BOP Program Statement 8531.14 § 8

Multiple element contracts can be diverse, depending on customer requirements. To maximize

cash flow and minimize delays, FPI ensures that revenue is recognized in accordance with

established guidelines.

a. Assessment. An assessment to determine if an arrangement contains “multiple deliverables”

is made during the initial contract negotiation and again as each item is delivered. Each item in a

multiple deliverable arrangement is recognized as a separate unit, based on its value, if the

following criteria are met:

■ The item(s) delivered has value on a standalone basis to the customer.

■ The fair value of remaining undelivered items is reliable.

■ If a right of return exists, as noted in the arrangement, delivery of the remaining item(s) is

probable.

To ensure that FPI invoices customers for partial deliveries, the customer(s) obligating document

must include an accounting of all individual line items subject to billing, and their pricing and

quantities. Inclusion within the obligating document must be done by listing each line item

separately. The total value of the individual line items must equal the value of the customer’s

obligation. Each billable line item on the customer’s order must be entered individually in the

financial information system. Items that have been delivered and are ready and available for use

P8531.14 03/20/2015 7

by the customer may be billed in whole or as delivered as long as they are separately accounted

for in the customer(s) obligating document.

Recommended verbiage for the customer agreement for Federal customers is “As defined in

FAR 32.102 (d), payment for accepted supplies, including payments for accepted partial

deliveries, is authorized upon proper receipt and invoicing.”

b. Pricing. Pricing must be calculated in accordance with the Program Statement Pricing

Procedures, FPI.

Dependent relationships include installation, site preparation, etc., and must be identified as such

at both the item level and sales order levels, defined as accounting units:

■ Elements that are available as part of FPI’s normal product line should have prices that are

fixed, determinable, and tied to FPI’s normal business operations.

■ Dependent elements must have current pricing that is fixed, determinable, and in a manner

linking the relationships together.

c. Delivery. Delivery has occurred for:

■ FOB Destination – when all independent elements have been received by the buyer.

■ FOB Origin – when shipment has occurred.

For delivery to have occurred, all dependent elements must have been delivered or accepted by

the buyer.

d. Ownership Recognition. Contractual agreements contain information to ensure FPI is

legally covered in regards to ownership and acceptance of loss liability, in the event a claim is

required.

e. Independent Elements. These are items that must be delivered to the buyer, whose

contractual acceptance is realized based on shipping terms and conditions.

f. Dependent Elements. A method of usability or completeness needs to be established and

certification of acceptance from the buyer needs to be obtained in the following manner.

Certifications from the customer must reference each element accepted by the buyer. It must

include:

P8531.14 03/20/2015 8

■ The customer purchase order or contract number.

■ Line item.

■ FPI’s sales order number.

■ Date of acceptance.

■ Point of contact, including name and title, telephone number, and address.

Elements containing partially completed items must indicate the approximate percentage

completed by individual element in addition to the contact information stated above.

Certifications may include a combination of independent and dependent elements listed above,

but must have a clear delineation of each element and its degree of completion.