Section 27-3220. LIQUIDATION RATES

 

3220.1Progress payments shall be recouped by the District through the deduction of liquidations from payments that would otherwise be due the contractor for completed contract items.

 

3220.2To determine the amount of the liquidation, the contracting officer shall apply a liquidation rate to the contract price of contract items delivered and accepted.

 

3220.3Except as provided in §3220.5, the liquidation rate shall be the same as the progress payment rate established pursuant to §3215. This rate shall always be used at the beginning of a contract.

 

3220.4The liquidation rate determined in accordance with §3220.3 shall apply throughout the period of contract performance unless the contracting officer adjusts the liquidation rate under the alternate method set forth in §3220.5.

 

3220.5In order to permit the contractor to retain the earned profit element of the contract price for completed items in the liquidation process, the contracting officer may reduce the liquidation rate when all of the following circumstances apply:

 

(a)The contractor has requested a reduction in the rate;

 

(b)The rate has not been reduced in the preceding twelve (12) months;

 

(c)The contract delivery schedule extends at least eighteen (18) months from the contract award date;

 

(d)Data on actual costs are available for the products delivered, or, if no deliveries have been made, for a performance period of at least twelve (12) months;

 

(e)The reduced liquidation rate would result in the District recouping under each invoice the full extent of the progress payments applicable to the costs allocable to that invoice;

 

(f)The contractor would not be paid for more than the costs of items delivered and accepted (less allocable progress payments) and the earned profit on those items;

 

(g)The unliquidated progress payments would not exceed the limit prescribed in the contract;

 

(h)The parties agree on an appropriate rate; and

 

(i)The contractor agrees to certify annually (or more often if requested by the contracting officer) that the alternate rate continues to meet the conditions of §§3220.5(e) through 3220.5(g). The certificate shall be accompanied by adequate supporting information.

 

3220.6The contracting officer may increase the liquidation rate in the following circumstances:

 

(a)If the contractor experiences a lower profit rate than the rate anticipated at the time the original liquidation rate was established;

 

(b)If the target profit is changed under a fixed-price incentive contract with successive targets; or

 

(c)If a redetermined price involves a change in the profit element under a contract with prospective price redetermination at stated intervals.

 

3220.7Whenever the liquidation rate is changed, the contracting officer shall issue a contract modification to specify the new rate.

 

3220.8If the liquidation rate is increased under §3220.6, the contracting officer shall ensure that the alternate liquidation rate is high enough to result in the recoupment by the District of the applicable progress payments on each billing.

 

3220.9Any change in the liquidation rate shall be supported by documentation included in the contract file.

 

source

Final Rulemaking published at 35 DCR 1634 (February 26, 1988).