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Federal Agencies May Have to Pay Late Fees to Contractors

Photo: Rob Hill

Even if the federal government avoids default, federal agencies may have to pay millions of dollars in penalties to contractorhttp://www.executivegov.com/wp-admin/post.php?post=21799&action=edit&message=10s from late payments.

Federal Times reports agencies may have to pay a 2.5 percent interest penalty under the Prompt Payments Act, which penalizes agencies that miss contractor and vendor payments.

Under the law, agencies are required to pay invoices by the agreed-upon date or have the penalty added onto the final bill.

However, contractors may hesitate to pursue the penalty fees and risk alienating the government as a customer.

“Legally, the government could find it owes interest to contractors all around the country,” said Dirk Haire, a partner with law firm Smith, Currie and Hancock. “But it would only be worth it for contractors on a few of the larger contracts.”

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