Prompt Payment Act Amendments of 1988
PL 100-496 (S.328), enacted 10/17/1988

PUBLIC LAW 100-496—OCT. 17, 1988 
102 STAT. 2455 
Public Law 100-496 
100th Congress 
An Act 
To amend chapter 39 of title 31, United States Code, to require the Federal Govern-
ment to pay interest on overdue payments, and for other purposes. 
Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled, 
SHORT TITLE 
SECTION 1. This Act may be cited as the "Prompt Payment Act 
Amendments of 1988". 
Oct. 17, 1988 
[S. 328] 
Prompt 
Payment Act 
Amendments of 
1988. 
Contracts. 
31 u s e 3901 
note. 
DEFINITIONS AND APPLICATION 
SEC. 2. (a) Section 3901(aX4) of title 31, United States Code, is 
amended to read as follows: 
"(4) for the purposes of determining a payment due date and 
the date upon which any late payment interest penalty shall 
begin to accrue, the head of the agency is deemed to receive an 
invoice— 
"(A) on the later of— 
"(i) the date on which the place or person designated 
by the agency to first receive such invoice actually 
receives a proper invoice; or 
"(ii) on the 7th day after the date on which, in 
accordance with the terms and conditions of the con-
tract, the property is actually delivered or performance 
of the services is actually completed, as the case may 
- 
be, unless— 
"(I) the agency has actually accepted such prop-
erty or services before such 7th day; or 
"(II) the contract (except in the case of a contract 
for the procurement of a brand-name commercial 
item for authorized resale) specifies a longer 
acceptance period, as determined by the contract-
ing officer to be required to afford the agency a 
practicable opportunity to inspect and test the 
property furnished or evaluate the services per-
formed; or 
"(B) on the date of the invoice, if the agency has failed to 
annotate the invoice with the date of receipt at the time of 
actual receipt by the place or person designated by the 
agency to first receive such invoice.", 
(b) Section 3901(aX5) of title 31, United States Code, is amended to 
read as follows: 
"(5) a payment is deemed to be made on the date a check for 
payment is dated or an electronic fund transfer is made.". 
(c)(1) Section 3901 of such title is further amended by adding at 
the end the following new subsection: 
102 STAT. 2456 
PUBLIC LAW 100-496—OCT. 17, 1988 
"(c) This chapter, except section 3906 of this title, applies to the 
United States Postal Service. However, the Postmaster General 
shall be responsible for issuing the implementing procurement regu-
lations, solicitation provisions, and contract clauses for the United 
States Postal Service.". 
(2) Section 410(b) of title 39, United States Code, is amended by 
inserting after paragraph (8) the following new paragraph: 
"(9) Chapter 39 of title 31.". 
Federal 
Register, 
publication. 
Business and 
industry. 
INTEREST PENALTIES: ELIMINATION OF GRACE PERIODS; INCREASED 
PENALTIES; OBUGATION TO PAY PENALTIES 
SEC. 3. (a)(1) Section 3902(a) of title 31, United States Code, is 
amended by striking the second and third sentences thereof and 
inserting the following: "The interest shall be computed at the rate 
of interest established by the Secretary of the Treasury, and pub-
lished in the Federal Register, for interest payments under section 
12 of the Contract Disputes Act of 1978 (41 U.S.C. 611), which is in 
effect at the time the agency accrues the obligation to pay a late 
payment interest penalty.". 
(2) Section 3902(b) of title 31, United States Code, is amended by 
striking out the second sentence. 
(b) Section 3902 of such title is further amended by redesignating 
subsections (c) through (e) as subsections (e) through (g), respec-
tively, and by inserting after subsection (b) the following new subsec-
tions (c) and (d): 
"(c)(1) A business concern shall be entitled to an interest penalty 
of $1.00 or more which is owed such business concern under this 
section, and such penalty shall be paid without regard to whether 
the business concern has requested payment of such penalty. 
"(2) Each payment subject to this chapter for which a late pay-
ment interest penalty is required to be paid shall be accompanied by 
a notice stating the amount of the interest penalty included in such 
payment and the rate by which, and period for which, such penalty 
was computed. 
