contract Provisions/Clauses: All solicitation
and/or contracts shall incorporate, as appropriate,
Agency specific provisions as follows:
FFP Invoice Payment Provisions;
Cost Reimbursement
Voucher Payment
Provisions; OR
When the contract is
awarded, the Category Type
must be identified in Section
G of every contract in the
invoice/voucher payment
clause.
Time & Materials/Labor Hour
Payment Provisions
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WHAT DOES A PAYMENT PROVISION
LOOK LIKE?
G.x: PAYMENTS – VOUCHERS (Cost Reimbursement Contracts –
MAR 2014)
a. GENERAL: The Contractor may submit to the Government a voucher or
Standard Form 1034, Public Voucher for Purchases and Services Other
Than Personal, for payment in accordance with the instructions below.
b. METHOD OF PAYMENT: CMS shall only make an electronic payment
for reimbursement of voucher submissions in accordance with FAR
52.232-33, Payments by Electronic Funds Transfer – System for Award
Management. In order to receive payments, the contractor shall register in
the System for Award Management (SAM) database, in accordance with
FAR 52.204-7, System for Award Management. Failure to register in
SAM may prohibit CMS from making payments to your organization.
16
WHAT DOES A PAYMENT PROVISION
LOOK LIKE? (Cont)
G.x: PAYMENTS – VOUCHERS (Cost Reimbursement Contracts –
MAR 2014)
c. CONTENT OF VOUCHER - Vouchers shall
include, at a minimum:
–
–
–
–
Contractor’s name and address
Contractor’s Tax Identification Number (TIN)
Contractor’s DUNS Number
Voucher Number to include the designation of the
Contract Payment Category Type as follows:
• Contract Payment Category Type I, II, III, IV (TBD upon
award)
17
WHAT DOES A PAYMENT PROVISION LOOK
LIKE? (Cont)
INVOICE/VOUCHER REVIEW/APPROVAL PROCESSING TIME FRAMES
Contract Payment Category Types ($ = Total Contract Value)
Days = Calendar Days
TYPE I
TYPE II
TYPE III
Type IA
Type IB
Type IIIA
Type IIIB
TEAM
MEMBER
Total
Processing
Time
All Small
Businesses
(No $ Limit)
15 Days
Not-toExceed 30
Days
All QIOs
(No $ Limit)
15 Days
Not-toExceed 30
Days
All Other
Contracts
(No $ Limit)
30 Days
Simplified
Acquisitions
Simplified
$3K to
Acquisitions
$150K
$3K to $6.5M
(Small
(Large
Businesses) Businesses)
15 Days
Not-toExceed 30
Days
30 Days
TYPE IV
All Large
Business
Prime
Contracts w/
Small
Business
SubCtrs
28 Days
Not-toExceed
30 Days
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SF 1034 PUBLIC VOUCHER FOR PURCHASES
AND SERVICES OTHER THAN PERSONAL
#10 – Pmt
Cat. IV
XYZ Company
123 Contractor Blvd.
Anywhere, USA
19
WHAT DOES A PAYMENT PROVISION
LOOK LIKE? (Cont)
G.x: PAYMENTS – VOUCHERS (Cost Reimbursement Contracts – MAR 2014)
•
•
•
•
•
•
•
•
•
•
Contract and Order Number, as applicable;
Contract line item number and/or Subcontract line item number;
Description, quantity, unit of measure, unit price and extended price/cost of the
items actually delivered or services rendered, i.e., Labor category and labor hours x
labor rate = total direct labor dollars, subcontractor costs, travel, other direct costs,
overhead rate(s), etc.;
Shipping and payment terms;
Terms of any discount for prompt payment offered;
Other substantiating documentation or information as required by the contract;
Name, title, phone number and complete mailing address of responsible official to
whom payment is to be sent;
Name, title, phone number of person to notified in the event of a defective
voucher; and,
Period of performance for delivery date of goods or services provided.
Additional items identified in Section J.x <CO/CS – Delete this bullet if no other
billing instructions are provided.>
20
WHAT DOES A PAYMENT PROVISION
LOOK LIKE? (Cont)
G.x: PAYMENTS – VOUCHERS (Cost Reimbursement Contracts – MAR 2014)
•
PAYMENTS: The Government shall make provisional payments on all vouchers (pending
the completion of a final audit of the Contractor's cost records) in accordance with:
– FAR 52.216-7, Allowable Cost & Payment, and
– FAR 52.232-1, Payments, and
upon acceptance by the Contracting Officer’s Representative (COR) of the required
supplies/services in accordance with the applicable FAR Inspection and Acceptance clause
and the Contracting Officer’s approval.
•
Reimbursement for vouchers submitted under this contract shall be made not later than thirty
(30) calendar days after receipt of an acceptable voucher from the Contractor at the paying
office designated above. Any discrepancies determined as a result of the audit could delay the
processing of the voucher and may result in the voucher being returned to the Contractor for
corrections.
21
WHAT HAPPENS IF A PRIME DOES NOT
MAKE A PAYMENT TO A SUB?
32.112 Nonpayment of subcontractors under contracts for noncommercial items.
32.112-1 Subcontractor assertions of nonpayment.
• (a) In accordance with Section 806(a)(4) of Pub. L. 102-190, as amended by Sections 2091 and 8105 of Pub. L. 103355 (10 U.S.C. 2302 note), upon the assertion by a subcontractor or supplier of a Federal contractor that the
subcontractor or supplier has not been paid in accordance with the payment terms of the subcontract, purchase
order, or other agreement with the prime contractor, the contracting officer may determine— (1) For a
construction contract, whether the contractor has made—
• (i) Progress payments to the subcontractor or supplier in compliance with Chapter 39 of Title 31, United States
Code (Prompt Payment Act); or
• (ii) Final payment to the subcontractor or supplier in compliance with the terms of the subcontract, purchase
order, or other agreement with the prime contractor;
• (2) For a contract other than construction, whether the contractor has made progress payments, final
payments, or other payments to the subcontractor or supplier in compliance with the terms of the subcontract,
purchase order, or other agreement with the prime contractor; or
• (3) For any contract, whether the contractor’s certification of payment of a subcontractor or supplier
accompanying its payment request to the Government is accurate.
• (b) If, in making the determination in paragraphs (a)(1) and (2) of this subsection, the contracting officer finds the
prime contractor is not in compliance, the contracting officer may—
• (1) Encourage the contractor to make timely payment to the subcontractor or supplier; or
• (2) If authorized by the applicable payment clauses, reduce or suspend progress payments to the contractor.
• (c)
If the contracting officer determines that a certification referred to in paragraph (a)(3) of this subsection is
inaccurate in any material respect, the contracting officer shall initiate administrative or other remedial action.
22
Challenges in Implementing the
Payment Category Types
Office of Acquisition & Grants Management:
• All contracts were required to be modified.
• Consistency in using the right provision/clause, i.e., FFP, CR or T&M
• Include the chart or just the Payment Category Type.
Office of Financial Management:
• The accelerated payments increased their workload by almost 100%!
• In the beginning, they were required to check the contract Section G
for every accelerated payment requested to make sure that the
contractor was requesting the right type.
• Different payment category types require different routing time
frames for review and approval.
23
QUESTIONS???
24