§ 3902. Interest penalties

Legislative history

Reconstructed from this section’s Code source credit and amendment notes, resolved against the local Statutes at Large. Editorial notes are evidence, not the law that made the change.

1. 1983

   Pub. L. 97–452 § 1(18)(A) · 96 Stat. 2467

   Enacted · 31 U.S.C. § 3902

   Added Pub. L. 97–452, § 1(18)(A), Jan. 12, 1983, 96 Stat. 2475

   Source evidence

   Code source credit
   Added Pub. L. 97–452, § 1(18)(A), Jan. 12, 1983, 96 Stat. 2475

   Enacted provision · exact public law section
   (A) Subtitle III is amended by adding at the end the following: “CHAPTER 39— PROMPT PAYMENT “Sec. “3901. Definitions and application. “3902. Interest penalties. “3903. Regulations. “3904. Limitations on discount payments. “3905. Reports. “3906. Relationship to other laws. “§ 3901. Definitions and application “(a) In this chapter— “(1) ‘agency has the same meaning given that term in section 551(1) of title 5 and includes an entity being operated, and the head of the agency identifies the entity as being operated, only as an instrumentality of the agency to carry out a program of the agency . “(2) ‘business concern’ means— “(A) a person carrying on a trade or business; and “(B) a nonprofit entity operating as a contractor. “(3) ‘proper invoice’ is an invoice containing or accompanied by substantiating documentation the Director of the Office of Management and Budget may require by regulation and the head of the appropriate agency may require by regulation or contract. “(4) the head of an agency is deemed to receive an invoice on the later of the dates that— “(A) the designated payment office or finance center of the agency actually receives a proper invoice; or “(B) the head of the agency accepts the applicable property or service. “(5) a payment is deemed to be made on the date a check for the payment is dated. “(6) a contract to rent property is deemed to be a contract to acquire the property. “(b) This chapter applies to the Tennessee Valley Authority. Tennessee Valley Authority. However, regulations prescribed under this chapter do not apply to the Authority, and the Authority alone is responsible for carrying out this chapter as it applies to contracts of the Authority. “§ 3902. Interest penalties “(a) Under regulations prescribed under section 3903 of this title, the head of an agency acquiring property or service from a business concern, who does not pay the concern for each complete delivered item of property or service by the required payment date, shall pay an interest penalty to the concern on the amount of the payment due. The interest shall be computed at the rate the Secretary of the Treasury establishes for interest payments under section 12 of the Contract Disputes Act of 1978 (41 U.S.C. 611). The Secretary shall Publication in Federal Roister. publish each rate in the Federal Register. “(b) Except as provided in section 3906 of this title, the interest penalty shall be paid for the period beginning on the day after the required payment date and ending on the date on which payment is made. However, a penalty may not be paid if payment for the item is made— “(1) when the item is a meat or meat food product described in section 3903(2)(A) of this title, before the 4th day after the required payment date; “(2) when the item is an agricultural commodity described in section 3903(2)(B) of this title, before the 6th day after the required payment date; or “(3) when the item is not an item referred to in clauses (1) and (2) of this subsection, before the 16th day after the required payment date. “(c) An amount of an interest penalty unpaid after any 30-day period shall be added to the principal amount of the debt, and a penalty accrues thereafter on the added amount. “(d) This section 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. “(e) A recipient of a grant from the head of an agency may provide in a contract for the acquisition of property or service from a business concern that, consistent with the usual business practices of the recipient and applicable State and local law, the recipient will pay an interest penalty on amounts overdue under the contract under conditions agreed to by the recipient and the concern. The recipient may not pay the penalty from amounts received from an agency. Amounts expended for the penalty may not be counted toward a matching requirement applicable to the grant. An obligation to pay the penalty is not an obligation of the United States Government. “§ 3903. Regulations “The Director of the Office of Management and Budget shall prescribe regulations to carry out section 3902 of this title. The regulations shall— “(1) provide that the required payment date is— “(A) the date payment is due under the contract for the item of property or service provided; or “(B) 30 days after a proper invoice for the amount due is received if a specific payment date is not established by contract; “(2) for the acquisition of meat or a meat food product (as defined in section 2(a)(3) of the Packers and Stockyards Act, 1921 (7 U.S.C. 182(3))), provide a required payment date of not later than 7 days after the meat or meat food product is delivered; and “(3) for the acquisition of a perishable agricultural commodity (as defined in section 1(4) of the Perishable Agricultural Commodities Act, 1930 (7 U.S.C. 499a(4))), provide a required payment date consistent with that Act; “(4) provide separate required payment dates for a contract under which property or service is provided in a series of partial executions or deliveries to the extent the contract provides for separate payments for partial execution or delivery; and “(5) require that, within 15 days after an invoice is received, the head of an agency notify the business concern of a defect or impropriety in the invoice that would prevent the running of the time period specified in clause (i)(B) of this section. “§ 3904. Limitations on discount payments “The head of an agency offered a discount by a business concern from an amount due under a contract for property or service in exchange for payment within a specified time may pay the discounted amount only if payment is made within the specified Penalty. time. The head of the agency shall pay an interest penalty on an amount remaining unpaid in violation of this section. The penalty accrues as provided under sections 3902 and 3903 of this title, except that the required payment date for the unpaid amount is the last day specified in the contract that the discounted amount may be paid. “§ 3905. Reports “(a) By the 60th day after the end of each fiscal year, the head of each agency shall submit to the Director of the Office of Management and Budget a report on interest penalty payments made under this chapter during that fiscal year. The report shall include the number, amounts, and frequency of the payments and the reasons the payments were not avoided by prompt payment. “(b) By the 120th day after the end of each fiscal year, the Director shall submit to the Committees on Governmental Affairs, Appropriations, and Small Business of the Senate and the Committees on Government Operations, Appropriations, and Small Business of the House of Representatives a report on agency compliance with this chapter. The report shall include a summary of the report of each agency submitted under subsection (a) of this section and an analysis of progress made in reducing interest penalty payments by that agency from prior years. “§ 3906. Relationship to other laws “(a) A claim for an interest penalty not paid under this chapter may be filed under section 6 of the Contract Disputes Act of 1978 (41 U.S.C. 605). “(b) (1) An interest penalty under this chapter does not continue to accrue— “(A) after a claim for a penalty is filed under the Contract Disputes Act of 1978 (41 U.S.C. 601 et seq.); or “(B) for more than one year. “(2) Paragraph (1) of this subsection does not prevent an interest penalty from accruing under section 12 of the Contract Disputes Act of 1978 (41 U.S.C. 611) after a penalty stops accruing under this chapter. A penalty accruing under section 12 may accrue on an unpaid contract payment and on the unpaid penalty under this chapter. “(c) Except as provided in section 3904 of this title, this chapter does not require an interest penalty on a payment that is not made because of a dispute between the head of an agency and a business concern over the amount of payment or compliance with the contract. A claim related to the dispute, and interest payable for the period during which the dispute is being resolved, is subject to the intract Disputes Act of 1978 (41 U.S.C. 601 et seq.).”.

