Contracting and Payment Options
Chontil Neville
Procurement and Contract Law
Professor Levasseur

Introduction
The government pays to its contractors when they submit invoices containing the prices of the supplies or the services rendered according to the contract’s terms. The invoices also contain any discounted or deducted amounts. The government is obligatory to pay upon deliveries unless they specify a due time to pay. For the purpose of selecting payments methods for the services and products purchased by the government agencies, FAR 32.113 should be referenced (Legal Information Institute, 1992). The purpose of this paper is to discuss the three payments options available to government and their advantages and disadvantages, three elements of the prompt Payment Act; next, it will discuss the key areas of cutting government costs, two revisions to TINA that will decrease the requirements for the government’s procurement of technical data and computer software. In the end, the paper will discuss the Buy American Act’s exceptions.
Government Payment Options
For purchasing the software for tax returns processing, contacting officers on behalf of Internal Revenue Service’s (IRS) can select various effective payment methods. Contracting officer uses the customary contract financing ref. 32.113 for review and uses it without getting the permission from top management. The Contracting officer can select three payment methods that are progress payment, performance-based payments, and payment by government charge cards (52.232-1 Payments, n.d).
Progress payments method: Progress payments method, as prescribed in 32.502-4(a), is used by the government to pay contractors on the demand of the contractor during the work progress, usually on a monthly basis, $2500 or according to the approval of the contracting officer. If the contractor does not demand the small amounts, the government pays 80% of the total cost of the contract cost incurred. This payment method is advantageous because it is less risky for the government and motivational for the contractor to make him agree to deliver product or service according to contract’s terms. This method has a disadvantage when a contractor does not perform according to the terms of the contract, the government can demand repayment according to the FAR 52.232-16 liquidation section. The contracting officer can defer or decrease the progress payments when the contractor fails to deliver the material or service supplies for the agreed contract. The repayment can be through credit memorandum cash and cannot be delayed or impaired (52.232-1 Payments, n.d).
Performance Based Payment Method: Another payment method is the Performance Based Payment covered under the FAR 32.10. Performance-Based Payments are made on the attainment of particular events; performance is measured through quantifiable methods or measured by objective or by some other quantified measures of the results. It is the most preferred method by the government. The amount of performance is specified through the bidding process. When the contractors get the regular performance payments, they are more motivated to complete the work effectively and timely. One disadvantage of this method is that Performance Based Payments program is defined for fewer measures and these measures have inadequate completion guidelines or the evaluation of these measures are not relevant to their comparative value, this will create a problem.
Payment by Government Charge Card Method: Third payment method is Payment by Government Charge Card referenced in 532.70 subparts. It is offered for the indefinite quantity and indefinite delivery schedules contracts (Part 532-Contract Financing, n.d). The advantage of this method is that it saves the administrative charges linked with the long contract negotiations in the bidding process. It also gives comprehensive transaction detail that can also be used for future purchase. The disadvantage of this method can be the wrong use or fraudulent use of government charge cards. It can be used for personal use, but with the tight monitoring, this method an e improved (Part 532-Contract Financing, n.d).
Elements of Prompt Payment Act
The Prompt Payment Act as referenced in FAR 32.9 ensures that contractors received payment in an efficient and timely manner after the receipt of the invoice. This obliges the government agencies to pay contractors for their products or services within the time period and to pay the interest penalty on late payments after the due date (COHEN SEGLIAS, n.d). The three most important elements of prompt payment act are increased use of electronic commerce for financial institutions, use of the government purchase cards and the third element is debt collection. Increased use of electronic commerce for financial institutions falls under the Paperwork Reduction Act. For example, the Paperwork Reduction Act allows the Management and Budget office to gather information of financial institutions for the effective processing of electronic payments (COHEN SEGLIAS, n.d).
The other element of the Prompt Payment Act is the use of government-wide purchase cards. For example, Government Commercial Purchase Cards are available to all Federal agencies in a GSA contract for the basic purchases that are covered under the FAR Subpart 13.2. The third element is the Debt Collection Improvement Act of 1996 that helps in collecting the debt for the government in the case when payments are not made willingly. For examples, the debt collection act helps in reducing the financial loss to the federal agencies, by accurately tracking the borrowers and the hostile evaluation of accounts and data that is shared with the federal agencies (COHEN SEGLIAS, n.d).
Yes, Congress has to revise each element for making the prompt payment smoother. These revisions may include, it should state the sufficient documentation and accurate invoicing. According to the Section 1315.4(f) of the Prompt Payment Act, the period of payment available to an agency for making the timely payments without incurring the interest penalty should be stated clearly and should begin on the date of receipt of an appropriate invoice. I think the provision that is mostly ignored is the provision of prompt payment to vendors and subcontractors within7 days of working from the government. These provisions should be revised by the Congress to make the system of payments better (COHEN SEGLIAS, n.d).
Areas of Limiting Government Costs
There are various ways of limiting government costs. The one way of limiting government cost is through the Internal Revenue Office. Internal Revenue Office can limit its use of public buildings in its operations. The Alternative Workplace Arrangement is one area of decreasing cost that permits agencies to work in a non-conventional environment that is far from the official working center, and can be worked and connected through telework system (IRS, n.d). The telework arrangements let the staff perform their duties and tasks from their home or location approved by the management, For example, work in a GSA telework center or Internal Revenue service satellite office.
The second way to limit the government costs is by leasing the idle public buildings or selling the properties to the public at the fair market price. A lot of community organizations can utilize the property to help the destitute people and can generate programs for employment and training (IRS, n.d).
A third way to limit government costs is by restraining the number of public buildings, the quantity of leases for diverse agencies will also decrease that performs business operations with commercially leased property. GSA's Office of Property Disposal informs local and state agencies about any spare federal real property that they may be qualified to buy under some laws (IRS, n.d).
In addition, the Government Accountability Office discovered that government programs are repeating. Several agencies are offering the same services, for example, homeland security services, health, defense, economic development, and social services etc. The government should track the repeated programs to reduce the expenses. This assessment and decrease in repeated programs can save billions of dollars in taxes yearly and assist agencies to offer more efficient and effective services (IRS, n.d).
Revisions to TINA
I think that the two most significant revisions to the TINA (Truth in negotiation Act) that would decrease the requirements for the government’s procurement of technical data and computer software are already working. First, according to FAR 2.101, if the data and computer software are commercial items, in that case, the commercial items exception is in place when it comes to the data submission for pricing requirements. To meet the criteria for this exception, the items must be presented to the public for sale/lease (Find Law, n.d).
When the contracting officer did market research and found that the necessary items are meeting the requirements of the requesting agency, at that time obtaining contractors’ technical data and a process will not be required. I think that with the restriction of unlimited rights, the government will not be capable of sharing the information with the competitors, for example, in a case of the company wanting to keep its data as proprietary information (Find Law, n.d).
If historical data is preserved and customized for economic variances, at that time the submission of data need less information by contracting officers to make a decision that sufficient data exists to confirm that submission or proposal is within the acceptable range for decision-making. If the electronic database for contractors’ records is updated then pricing data can be obtained and verified adequately for pricing competition (Find Law, n.d).