"(3) If a business concern— 
"(A) is owed an interest penalty by an agency; 
"(B) is not paid the interest penalty in a payment made to the 
business concern by the agency on or after the date on which 
the interest penalty becomes due; 
"(C) is not paid the interest penalty by the agency within 10 
days after the date on which such payment is made; and 
"(D) makes a written demand, not later than 40 days after the 
date on which such payment is made, that the agency pay such 
a penalty, 
such business concern shall be entitled to an amount equal to the 
sum of the late payment interest penalty to which the contractor is 
entitled and an additional penalty equal to a percentage of such late 
payment interest penalty specified by regulation by the Director of 
the Office of Management and Budget, subject to such maximum as 
may be specified in such regulations. 
"(d) The temporary unavailability of funds to make a timely 
payment due for property or services does not relieve the head of an 
agency from the obligation to pay interest penalties under this 
section.". 
PUBLIC LAW 100-496—OCT. 17, 1988 - 
102 STAT. 2457 
(c) Section 3902 (as amended in subsection (b) of this section) is 
further amended by adding at the end thereof the following new -
subsection: 
"(h)(1) This section shall apply to contracts for the procurement of 
property or services entered into pursuant to section 4(h) of the Act 
of June 29,1948 (15 U.S.C. 714b(h)). 
"(2XA) In the case of a payment to which producers on a farm are 
entitled under the terms of an agreement entered into under the 
Agricultural Act of 1949 (7 U.S.C. 1421 et seq.), an interest penalty 
shall be paid to the producers if the payment has not been made by 
the required pajmient or loan closing date. The interest penalty 
shall be paid— 
"(i) on the amount of payment or loan due; and 
"(ii) for the period beginning on the first day beginning after 
the required payment or loan closing date and ending on the 
date the amount is paid or loaned. 
"(B) As used in this subsection, the 'required payment or loan 
closing date' means— 
"(i) for a purchase agreement, the 30th day after delivery of 
the warehouse receipt for the commodity subject to the pur-
chase agreement; 
"(ii) for a loan agreement, the 30th day be^nning after the 
date of receipt of an application with all requisite documenta-
tion and signatures, unless the applicant requests that the 
disbursement be deferred; 
"(iii) for refund of amounts received greater than the amount 
required to repay a commodity loan, the first business day after 
the Commodity Credit Corporation receives payment for such 
loan; 
"(iv) for land diversion payments (other than advance pay-
ments), the 30th day beginning after the date of completion of 
the production adjustment contract by the producer; 
"(v) for an advance land diversion payment, 30 days after the 
date the Commodity Credit Corporation executes trie contract 
with the producer; 
"(vi) for a deficiency pajmient (other than advance payments) 
based upon a 12-month or 5-month period, 91 days after the end 
of such period; or 
"(vii) for an advance deficiency pajrment, 30 days after the 
date the Commodity Credit Corporation executes the contract 
with the producer. 
"(3) Payment of the interest penalty under this subsection shall be 
made out of funds available under section 8 of the Act of June 29, 
1948 (15 U.S.C. 7140. 
"(4) Section 3907 of this title shall not apply to interest penalty 
payments made under this subsection.". 
PAYMENTS FOR DAIRY AND CERTAIN OTHER PRODUCTS 
SEC. 4. Section 3903(4) of title 31, United States Code, is amended 
to read as follows: 
"(4) for the acquisition of dairy products (as defined in section 
111(e) of the Dairy Production Stabilization Act of 1983 (7 U.S.C. 
4502(e)), the acquisition of edible fats or oils, and the acquisition 
of food products prepared from edible fats or oils, provide a 
required payment date of not later than 10 days after the date 
on which a proper invoice for the amount due has been received 
by the agency acquiring such dairy products, fats, oils, or food 
products;". 
102 STAT. 2458 
PUBLIC LAW 100-496—OCT. 17, 1988 
PERIODIC PAYMENTS UNDER PROPERTY AND SERVICE CONTRACTS 
SEC. 5. Section 3903 of title 31, United States Code, is further 
amended— 
(1) by redesignating paragraph (5) as paragraph (7); and 
(2) by inserting after paragraph (4) the following: 
"(5) require periodic payments, in the case of a property or 
service contract which does not prohibit periodic payments for 
partial deliveries or other contract performance during the 
contract period, upon— 
"(A) submission of an invoice for property delivered or 
services performed during the contract period, if an invoice 
is required by the contract; and 
"(B) either— 
"(i) acceptance of the property or services by an 
employee of an agency authorized to accept the prop-
erty or services; or 
"(ii) the making of a determination by such an em-
ployee, that the performance covered by the payment 
conforms to the terms and conditions of the contract;". 
