Prompt Payment Act

At Malyszek & Malyszek we focus on contracting with the U.S. federal government. Malyszek & Malyszek can help with your government contract matters and rulings involving the Prompt Payment Act.

 

The Prompt Payment Act ensures that federal agencies pay vendors in a timely routine. Prompt Payment evaluates late interest penalties against agencies that pay vendors after a payment due date.

 

This rate was established under the Contract Disputes Act and is referred to as the "Contract Disputes Act Interest Rate," "Renegotiation Board Interest Rate," and the "Prompt Payment Act Interest Rate."

 

Agencies may quicken payments for payments to small businesses, invoices under $2,500, payments related to emergencies, military deployments, and disasters. Agencies may also make the payment within 15 days of receipt of a proper invoice. The Prompt Payment Act enlarges the options for making early payments if doing so is in the best interest of the government.

 

The Prompt Payment Act requires State agencies to pay properly submitted invoices within 45 calendar days of the original receipt. If the requirement is not met, State departments must calculate and pay the appropriate late payment penalties.

 

Prompt Payment assistance provides interpretation of the Prompt Payment Act for suppliers and State departments as requested. By trouble-shooting payment issues and facilitating access to departments, payment problems can be resolved to the reciprocated satisfaction of all the individuals.

 

Prompt Payment Act (PPA), 31 U.S.C. § 3901et seq., which is effective for contracts entered into on or after October 1, 1982. The Act was amended in 1988 by Pub. L. No. 100-496. Section 3902 of the Act requires each federal agency that fails to make payment for each “delivered item of property or service by the required payment date” to pay an interest penalty. The Act is implemented by FAR Subpart 32.9. The Office of Management and Budget has also implemented the Act through 5 CFR § 1315. DFARS 232.905 contains guidance for the Department of Defense.

 

To determine whether the liability for interest due on late payment falls on the program office or on the defense finance accounting service, see Liability for Prompt Payment Interest Payments Under Interagency Agreements, 65 Comp. Gen. 795 (B-219474) (1986). The PPA states that when the government is liable for interest on late payments, the Act “does not authorize the appropriation of additional amounts to pay an interest penalty. The head of an agency shall pay a penalty under this section out of amounts made available to carry out the program for which the penalty is incurred,” 31 U.S.C. § 3902(f).

 

Contractors must act to preserve their rights. If this is not done by the contractor, the Prompt Payment Act may be denied. 

 

Government contract law can be complex. Trust our knowledgeable attorneys to guide you through every step of the process. From Contact Appeals, Federal Claims, GSA, and SBA matters, count on us when you are in need of legal assistance. Call Malyszek & Malyszek today to speak with one of our attorneys about your case.