Getting Paid on Government Contracts: Invoices, Changes and Recompetes

Government Contracting Guide · Contract Management

The first win is good. The second one is the business.

Kickoff, invoicing, changes, CPARS and the recompete.

30 daysusual federal deadline to pay a proper invoice

15 daysfederal goal for small businesses

3 yearsrecords kept after final payment

Getting paid on government contracts depends on what happens after the award: a clear kickoff, invoices that match the contract exactly, careful handling of changes, and strong performance that leads to option years and the next contract.

The kickoff and who has authority

Ask for a kickoff meeting soon after award to confirm the scope, schedule, deliverables, reports, invoicing steps and points of contact. Learn who is who. The contracting officer is the only person who can change the contract, its price or its terms. The contracting officer’s representative monitors the work day to day and accepts deliverables, but usually cannot change the contract. Program staff may be your daily customers, but they cannot authorize extra work. Write these roles down and share them with your team.

Invoices and the Prompt Payment Act

Under the Prompt Payment Act and FAR Subpart 32.9, federal agencies generally must pay a proper invoice within 30 days of receipt or owe an interest penalty, and federal policy aims to pay small business contractors faster, with a goal of 15 days. A proper invoice matches the contract exactly: contract and order numbers, line items, quantities, unit prices, period of performance, and your banking details as registered in SAM.gov. Most federal invoices are submitted electronically, through Treasury’s Invoice Processing Platform or the Defense Department’s PIEE system. State and local governments have their own prompt payment rules and systems.

Changes and modifications

Agencies sometimes ask for more than the contract covers. Do not do work outside the contract until the contracting officer signs a modification, even if a friendly program manager asks, because you may never be paid for it. Keep a log of every request, the date, who asked and what you answered, and reply in writing asking for direction from the contracting officer. When a change is approved, price it promptly and fairly with clear backup.

Past performance ratings: CPARS

Federal agencies record contractor performance in the Contractor Performance Assessment Reporting System, CPARS, and future evaluators read those ratings. You get a chance to review and comment before a rating is final. If you disagree, respond with facts, dates and documents, politely and on time. The best defense is a year of good work, regular short updates to the agency, and records that show what you delivered.

Option years, recompetes and closeout

Many contracts include option periods the agency can choose to exercise; strong performance makes that an easy decision. About a year before the contract ends, start planning for the recompete: what went well, what you would improve, what the agency will need next, and whether you should team with anyone. At the end, close out cleanly: final invoice, any release the contract requires, return of government property, and records kept, generally for three years after final payment for federal contracts.

Cash flow while you wait

Even prompt government payment can feel slow to a small business that must meet payroll every two weeks. Plan for at least 30 to 45 days between doing the work and receiving payment, more for a first invoice while you are set up in the system. A business line of credit, careful scheduling of supplier payments and invoicing on the first allowed day all help. Some lenders also offer financing secured by government receivables.

When payments are late

If a payment is late, check first that the invoice was proper and accepted: most delays come from a missing contract number, a quantity that does not match, or banking details that differ from SAM.gov. Then contact the payment office or the contracting officer’s representative with the invoice number and date. For federal contracts, Prompt Payment Act interest is generally added automatically when a proper invoice is paid late. Keep a simple aging report of every open invoice so nothing slips.

Reporting and communication

Agencies notice contractors who make their jobs easier. Send a short monthly status report even if the contract does not require one: work completed, upcoming milestones, risks and any decisions you need. Answer questions within one business day, tell the agency about problems before they find them, and bring a proposed fix with every problem. That steady communication is what turns into strong CPARS ratings, exercised options and a real advantage at recompete time.

Subcontractors and flow-downs

If you use subcontractors, the contract’s rules flow down to them. Pay them on time, pass along the clauses that apply, collect their certified payroll where wage rules apply, and keep their insurance certificates current. Their performance becomes part of yours in the agency’s eyes.

Frequently asked questions

Sources

• Acquisition.gov: FAR Subpart 32.9, Prompt Payment
• Acquisition.gov: FAR Subpart 42.15, Contractor Performance Information
• Acquisition.gov: FAR 4.703, Policy (record retention)