Exceptions to the Buy American Act
The Buy American Act limits the buying of the goods to use within the U.S.A. that are not domestically produced. The Congress signed the Act in 1993. According to FAR 25.003, BAA is domestic end products and TAA are U.S.A made end products but components from designated country (Government contracts, n.d). There are some exemptions in the Buy American Act. If we look at the two exemptions of Buy American Act that are the non-availability and unreasonable cost of the items required, at that time I believe that these exceptions necessary. If a product in not available in the United States, particularly during the times of war, at that times the products that are manufactured in the U.S., but have components from foreign countries, will fall within the 15 % rule to decide if the product is a domestic end product and can be used within the United States. According to FAR Subpart 25.1, if the contracting officer sees that the product is unreasonably priced in the domestic country then, he will allow the purchase of the foreign country products (Government contracts, n.d).
Conclusion
Thus, Government can pay through Progress payment method, performance-based method or through government charge cards. Increased use of electronic commerce for financial institutions, use of the government purchase cards debt collection are the elements of the Prompt payment Act that can smooth the processing of payments. Areas of limiting the government costs are through the Internal Revenue Office, by leasing the idle public buildings, by restraining the number of public buildings, restraining the government repeating programs. Revisions to the TINA that demand fewer data requirements are the commercial items and items that are meeting the requirements of the agency. The exemptions to the Buy American Act non-availability and unreasonable price are necessary in the case of war, disastrous etc.

References
Legal Information Institute (1992). 48 CFR 32.113 - Customary contract financing. Retrieved from https://www.law.cornell.edu/cfr/text/48/32.113
52.232-1 Payments (n.d). Federal Acquisition Review (FAR). Retrieved from https://www.acquisition.gov/sites/default/files/current/far/html/52_232.html
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Part 532-Contract Financing (n.d). General services administration acquisition manual (GSAM). Retrieved from https://www.acquisition.gov/sites/default/files/current/gsam/html/Part532.html#wp1860478
COHEN SEGLIAS (n.d). (Prompt Payment Act http://www.cohenseglias.com/federal-contracting-database/prompt-payment-act
Government contracts (n.d). Buy American Act. Retrieved from http://www.wingovernmentcontracts.com/buy-american-act.htm
Find Law (n.d). 10 U.S.C. § 2306a : US Code - Section 2306A: Cost or pricing data: truth in negotiations. Retrieved from http://codes.lp.findlaw.com/uscode/10/A/IV/137/2306a
IRS (n.d). Telework (Flexi-place) Program. (2010). Retrievedhttps://www.irs.gov/irm/part6/irm_06-800-002.html