Prompt Payment Act
PL 97-177 (S.1131), enacted 05/21/1982

PUBLIC LAW 97-177—MAY 21, 1982 
96 STAT. 85 
Public Law 97-177 
97th Congress 
An Act 
To require the Federal Government to pay interest on overdue payments, and for 
May 21, 1982 
other purposes. 
[S. 1131] 
Be it enacted by the Senate and House of Representatives of the Prompt 
United States of America in Congress assembled. 
Payment Act. 
SHORT TITLE 
SECTION 1. This Act may be cited as the "Prompt Payment Act". 3i use I801 
note. 
INTEREST PENALTIES ON LATE PAYMENTS 
SEC. 2. (a)(1) In accordance with regulations prescribed by the 3i use I801. 
Director of the Office of Management and Budget, each Federal 
agency which acquires property or services from a business concern 
but which does not make payment for each such complete delivered 
item of property or service by the required payment date shall pay 
an interest penalty to such business concern in accordance with 
this section on the amount of the payment which is due. 
(2) Such regulations— 
(A) shadl specify that the required payment date shall be— 
(i) the date on which payment is due under the terms of 
the contract for the provision of such property or service; 
or 
(ii) thirty days after receipt of a proper invoice for the 
amount of the payment due, if a specific date on which 
payment is due is not established by contract; 
(B)(i) in the case of any acquisition of meat or of a meat food 
product, as defined in section 2(a)(3) of the Packers and Stock-
yards Act, 1921 (7 U.S.C. 182(3)), shall specify a required pay-
ment date which is not later than seven days after the date of 
delivery of such meat or meat food product; and 
(ii) in the case of any acquisition of a perishable agricultural 
commodity, as defined in section 1(4) of the Perishable Agricul-
tural Commodities Act, 1930 (7 U.S.C. 499a(4)), shall specify a 
required payment date consistent with requirements imposed 
pursuant to such Act; 
(C) shall specify separate required payment dates for con-
tracts under which property or services are provided in a series 
of partial executions or deliveries, to the extent that such con-
tract provides for separate payment for such partial execution 
or delivery; and 
(D) shall require that, within fifteen days after the date on 
which any invoice is received. Federal agencies notify the busi-
ness concern of any defect or impropriety in such invoice 
which would prevent the running of the time period specified 
in subparagraph (AXii). 
(b)(1) Interest penalties on amounts due to a business concern 
under this Act shall be paid to the business concern for the period 
96 STAT. 86 
PUBLIC LAW 97-177—MAY 21, 1982 
Interest rate 
computation. 
Publication in 
Federal Register. 
Unpaid interest 
penalty. 
Interest penalty 
payments. 
beginning on the day after the required payment date and ending 
on the date on which payment of the amount due is made, except 
that no interest penalty shall be paid if payment for the complete 
delivered item of property or service concerned is made on or 
before (A) the third day after the required payment date, in the 
case of meat or a meat food product described in subsection 
(a)(2)(B)(i); (B) the fifth day after the required pa3mient date, in the 
case of an agricultural commodity described in subsection 
(a)(2)(B)(ii); or (C) the fifteenth day after the required payment date, 
in the case of any other item. Interest shall be computed at the 
rate determined by the Secretary of the Treasury for interest pay-
ments under section 12 of the Contract Disputes Act of 1978 (41 
U.S.C. 611). The Secretary of the Treasury shall publish each such 
rate in the Federal Register. 
(2) Any amount of an interest penalty which remains unpaid at 
the end of any thirty-day period shall be added to the principle 
amount of the debt and thereafter interest penalties shall accrue 
on such added amount. 
(c) This section does not authorize the appropriation of additional 
funds for the payment of interest penalties required by this section. 
A Federal agency shall pay any interest penalties required by this 
section out of funds made available for the administration or oper-
ation of the program for which the penalty was incurred. 
(d)(1) Any recipient of a grant from a Federal agency may pro-
vide in a contract for acquisition of property or services from a 
business concern for the pa3anent of interest penalties on amounts 
overdue under such contract, except that— 
(A) in no case shall an obligation to pay such interest penal-
ties be construed to be an obligation of the United States, and 
(B) any payment of such interest penalties shall not be made 
from funds provided to the grant recipient by a Federal 
agency, nor shall any non-Federal funds expended for such 
interest penalties be counted toward any matching require-
ment applicable to that grant. 
(2) Such interest penalty payments shall be made under such 
terms and conditions as agreed to by the grant recipient and the 
business concern, consistent with the grant recipient's usual busi-
ness practices and applicable State and local law. 
LIMITATION ON DISCOUNT PAYMENTS 
31 use 1802. 
SEC. 3. (a) If a business concern offers a Federal agency a dis-
count from the amount otherwise due under a contract for prop-
erty or services in exchange for payment within a specified period 
of time, the Federal agency may make pajnnent in an amount 
equal to the discounted price only if payment is made within such 
specified period of time. 
(b) Each agency which violates subsection (a) shall pay an inter-
est penalty on any amount which remains unpaid in violation of 
such subsection. Such interest penalty shall accrue on such unpaid 
amount in accordance with the regulations prescribed pursuant to 
section 2, except that the required payment date with respect to 
such unpaid amount shall be the last day of the specified period of 
time described in subsection (a). 
