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B-204733 1 (1982-03-17)

handle is hein.gao/gaobachkt0001 and id is 1 raw text is: COMPTROLLER ,NNERA.L C TE U#NITED STATES WASMINGTON' D C 254 B-204733 Mrch 17, 1982 The Honorable Jack Brooks Chairman, Committee on Government Operations Rouse of Representatives Dear Mr. Chairman: On November 13, 1981, you asked for our comments on H.R. 4895, an amendment to the Federal Property and Admin- istrative Services Act of 1949. The amendment would require the Federal Government to pay interest on late payments to small business concerns. It would also provide for congres- sional oversight of the interest payments to small businesses and enforcement of mandatory payments within the 6 month period after completion of the contracts. Subsequently, on January 4, 1982, you asked for our comments on a similar bill, S. 1131, cited as the Delinquent Payments Act of 1981. This bill would also require the Federal Government to pay interest on overdue payments and to take early payment dis- counts only when timely payment is made, and would provide for congressional oversight of Federal bill payment performance. Almost 4 years ago we reviewed the Federal Government's bill payment perform.ance Companies had complained that Federal agen- cies were slow in paying their bills. In February 1978 we re- ported our findings: The Federal Government's Bill Payment Performance Is Good But Should Be Better (FGtOSD-78-16). We also testified in July 1977 before the Senate Select Comittee on Small Business on the problems of late payments by Federal agencies. We found that although the Government's bill payment per- formance was more often good than bad, lengthy delays did occur and many contractors believed they were not paid soon enough. We also found th.'t early bill payment was a problem that was costing the Government unnecessary interest and causing some contractors to stop offering discounts. As we pointed out, it is costly to both the Government and private contractors when Federal agencies do not pay their bills when due. Costs to the Government for early payments and costs to contractors for late payments may amount to hundreds of millions of dollars annually. Payment delays occurred for several reasons, but at least two were clearly the Government's responsibility. First, all the

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