INTEREST PENALTIES ON PROGRESS PAYMENTS AND RETAINED AMOUNTS 
UNDER CONSTRUCTION CONTRACTS 
SEC 6. Section 3903 of title 31, United States Code, is amended— 
(1) by inserting "(a)" before "The Director"; 
(2) by inserting after paragraph (5) (as added by section 5) the 
following new paragraph: 
"(6) in the case of a construction contract, provide for the 
payment of interest on— 
"(A) a progress payment (including a monthly percent-
age-of-completion progress payment or milestone payments 
for completed phases, increments, or segments of any 
project) that is approved as payable by the agency pursuant 
to subsection (b) of this section and remains unpaid for— 
"(i) a period of more than 14 days after receipt of the 
payment request by the place or person designated by 
the agency to first receive such requests; or 
"(ii) a longer period, specified in the solicitation, if 
required to afford the Government a practicable oppor-
tunity to adequately inspect the work and to determine 
the adequacy of the contractor's performance under the 
contract; and 
"(B) any amounts which the agency has retained pursu-
ant to a prime contract clause providing for retaining a 
percentage of progress payments otherwise due to a con-
tractor and that are approved for release to the contractor, 
if such retained amounts are not paid to the contractor by a 
date specified in the contract or, in the absence of such a 
specified date, by the 30th day after final acceptance;"; and 
(3) by adding at the end of such subsection the following new 
subsection: 
"(bXl) A payment request may not be approved under subsection 
(a)(6)(A) of this section unless the application for such payment 
includes— 
"(A) substantiation of the amounts requested; and 
PUBLIC LAW 100-496—OCT. 17, 1988 
102 STAT. 2459 
"(B) a certification by the prime contractor, to the best of the 
contractor's knowledge and belief, that— 
"(i) the amounts requested are only for performance in 
accordance with the specifications, terms, and conditions of 
the contract; 
"(ii) pajrments to subcontractors and suppliers have been 
made from previous pajrments received under the contract, 
and timely pajrments will be made from the proceeds of the 
payment covered by the certification, in accordance with 
their subcontract agreements and the requirements of this 
chapter; and 
"(iii) the application does not include any amounts which 
the prime contractor intends to withhold or retain from a 
subcontractor or supplier in accordance with the terms and 
conditions of their subcontract. 
"(2) The agency shall return any such payment request which is 
defective to the contractor within 7 days after receipt, with a 
statement identifying the defect. 
"(cXD The contracting officer shall— 
"(A) compute the interest which a contractor shall be obli-
gated to pay under sections 3905(aX2) and 3905(e)(6) of this title 
on the basis of the average bond equivalent rates of 91-day 
Treasury bills auctioned at the most recent auction of such bills 
prior to the date the contractor received the unearned amount; 
and 
"(B) deduct the interest amount determined under subpara-
graph (A) of this paragraph from the next available payment to 
the contractor. 
"(2) Amounts deducted from pasrments to contractors under para-
graph (IXB) shall revert to the Treasury.". 
ADDITIONAL REQUIREMENTS OF REGULATIONS 
SEC. 7. Section 3903(a) of title 31, United States Code, is further 
amended by striking out paragraph (7), as redesignated by section 5, 
and inserting the following: 
"(7) require that— 
"(A) each invoice be reviewed as soon as practicable after 
receipt for the purpose of determining that such an invoice 
is a proper invoice within the meaning of section 3901(aX3) 
of this title; 
"(B) any invoice determined not to be such a proper 
invoice suitable for payment shall be returned as soon sis 
practicable, but not later than 7 days, after receipt, specify-
ing the reasons that the invoice is not a proper invoice; and 
"(C) the number of days available to an agency to make a 
timely payment of an invoice without incurring an interest 
penalty shall be reduced by the number of days by which an 
agency exceeds the requirements of subparagraph (B) of 
this paragraph; 
"(8) permit an agency to make payment up to 7 days prior to 
the required payment date, or earlier as determined by the 
agency to be necessary on a case-by-case basis; and 
"(9) prescribe the methods for computing interest under sec-
tion 3903(c) of this title.". 
102 STAT. 2460 
PUBLIC LAW 100-496—OCT. 17, 1988 
UMITATIONS ON DISCOUNT PAYMENTS 
SEC. 8. Section 3904 of title 31, United States Code, is amended by 
inserting after the first sentence the following: "For the purpose of 
the preceding sentence, the specified time shall be determined from 
the date of the invoice.". 
