Jump to content
The Wifcon Forums and Blogs

Jazzy

DFAS- Contractor Owed Interest

Recommended Posts

Pursuant to FAR 52.232-17 Interest (Oct 2010) and FAR subpart 32.9- Prompt Payment, after a payment is 30+ days late who is responsible for adding interest. 

1. Does DFAS include it and pay it automatically? 

2. Is it for the contract office to determine and add to the invoiced total using the interest calculator (http://www.fms.treas.gov/prompt/)

3. Also, is it typically determined and paid after the invoiced amount is paid in full? Thinking that once a paid date is available than a final interest amount can be determined.

What does everyone think?

Share this post


Link to post
Share on other sites

Jazzy, under the PPA, the government owes a contractor an interest penalty if the government does not make an invoice payment by the time specified in the contract.  The time for payment varies depending on what is being acquired under the contract.  If the government does not make a timely invoice payment, the government is required to pay the interest penalty when the principle is paid and to indicate what portion of the payment is interest and what portion is principle.  If the government does not pay interest with the late payment, and the contractor makes a timely request for the interest, the government owes the contractor an additional penalty on top of the late payment interest penalty.  The late payment interest penalty continues to accrue until the earlier of one year from the payment due date, the total amount due is paid, or the contractor files a claim for it under the Contract Disputes Act.

Share this post


Link to post
Share on other sites

I "think" the calculation is done by DFAS, it may even be automated I don't know.  I do know that the contracting office does not do it.  I also "think" it is paid automatically.  This is based on what I have seen in payment systems, after an invoice with interest has been paid out.  In todays world of IT, I would think that is all automated.

Share this post


Link to post
Share on other sites

To clarify my post, it is the paying office, DFAS for most DoD contracts, that is responsible for making a timely payment and paying interest on a late payment.  The money for the late payment interest comes from the appropriation that funded the contract, not out of DFAS' budget.  Thus, the buying activity pays for DFAS's tardiness.

Share this post


Link to post
Share on other sites

@Retreadfed What if the late payment is caused by a program office delay in routing the paperwork to DFAS.  In that scenario, does DFAS see the initial due date and process the interest or is there an extra step?

Share this post


Link to post
Share on other sites

Didn't we have a same or similar topic about a year ago? Something about when the accrual date started?

 

H2H

Share this post


Link to post
Share on other sites
1 hour ago, Jazzy said:

@Retreadfed In this situation, DFAS has kicked back the Invoice/ Receiving Report due to some errors.  Each time it gets that much later.

DFAS used to automatically pay the late payment interest, as stated above. I assume that is still the procedure.

However, you said that DFAS has "kicked back" (refused to pay ? Returned? ) the invoice and receiving report "due to some errors". What type of "errors" are you referring to?  Were they errors in the invoice that rendered it "improper" as opposed to a "proper invoice"?  In theory, an invoice is not payable until it is "proper", depending upon the particular language of the prompt payment clause(s) in the contract. The "calendar clock" generally stops during the time before the contractor corrects an invoice.  

 

Share this post


Link to post
Share on other sites

Joel is correct.  The time for payment does not begin until the billing office receives a proper invoice or acceptance of the work, whichever is later.  When an invoice is received, the government has seven days within which to notify the contractor of any deficiencies in the invoice.  If the government meets this seven day requirement, the usual 30 time period has not begun.  However, if the government takes longer than seven days to notify the contractor, any days in excess of seven are deducted from the usual 30 day time period for payment on the corrected invoice.

Share this post


Link to post
Share on other sites

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now

×