Final Invoice

A final invoice is the contractor's last formal payment request submitted to the government after all performance is complete and accepted, explicitly certified as the final and complete claim for all compensation due under the contract.

What is a Final Invoice?

A final invoice marks the end of the financial relationship between a contractor and the government under a specific contract. Unlike progress payments or interim invoices submitted during performance, the final invoice is distinguished by its certification: the contractor certifies that all work has been performed and accepted, all amounts claimed are proper and consistent with the contract, and the invoice represents the contractor's complete and final claim for payment under the contract.

FAR 52.232-5 (for construction) and FAR 52.232-25 (prompt payment) govern invoice submission requirements. For cost-type contracts, the final invoice must be submitted no later than 120 days (for DCAA-audited contracts, this can extend) after contract completion. The contracting officer may withhold a small percentage of payments during performance (retainage) that is released upon satisfactory completion and submission of the final invoice.

Before submitting a final invoice, contractors should: confirm all deliverables have been formally accepted (not merely delivered); ensure all subcontractors have submitted their final invoices to the prime; resolve any open contract modifications affecting the final contract price; and review the contract for any withheld amounts or unresolved credits that should be addressed in the final invoice amount.

Why Final Invoice matters for government contractors

The final invoice is the last opportunity to claim all amounts legitimately owed under the contract. Submitting a final invoice without accounting for all earned compensation, including retainage, unapplied contract modifications, or unresolved equitable adjustments, may result in unrecoverable losses. The certification that accompanies the final invoice carries legal weight; false certification can trigger the False Claims Act.

Example

An engineering services contractor completes a two-year contract for EPA environmental assessment work. Final deliverables are accepted on May 15, 2026. The contractor submits a final invoice on June 10, 2026, for $48,750 representing the last month's labor, final expenses, and 5% retainage withheld during performance. The invoice is certified: "I certify that this invoice is true and correct and that the amounts claimed are in accordance with the contract terms and conditions. This is the final invoice on this contract." The contracting officer approves payment within 30 days.

Frequently Asked Questions

What happens if a contractor fails to submit a final invoice within the required timeframe?

Failure to submit a final invoice within the contractually required period can complicate contract closeout and, in some cases, result in the government treating the omission as a waiver of remaining claims. For cost-type contracts, late final invoices can delay indirect cost rate settlements and DCAA audit resolution. Most contracts specify a deadline; contractors should track this carefully.

Can a contractor submit a revised final invoice after the government has paid it?

Submitting a revised final invoice is unusual and requires contracting officer approval. If a contractor discovers an error or omission after submitting the final invoice but before the release of claims is executed at closeout, it should contact the contracting officer immediately to request the revision. After the release of claims is signed, recovery of additional amounts is extremely difficult.

Should contractors hold back submitting a final invoice if there are unresolved equitable adjustments?

Yes, in many cases. If a request for equitable adjustment (REA) or certified claim is pending, submitting a final invoice before resolution can complicate the claim. Some contractors submit the final invoice for the undisputed amount while expressly reserving the right to the pending REA or claim. This approach should be documented carefully.

What retainage is typically withheld until final invoice payment?

Retainage amounts vary by contract type. Construction contracts under FAR 52.232-5 authorize up to 10% retainage on progress payments, reduced to 5% upon satisfactory performance. Service contracts may use smaller retainage percentages or none at all. The specific retainage terms are stated in the contract.