Exactly. This lies entirely at the feet of the agency's contracting officer, who is the only person with legal authority to issue the payment. Hopefully, the contracting officer will be reprimanded.
The contracting officer can and often does delegate (limited) authority to Contracting Officer Representatives (COR's) who in most cases can, or very often does directly approve contractor (read here as : AT&T) invoices in the financial services system during a contracts period of performance. I don't know what type of contract this is (i.e. Firm Fixed Price, Cost reimbursement, time and materials etc.) but assuming a payment was made early without completing the full milestone leads me the beleive a delegated COR approved the invoice or payment request prematurely in the financial services system without fully monitoring and ensuring that the milestone work was completed. The government always has a way to re-coop the payment if it was misappropriated or inappropriately paid out before the government received the deliverables. And, the COR in cases like this will be held administratively responsible.
1.604 Contracting Officer’s Representative (COR). | Acquisition.GOV
1.604 Contracting Officer’s Representative (COR).
A contracting officer’s representative (COR) assists in the technical monitoring or administration of a contract (see
1.602-2 (d)). The COR shall maintain a file for each assigned contract. The file must include, at a minimum–
(a) A copy of the contracting officer’s letter of designation and other documents describing the COR’s duties and responsibilities;
(b) A copy of the contract administration functions delegated to a contract administration office which may not be delegated to the COR (see
1.602-2(d)(4)); and
(c) Documentation of COR actions taken in accordance with the delegation of authority.
Parent topic: Subpart 1.6 - Career Development, Contracting Authority, and Responsibilities
Personal Disclaimer: I do work in the fed govt acquisitions field and have "previously" held a position as a 1102 series warranted contracting officer (CO). I also want to say I don't fully know all the details of this particular contract award and its current terms and conditions. I also don't work for this agency in the news article.