PAYMENT PROVISIONS RELATING TO CONSTRUCTION CONTRACTS 
SEC. 9. (a) Chapter 39 of title 31, United States Code, is amended— 
(1) by redesignating sections 3905 and 3906 as sections 3906 
and 3907, respectively; and 
(2) by inserting after section 3904 the following: 
"§ 3905. Payment provisions relating to construction contracts 
"(a) In the event that a contractor, after making a certified 
payment request to an agency pursuant to section 39O30t)) of this 
title, discovers that a portion or all of such payment request con-
stitutes a payment for performance by such contractor that fails to 
conform to the specifications, terms, and conditions of its contract 
(hereafter in this subsection referred to as the 'unearned amount'), 
then the contractor shall— 
"(1) notify the agency of such performance deficiency; and 
"(2) be obligated to pay the Government an amount equal to 
interest on the unearned amount (computed in the manner 
provided in section 3903(c) of this title), from the date of the 
contractor's receipt of such unearned amount until— 
"(A) the date the contractor notifies the agency that the 
performance deficiency has been corrected; or 
"(B) the date the contractor reduces the amount of any 
subsequent certified application for payment to such agency 
by an amount equal to the unearned amount. 
"Ot)) Each construction contract awarded by an agency shall in-
clude a clause that requires the prime contractor to include in each 
subcontract for property or services entered into by the prime 
contractor and a subcontractor (including a material supplier) for 
the purpose of performing such construction contract— 
"(1) a payment clause which obligates the prime contractor to 
pay the subcontractor for satisfactory performance under its 
subcontract within 7 days out of such amounts as are paid to the 
prime contractor by the agency under such contract; and 
"(2) an interest penalty clause which obligates the prime 
contractor to pay to the subcontractor an interest penalty on 
amounts due in the case of each payment not made in accord-
ance with the payment clause included in the subcontract 
pursuant to paragraph (1) of this subsection— 
"(A) for the period beginning on the day after the re-
quired payment date and ending on the date on which 
pavment of the amount due is made; and 
(B) computed at the rate specified by section 3902(a) of 
this title. 
"(c) The construction contract awarded by the agency shall fur-
ther require the prime contractor to include in each of its sub-
contracts (for the purpose of performance of such construction 
contract) a provision requiring the subcontractor to include a pay-
ment clause and an interest penalty clause conforming to the 
standards of subsection (b) of this section in each of its subcontracts 
PUBLIC LAW 100-496—OCT. 17, 1988 
102 STAT. 2461 
and to require each of its subcontractors to include such clauses in 
their subcontracts with each lower-tier subcontractor or supplier. 
"(d) The clauses required by subsections (b) and (c) of this section 
shall not be construed to impair the right of a prime contractor or a 
subcontractor at any tier to negotiate, and to include in their 
subcontract, provisions which— 
"(1) permit the prime contractor or a subcontractor to retain 
(without cause) a specified percentage of each progress payment 
otherwise due to a subcontractor for satisfactory performance 
under the subcontract, without incurring any obligation to pay 
a late payment interest penalty, in accordance with terms and 
conditions agreed to by the parties to the subcontract, giving 
such recognition as the parties deem appropriate to the ability 
of a subcontractor to furnish a performance bond and a pay-
ment bond; 
"(2) permit the contractor or subcontractor to make a deter-
mination that part or all of the subcontractor's request for 
payment may be withheld in accordance with the subcontract 
agreement; and 
"(3) permit such withholding without incurring any obligation 
to pay a late payment penalty if— 
"(A) a notice conforming to the standards of subsection (g) 
of this section has been previously furnished to the sub-
contractor; and 
"(B) a copy of any notice issued by a prime contractor 
pursuant to subparagraph (A) of this paragraph has been 
furnished to the Government. 
