1. Advanced Contract Billing Implementation Guide
  2. Understanding Fee and Award Fee Billing Lines for Advanced Contract Billing Contracts

Understanding Fee and Award Fee Billing Lines for Advanced Contract Billing Contracts

You can set up two types of billing lines for fees:

  • Fee (Billing line type F or 4)

  • Award fee (Billing line type A)

Fees are amounts that you bill your customer in addition to the invoice amount. Award fees are additional fee amounts that the customer allows you to bill for, but only if you meet certain incentive criteria, such as finishing the project ahead of schedule. The incentives for which you can bill the award fee are defined as part of setting up the contract.

The process to set up fee and award fee billing lines is the same, but the system processes the two lines differently when editing the calculated fee amounts against the limits that you set up for the contract. For fee billing lines, the system edits the calculated fee amount against the amounts in the Fee fields. For award fee billing lines, the system uses the amounts in the Award Fee fields. These fields appear on the Contract Amounts tab in the Create/Edit Advanced Contracts program (P52G01M) for the funding level contract for which you are setting up billing lines.

You use the Contract Billing Line Details program (P5202) to set up fee billing lines. After you enter the fee billing line, you set up the cross-reference information for the line. Setting up cross-reference information includes selecting the billing lines against which you want to apply the fee and selecting the calculation method for the fee. If the contract for which you are setting up billing lines is assigned document type R2, you can use only one calculation method, which is the percent of cost method. If the contract is a funding-level advanced contract billing contract (document type C3), you can use one of these seven calculation methods:

  • Percent of cost.

  • Labor category.

  • Rate per hour.

  • Flat amount.

  • Level of effort (LOE) at the funding level.

  • LOE at the labor category level.

  • Percent of limit value.

When you set up the cross-reference lines, you can also specify that a fee calculation method is cumulative by selecting the Cumulative check box. If you select the Cumulative check box for any of the calculation methods, the system factors in fee amounts from previous invoices when calculating the fee amount for the current invoice.

For the flat amount and percent of limit value calculation methods only, you also specify whether the fee amount is recurring or is a one time occurrence. If you specify that the amount is recurring, you also specify a recurring frequency. For fees that you set up as one time occurrences, the system suspends the fee line after calculating fees for the first invoice. The system suspends the fee line by changing the value in the Eligibility Status field to Suspended and does not calculate fees again for the fee line unless you manually change the value.

The following sections discuss the seven calculation methods. Each section includes three examples of how the system calculates the fee amount based on different scenarios. These examples include:

  • A fee line that is not cumulative and the setup for the fee has changed since the last invoice.

  • A fee line that is cumulative and the setup for the fee has not changed since the last invoice.

  • A fee line that is cumulative and the setup for the fee has changed since the last invoice.