How does the government pay for what it buys?
One of the benefits of working with the Federal government is that if the contractor provides the goods and/or services and set forth in the contract, and submits the proper documentation as required, the government will pay promptly.
The Federal government pays its contractors electronically. The method is defined by the contract. The trend is to continue to decrease the volume of paperwork involved in processing acceptance / payment and continue to increase the use of web based applications and processes. As in the commercial sector, this results in substantial cost savings.
Three basic methods are currently being used:
One of the primary purposes for the System for Award Management (SAM) is to get the information required to establish the capability of Electronic Funds Transfer (EFT). A Federal contract will not be awarded to a business or organization that is not SAM registered. In this scenario, documentation is presented and approved and payment follows. The registration website is www.sam.gov and there is no cost to get registered on SAM.
Credit cards are actively used by the Federal government. Small purchases (under $2,500) are commonly paid for with a credit card. Government credit cards work the same as credit cards in the commercial sector. If you accept commercial cards, you can accept government cards. Credit cards can be used for large purchases as well. Use of the cards is directed by the Government agency. The GSA SmartPay® Program, the world’s largest Government charge card program, provides charge cards to agencies/departments throughout the Federal Government. There are currently over 350 agencies/organizations participating in the GSA SmartPay® program, spending more than $26 billion in FY06, through 98 million transactions on approximately 3 million charge cards. Contractors may want to consider if they are loosing sales by not accepting Government credit cards.
The Department of Defense has recently implemented an online payment system. Wide Area Work Flow (WAWF) is a paperless Contracting DoD-wide application designed to eliminate paper from the receipts and acceptance process of the DoD contracting lifecycle. The goal is to enable authorized Defense contractors and DoD personnel the ability to create invoices and receiving reports and access contract related documents. If you are a contractor with the Department of Defense, you should be ready to be able to work with WAWF.
New contractors may find WAWF a bit overwhelming. The primary website is https://wawf.eb.mil There is a training site at https://wawftraining.eb.mil which will help you understand the how the process works.