"(e) If a prime contractor, after making application to an agency 
for payment under a contract but before making a payment to a 
subcontractor for the subcontractor's performance covered by such 
application, discovers that all or a portion of the payment otherwise 
due such subcontractor is subject to withholding from the sub-
contractor in accordance with the subcontract agreement, then the 
prime contractor shall— 
"(1) furnish to the subcontractor a notice conforming to the 
standards of subsection (g) of this section as soon as practicable 
upon ascertaining the cause giving rise to a withholding, but 
prior to the due date for subcontractor payment; 
"(2) furnish to the Government, as soon as practicable, a copy 
of the notice furnished to the subcontractor pursuant to para-
graph (1) of this subsection; 
"(3) reduce the subcontractor's progress payment by an 
amount not to exceed the amount specified in the notice of 
withholding furnished under paragraph (1) of this subsection; 
"(4) pay the subcontractor as soon as practicable after the 
correction of the identified subcontract performance deficiency, 
and— 
"(A) make such payment within— 
"(i) 7 days after correction of the identified sub-
contract performance deficiency (unless the funds 
therefor must be recovered from the Government be-
cause of a reduction under paragraph (5XA)); or 
"(ii) 7 days after the contractor recovers such funds 
from the Government; or 
"(B) incur an obligation to pay a late payment interest 
penalty computed at the rate specified by section 3902(a) of 
this title; 
102 STAT. 2462 
PUBLIC LAW 100-496—OCT. 17, 1988 
"(5) notify the Government, upon— 
"(A) reduction of the amount of any subsequent certified 
application for payment; or 
"(B) payment to the subcontractor of any withheld 
amounts of a progress payment, specifying— 
"(i) the amounts of the progress payments withheld 
under paragraph (1) of this subsection; and 
"(ii) the dates that such withholding began and 
ended; and 
"(6) be obligated to pay to the Government an amount equal 
to interest on the withheld payments (computed in the manner 
provided in section 3903(c) of this title), from the 8th day after 
receipt of the withheld amounts from the Government until— 
"(A) the day the identified subcontractor performance 
deficiency is corrected; or 
"(B) the date that any subsequent payment is reduced 
under paragraph (5XA). 
"(fKD If a prime contractor, after making payment to a first-tier 
subcontractor, receives from a supplier or subcontractor of the first-
tier subcontractor (hereafter referred to as a 'second-tier subcontrac-
tor') a written notice in accordance with section 2 of the Act of 
August 24, 1935 (40 U.S.C. 270b), asserting a deficiency in such first-
tier subcontractor's performance under the contract for which the 
prime contractor may be ultimately liable, and the prime contractor 
determines that all or a portion of future payments otherwise due 
such first-tier subcontractor is subject to withholding in accordance 
with the subcontract agreement, then the prime contractor may, 
without incurring an obligation to pay an interest penalty under 
subsection (eX6) of this section— 
"(A) furnish to the first-tier subcontractor a notice conform-
ing to the standards of subsection (g) of this section as soon as 
practicable upon making such determination; and 
"(B) withhold from the first-tier subcontractor's next avail-
able progress payment or payments an amount not to exceed 
the amount specified in the notice of withholding furnished 
under subparagraph (A) of this paragraph. 
"(2) As soon £is practicable, but not later than 7 days after receipt 
of satisfactory written notification that the identified subcontract 
performance deficiency has been corrected, the prime contractor 
shall pay the amount withheld under paragraph (IXB) of this subsec-
tion to such first-tier subcontractor, or shall incur an obligation to 
pay a late payment interest penalty to such first-tier subcontractor 
computed at the rate specified by section 3902(a) of this title. 
"(g) A written notice of any withholding shall be issued to a 
subcontractor (with a copy to the Government of any such notice 
issued \}y a prime contractor), specifying— 
"(1) the amount to be withheld; 
"(2) the specific causes for the withholding under the terms of 
the subcontract; and 
"(3) the remedial actions to be taken by the subcontractor in 
order to receive payment of the amounts withheld. 
"(h) A prime contractor may not request payment from the agency 
of any amount withheld or retained in accordance with subsection 
(d) of this section until such time as the prime contractor has 
determined and certified to the agency that the subcontractor is 
entitled to the payment of such amount. 
PUBLIC LAW 100-496—OCT. 17, 1988 
102 STAT. 2463 
"(i) A dispute between a contractor and subcontractor relating to 
the amount or entitlement of a subcontractor to a payment or a late 
payment interest penalty under a clause included in the subcontract 
pursuant to subsection (b) or (c) of this section does not constitute a 
dispute to which the United States is a party. The United States 
may not be interpleaded in any judicial or administrative proceed-
ing involving such a dispute. 
