Prompt Payment Act: An Interest(ing) Remedy for Government Late Payment
Abstract
We don't want the Government to be a deadbeat, either, so I will soon sign the Prompt Payment Act to make sure the Government pays its debts on time. Former President Reagan spoke these words seven days before signing the Prompt Payment Act (PPA). While the appropriateness of the deadbeat label is debatable, the fact that Government agencies were (and are) often paying their bills late to vendors is beyond question. Timeliness of payments is of great importance to both contractors and the Government. Getting paid is the obvious inducement for contractors to undertake work. Moreover, receiving payment on time is often essential to provide the necessary funds to continue work on the contract. From the Government's perspective, its concern with paying on time is tied to the frequently repeated maxim that the Government's primary contractual obligation is to make prompt and proper payment for services performed. Failure to make payment in the amounts and times required by the contract may constitute a breach. In some instances the breach may be so substantial as to be a material breach, entitling the contractor to cease its own performance. Even where a late payment is not material breach, a contractor may now, thanks to the PPA, recover interest from the Government. This thesis focuses exclusively on the Prompt Payment Act.
Document Details
- Document Type
- Technical Report
- Publication Date
- Feb 17, 1991
- Accession Number
- ADA243386
Entities
People
- Michael J. Renner
Organizations
- Air Force Institute of Technology