1. page Bill of Collections and Overpayments – Federal Contracts November 10, 2011 Midwest SBLO Meeting

2. page1 Introduction Presented by Ray Suennen Governmental Contracts Compliance Coordinator Integrys Energy Services, Inc RFSuennen@integrysenergy.com

3. page2 Introduction This presentation is focused on Bill of Collection notices and Overpayments as related to compliance issues and operational processes

4. page3 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

5. page4 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

6. page5 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

7. page6 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

8. page7 Bill of Collections and Overpayments are administrative aspects that are part of performance and are part of Past Performance

9. page8 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

10. page9 Bill of Collection Notices 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

11. page10 Bill of Collection Notices 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

12. page11 Bill of Collection Notices Bill of Collections - give generic reasons Erroneous - wrong vendor Duplicate payment A deposit was made in error identifying a date and a tracer number

13. page12 Bill of Collection Notices 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

14. page13 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

15. page14 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)

16. page15 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

17. page16 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 -

18. page17 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 -

19. page18 Bill Of Collection Examples Timing – For receipt of the payment for the re-bill 43 days – 102 days (our experience) Overpayment amounts $1,049.24BOC - applied/credit/rebill $8,672.72BOC - applied/credit/rebill $341,893.90Refunded at time of receipt $2,042,771.85 Refunded at time of receipt BOCs have not included any interest or other fees

20. page19 Timing Examples Example # 1 -$8,672.72 Payment error 7/7/08Payment received & posted to account as unapplied Sep & OctAdjusted rates & issued credits 2/19/09Received (net balance) payment 6/20/11BOC issued (1 year & 121 days) 6/24/11Issued payment to DFAS 6/24/11Invoiced for returned amount 10/4/11Received payment (3 months & 10 days to collect)

21. page20 Timing Examples Example # 2 -$341,893.90 Paid twice 4/29/09Invoice created 6/2/09Payment # 1 received 6/12/09Payment # 2 received 9/17/09Refunded payment # 2 ---------- 1 yr & 4+ months later 1/31/11BOC issued 2/16/11Replied & requested cancellation 2/16/11Located repayment & closed

22. page21 Timing Examples Example # 3 - $2,019,768.22 Payment error Paid us for another vendor’s invoice 3/3/11Received payment 3/15/11Notified DFAS of overpayment 4/6/11Funds withdrawn from our account

23. page22 Timing Examples Example # 4 - $8,947.42 Paid invoice twice 6/1/10 8,947.42Invoice created for May 6/17/10(8,947.42)Received payment # 1 6/24/10(8,947.42)Received payment # 2 7/2/1010,462.95Invoice created for June 7/20/10 (1,515.53)Payment for June (net) 10/6/11BOC issued 10/24/11Request payment reclass 11/4/11DFAS approval & cancel

24. page23 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

25. page24 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

26. page25 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

27. page26 Summary Questions, & Comments