"(j) Except as provide! in subsection (i) of this section, this section 
shall not limit or impair any contractual, administrative, or judicial 
remedies otherwise available to a contractor or a subcontractor in 
the event of a dispute involving late pa3mient or nonpayment by a 
prime contractor or deficient subcontract performance or non-
performance by a subcontractor. 
"(k) A contractor's obligation to pay an interest penalty to a 
subcontractor pursuant to the clauses included in a subcontract 
under subsection (b) or (c) of this section may not be construed to be 
an obligation of the United States for such interest penalty. A 
contract modification may not be made for the purpose of providing 
reimbursement of such interest penalty. A cost reimbursement Claims. 
claim may not include any amount for reimbursement of such 
interest penalty.". 
(b) The table of sections at the b^inning of such chapter is 
amended by striking out the items relating to sections 3905 and 3906 
and inserting in lieu thereof the following: 
"3905. Payment provisions relating to construction contracts. 
"3906. Reports. 
"3907. Relationship to other laws.". 
REPORTS 
SEC. 10. Section 3906(a) of title 31, United States Code (as redesig-
nated by section 9(aXl)), is amended to read as follows: 
"(aXl) By the 60th day after the end of the fiscal year, the head of 
each agency shall submit to the Director of the C)ffice of Manage-
ment and Budget a report on the agency's payment practices during 
that fiscal year, including a description of the extent to which those 
practices satisfy the requirements of this chapter. 
"(2) In addition to such other information as may be required by 
the Director, the report required by paragraph (1) shall include— 
"(A) the number, dollar value, and percentage of invoices for 
which interest or other late payment penalties were paid, the 
amount of such late payment interest and other penalties, and 
the reasons the interest penalties were not avoided by prompt 
pavment; and 
'(B) the number, dollar value, and percentage of invoices paid 
after the required payment date without payment of an interest 
penalty or other late payment penalty, and the reasons no 
obligation to pay such penalties was incurred with respect to 
such invoices or no amount for such penalties were included in 
the payments of such invoices.". 
IMPLEMENTATION THROUGH THE FEDERAL ACQUISITION REGULATION 
SEC. 11. (a) The Federal Acquisition Regulation shall be modified 
31 USC 3903 
to provide appropriate solicitation provisions and contract clauses 
note. 
that implement chapter 39 of title 31, United States Code, as 
amended by this Act, and the r^ulations prescribed under section 
3903 of such title (as amended). 
102 STAT. 2464 
PUBLIC LAW 100-496—OCT. 17, 1988 
(b) The solicitation provisions and contract clauses required by 
subsection (a) of this section shall include (but not be limited to) the 
following matters: 
(1) Authority for a contracting officer to specify for a Contract 
or class of contracts a specific payment period, which— 
(A) in the case of payments for commercial items or 
services, is similar to the payment period or periods per-
mitted in prevailing private industry contracting practices; 
(B) in the C£ise of payments for noncommercial items and 
services, does not exceed 30 days unless the circumstances 
of the procurement action is determined to require a longer 
period for payment and such determination is approved 
above the level of the contracting officer; 
(C) in the case of payments for items of property or 
services in an amount less than the amount specified as a 
small purchase in section 303(gX2) of the Federal Property 
and Administrative Services Act of 1949 (41 U.S.C. 
253(gX2)), does not exceed 15 days after the date of receipt of 
the invoice, i
f
— 
(i) the contract provides for such "fast payment" 
terms; 
(ii) title to any property will vest in the Government 
upon delivery (including delivery to a common carrier); 
and 
(iii) the business concern offers appropriate warran-
ties to furnish property or services conforming to the 
requirements of the contract or purchase order, if pay-
ment will be due prior to acceptance of the items or 
services; and 
(D) in the C£ise of progress payments under construction 
contracts, does not exceed 14 days, unless the solicitation 
specifies a longer period which the contracting officer has 
determined is required to afford the Government a prac-
ticable opportunity to adequately inspect the work and to 
evaluate the adequacy of the contractor's performance 
under the contract. 
(2) Requirements to make periodic payments, in the case of a 
property or service contract which does not prohibit periodic 
payments for partial deliveries or other contract performance 
during the contract period, upon— 
(A) submission of an invoice for property delivered or 
services performed during the contract period, if an invoice 
is required by the contract; and 
(B) either— 
(i) acceptance of the property or services by an em-
ployee of the contracting agency authorized to accept 
the property or services; or 
(ii) the making of a determination by such an em-
ployee, that the performance covered by the payment 
conforms to the terms and conditions of the contract. 