PUBLIC LAW 97-177—MAY 21, 1982 
96 STAT. 87 
CLAIMS; RELATION TO OTHER LAW 
SEC. 4. (a)(1) Claims for interest penalties which a Federal agency 
has failed to pay in accordance with the requirements of section 2 
or 3 of this Act may be filed under section 6 of the Contract Dis-
putes Act of 1978 (41 U.S.C. 605). 
(2) Interest penalties under this Act shall not continue to accrue 
(A) after the filing of a claim for such penalties under the Contract 
Disputes Act of 1978, or (B) for more than one year. 
(3) Paragraph (2) shall not be construed to preclude the accrual 
of interest pursuant to section 12 of the Contract Disputes Act of 
1978 (41 U.S.C. 611) after interest penalties have ceased accruing 
under this Act, and interest pursuant to such section may accrue 
on both any unpaid contract payment and on the unpaid interest 
penalty required by this Act. 
(b) Except as provided in section 3 with respect to disputes con-
cerning discounts, this Act shall not be construed to require inter-
est penalties on payments which are not made by the required 
payment date by reason of a dispute between a Federal agency and 
a business concern over the amount of that payment or other alle-
gations concerning compliance with a contract. Claims concerning 
any such dispute, and any interest which may be payable with 
respect to the period while the dispute is being resolved, shall be 
subject to the Contract Disputes Act of 1978. 
31 u s e 1803. 
41 u s e 601 note. 
CONGRESSIONAL OVERSIGHT 
SEC. 5. (a) Each Federal agency shall file with the Director of the 
Office of Management and Budget a detailed report on any interest 
penalty payments made under this Act during the preceding fiscal 
year. 
(b) Such report shall include the number, amounts, and fre-
quency of interest penalty payments, and the reasons such pay-
ments were not avoided by prompt payment, and shall be delivered 
to the Director within sixty days after the conclusion of each fiscal 
year. 
(c) The Director shall submit to the Committee on Governmental 
Affairs, the C!ommittee on Appropriations, and the Committee on 
Small Business of the Senate and to the Committee on Government 
Operations, the Committee on Appropriations, and the Committee 
on Small Business of the House of Representatives within one hun-
dred and twenty days after the conclusion of each fiscal year a 
report on Federal agency compliance with the requirements of this 
Act. Such report shall include a summary of the report submitted 
by each Federal agency under subsection (b) and an analysis of the 
progress made in reducing interest penalty payments by that 
agency from previous years. 
Report, filing 
with 0MB. 
31 u s e 1804. 
eontents. 
Federal agency 
compliance; 
submittal to 
congressional 
committees. 
DEFINITIONS 
SEC. 6. For the purposes of this Act— 
(1) the term "Federal agency" has the same meaning as the 
term "agency" in section 551(1) of title 5, United States Code, 
but also includes any entity (A) which is operated exclusively 
as an instrumentality of such an agency for the purpose of 
administering one or more programs of that agency, and (B) 
31 u s e 1805. 
97-200 O—84—pt. 1 
5 : QL3 
96 STAT. 88 
PUBLIC LAW 97-177—MAY 21, 1982 
which is so identified for this purpose by the head of such 
agency; 
(2) the term "business concern" means any person engaged 
in a trade or business and nonprofit entities operating as con-
tractors; 
(3) an invoice shall be considered a "proper invoice" when it 
contains or is accompanied by such substantiating documenta-
tion (A) as the Director of the Office of Management and 
Budget may require by regulation, and (B) as the Federal 
agency involved may require by regulation or contract; 
(4) an invoice shall be deemed to have been received by an 
agency on the later o
f
— 
(A) the date on which the agency's designated payment 
office or finance center actually receives a proper invoice; 
or 
(B) the date on which such agency accepts the property 
or service concerned; 
(5) a payment shall be considered made on the date on which 
a check for such payment is dated; and 
(6) a contract for the rental of real or personal property is a 
contract for the acquisition of that property. 
EFFECTIVE DATE 
31 use 1801 
SEC. 7. (a) This Act applies to the acquisition of property or serv-
^°^^' 
ices on or after the beginning of the first calendar quarter which 
begins more than ninety days after the date of enactment of this 
Act. 
31 use 1801 
(b) The provisions of this Act requiring the promulgation of regu-
^°^^- 
lations shall be effective upon enactment, and such regulations 
shall be promulgated not later than ninety days after the date of 
enactment of this Act. 
31 use 1806. 
(c) The provisions of this Act shall apply to the Tennessee Valley 
Authority, but any regulations promulgated under the authority of 
this Act shall not be applicable to the Tennessee Valley Authority, 
which shall be solely responsible for implementing the provisions 
of this Act with respect to its contracts. 
Approved May 21, 1982. 
LEGISLATIVE HISTORY—S. 1131 (H.R. 4709): 
HOUSE REPORT No. 97-461 accompanying H.R. 4709 (Comm. on Government 
Operations). 
SENATE REPORT No. 97-302 (Comm. on Governmental Affairs). 
CONGRESSIONAL RECORD: 
Vol. 127 (1981): Dec. 15, considered and passed Senate. 
Vol. 128 (1982): Mar. 23, H.R. 4709 considered and passed House; proceedings 
vacated and S. 1131, amended, passed in lieu. 
May 11, Senate concurred in House amendments.