2. 1984

   Pub. L. 98–216 § 1(6) · 98 Stat. 3

   1. Substituted · 31 U.S.C. § 3902(b)

      Pub. L. 98–216 substituted “3903(2)” for “3903(2)(A)” in par. (2)

   2. Substituted · 31 U.S.C. § 3902(b)

      Pub. L. 98–216 substituted “3903(3)” for “3903(2)(B)” in par. (2)

   Source evidence

   Code amendment note
   Subsec. (b). Pub. L. 98–216 substituted “3903(2)” for “3903(2)(A)” in par. (1) and “3903(3)” for “3903(2)(B)” in par. (2).

   Enacted provision · exact public law section
   (6) Section 3902(b) is amended— (A) in clause (1), by striking out “3903(2)(A)” and substituting “3903(2)”; and (B) in clause (2), by striking out “3903(2)(B)” and substituting “3903(3)”.

3. 1988

   Prompt Payment Act Amendments of 1988

   Pub. L. 100–496 § 3(a)(1) · 102 Stat. 2455

   Substituted · 31 U.S.C. § 3902(a)

   Pub. L. 100–496, § 3(a)(1), substituted “The interest shall be computed at the rate of interest established by the Secretary of the Treasury, and published 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” for “The interest shall be computed at the rate the Secretary of the Treasury establishes for interest payments under section 12 of the Contract Disputes Act of 1978 (41 U.S.C. 611). The Secretary shall publish each rate in the Federal Register”

   Source evidence

   Code amendment note
   Subsec. (a). Pub. L. 100–496, § 3(a)(1), substituted “The interest shall be computed at the rate of interest established by the Secretary of the Treasury, and published 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” for “The interest shall be computed at the rate the Secretary of the Treasury establishes for interest payments under section 12 of the Contract Disputes Act of 1978 (41 U.S.C. 611). The Secretary shall publish each rate in the Federal Register”.

   Enacted provision · exact public law section
   (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 published 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.”.