(3) A conclusive presumption, exclusively for the purposes of 
determining when an agency becomes obligated to pay a late 
pajmient interest penalty (other than under construction con-
tracts), that the Federal Government has accepted property or 
services by the 7th day after the date on which, in accordance 
with the terms and conditions of the contract, the property is 
delivered or final performance of the services is completed, 
PUBLIC LAW 100-496—OCT. 17, 1988 
102 STAT. 2465 
unless the solicitation specifies a longer period which is deter-
mined by the contracting officer to be required to afford the 
agency a practicable opportunity to inspect and test the prop-
erty furnished or evaluate the services performed. 
(4) The limitation that the Federal Government may take a 
discount offered by a contractor for early payment by the 
Federal Government only in accordance with the time limits 
specified by the contractor, determined in accordance with the 
second sentence of section 3904 of title 31, United States Code. 
(5) The requirements of section 3902(c) of title 31, United 
States Code. 
(6) The requirements of section 3903(a)(6) of title 31, United 
States Code. 
(7) The requirements of section 3905 of title 31, United States 
Code. 
(c) The regulations required by subsection (a) of this section shall 
be published as proposed regulations for public comment as provided 
in section 22 of the Office of Federal Procurement Policy Act (41 
U.S.C. 418b) within 120 days after the date of the enactment of this 
Act. 
ASSISTANCE TO SMALL BUSINESS 
SEC. 12. Section 15(k) of the Small Business Act (15 U.S.C. 644(k)) 
is amended by— 
(1) renumbering paragraphs (5), (6), and (7) as paragraphs (6), 
(7), and (8), respectively; and 
(2) by inserting after paragraph (4) the following new para-
graph: 
"(5) assist small business concerns to obtain payments, late 
payment interest penalties, or information due to such con-
cerns, in conformity with chapter 39 of title 31, United States 
Code;". 
CODIFICATION OF A DEFINITION PROVIDED IN AN APPROPRIATION LAW 
SEC. 13. (a) Section 3903(a)(2) of title 31, United States Code, is 
amended by inserting "including any edible fresh or frozen poultry 
meat, any perishable poultry meat food product, fresh eggs, and any 
perishable egg product," after "182(3))),". 
(b) Section 2002 of the Supplemental Appropriations Act, 1984 
(Public Law 98-181; 97 Stat. 1297) is amended by striking out "the 
31 USC 3903 
terms 'meat' and 'meat food products' as used in the Prompt Pay- ^°^^-
ment Act (Public Law 97-177; 96 Stat. 85) in section 2(a)(2XB)(i) 
thereof shall include also edible fresh or frozen poultry meat, perish-
able poultry meat food products, fresh eggs and perishable egg 
products; and". 
EFFECTIVE DATES 
SEC. 14. (a) The amendments made by sections 2(a), 2(b), 3(a), 4 
31 USC 3902 
through 9, 12, and 13 of this Act shall apply to payments under 
note. 
contracts awarded, contracts renewed, and contract options exer-
cised during or after the first fiscal quarter which begins more than 
90 days after the date of the enactment of this Act. 
Ot)) The requirements of section 3902(cX2) of title 31, United States 
31 USC 3902 
Code, £is added by section 3(b) of this Act, shall apply to payments 
note. 
under contracts awarded on or after October 1, 1989. 
19-194 O—91—Part 3 
17 : QL 3 
102 STAT. 2466 
PUBLIC LAW 100-496—OCT. 17, 1988 
31 use 3902 
(c) The amendments made by sections 2(c) and 3(c) of this Act shall 
"°^® 
be applicable with respect to all obligations incurred on or after 
January 1,1989. 
31 use 3906 
(d) The amendment made by section 10 of this Act shall apply to 
note. 
the report required by section 3906 of title 31, United States Code, 
for each fiscal year beginning after September 30,1988. 
Approved October 17, 1988. 
LEGISLATIVE HISTORY—S. 328: 
HOUSE REPORTS: No. 100-784 (Comm. on Government Operations). 
SENATE REPORTS: No. 100-78 (Gomm. on Governmental Affairs). 
eONGRESSIONAL RECORD: 
Vol. 133 (1987): Oct. 9, considered and passed Senate. 
Vol. 134 (1988): July 26, considered and passed House, amended. 
Sept. 23, Senate concurred in House amendments.