   Effective date note
   Pub. L. 100–496, § 14(a)–(c), Oct. 17, 1988, 102 Stat. 2465, 2466, provided that:

4. 1988

   Prompt Payment Act Amendments of 1988

   Pub. L. 100–496 § 3(a)(2) · 102 Stat. 2455

   Struck · 31 U.S.C. § 3902(b)

   Pub. L. 100–496, § 3(a)(2), struck out second sentence which read as follows: “However, a penalty may not be paid if payment for the item is made—

   Source evidence

   Code amendment note
   Subsec. (b). Pub. L. 100–496, § 3(a)(2), struck out second sentence which read as follows: “However, a penalty may not be paid if payment for the item is made—

   “(1) when the item is a meat or meat food product described in section 3903(2) of this title, before the 4th day after the required payment date; “(2) when the item is an agricultural commodity described in section 3903(3) of this title, before the 6th day after the required payment date; or “(3) when the item is not an item referred to in clauses (1) and (2) of this subsection, before the 16th day after the required payment date.”

   Enacted provision · exact public law section
   (2) Section 3902(b) of title 31, United States Code, is amended by striking out the second sentence.

   Effective date note
   Pub. L. 100–496, § 14(a)–(c), Oct. 17, 1988, 102 Stat. 2465, 2466, provided that:

5. 1988

   Prompt Payment Act Amendments of 1988

   Pub. L. 100–496 § 3(b) · 102 Stat. 2455

   1. Added · 31 U.S.C. § 3902(c)(g)

      Pub. L. 100–496, § 3(b), added subsecs. (c) and (d)

   2. Redesignated · 31 U.S.C. § 3902(c)(g)

      Pub. L. 100–496, § 3(b), redesignated former subsecs. (c) to (e) as (e) to (g), respectively

   Source evidence

   Code amendment note
   Subsecs. (c) to (g). Pub. L. 100–496, § 3(b), added subsecs. (c) and (d) and redesignated former subsecs. (c) to (e) as (e) to (g), respectively.

   Enacted provision · exact public law section
   (b) Section 3902 of such title is further amended by redesignating subsections (c) through (e) as subsections (e) through (g), respectively, and by inserting after subsection (b) the following new subsections (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 payment 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.”.

   Effective date note
   Pub. L. 100–496, § 14(a)–(c), Oct. 17, 1988, 102 Stat. 2465, 2466, provided that:

6. 1988

   Prompt Payment Act Amendments of 1988

   Pub. L. 100–496 § 3(c) · 102 Stat. 2455

   Added · 31 U.S.C. § 3902(h)

   Pub. L. 100–496, § 3(c), added subsec. (h)

   Source evidence

   Code amendment note
   Subsec. (h). Pub. L. 100–496, § 3(c), added subsec. (h).

   Enacted provision · exact public law section
   (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)). “(2) (A) 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 payment 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 purchase agreement; “(ii) for a loan agreement, the 30th day beginning after the date of receipt of an application with all requisite documentation 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 payments), 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 the contract with the producer; “(vi) for a deficiency payment (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 payment, 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. 714f). “(4) Section 3907 of this title shall not apply to interest penalty payments made under this subsection.”.

   Effective date note
   Pub. L. 100–496, § 14(a)–(c), Oct. 17, 1988, 102 Stat. 2465, 2466, provided that:

7. 1998

   Federal Reports Elimination Act of 1998

   Pub. L. 105–362 title XIII § 1301(c)(2)(B) · 112 Stat. 3280

   Substituted · 31 U.S.C. § 3902(b)

   Pub. L. 105–362 substituted “The” for “Except as provided in section 3906 of this title, the”

   Source evidence

   Code amendment note
   Subsec. (b). Pub. L. 105–362 substituted “The” for “Except as provided in section 3906 of this title, the”.

   Enacted provision · exact public law section
   (B) Section 3902(b) of such title is amended by striking “Except as provided in section 3906 of this title, the” and inserting “The”.

8. 2011

   Pub. L. 111–350 § 5(h)(7) · 124 Stat. 3677

   Substituted · 31 U.S.C. § 3902(a)

   Pub. L. 111–350 substituted “section 7109(a)(1) and (b) of title 41” for “section 12 of the Contract Disputes Act of 1978 (41 U.S.C. 611)”

   Source evidence

   Code amendment note
   Subsec. (a). Pub. L. 111–350 substituted “section 7109(a)(1) and (b) of title 41” for “section 12 of the Contract Disputes Act of 1978 (41 U.S.C. 611)”.

   Enacted provision · exact public law section
   (7) In section 3902(a), strike “section 12 of the Contract Disputes Act of 1978 (41 U.S.C. 611)” and substitute “section 7109(a)(1) and (b) of title 41”.

10 of 10 references resolved to an enrolled provision