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B-212563 1 (1983-08-03)

handle is hein.gao/gaobabjaf0001 and id is 1 raw text is: P COMPTROLLER GENERAL OF THE UNIT ED STATES 6 WASI-INGTQN D.C. flSO B-212%3 August 3, 1983 The Honorable William V. Path, Jr. Chairman, Committee on Governmental Affairs United States Senate Attention: Marikay Riney / Dear Mr. Chairman: Do nos. wsZ- Av 1z.ti tble to public r'ading * This is in reply to-your May 10, 1983, letter requesting our views on the j ovisions of S. 1181, a bill entitled Construction Contract Payment procedures Act of 1983.R equiTheLYlr'roud requireiFederal executeagencies, wnen they P-1~ ~ ~ f'Mctv -to 'ae),rgrs 48ym A V kfr:. \1_1_ eeftO N-make progrts *n cons ruction contract, to makepuch progress payments Vfu &_lie. t or ;ihout re ion-of anyport of eprogresspayment: ueunless the contiactinqofficer fijnds and deeriesthat'the-contractor is not kiimakng txey$& otelrwise satiisfactory progr-ess towards compTetion of the contract. Currently, the Government is reimbtursing coritractors at rates ranging from 90 to 95 percent of progress payments due under construction contracts. 4JWedofrnot.believe:, thetptovisid'ns ofa'the bill1 iftienacted,. wOuldI1 .eZhsstet i th good_ rDse .ractice orlwould provide the eral'overnmentte rotie &' o 'tna retention of. a percentage.. ofprogre~ssp aymentsnwi affords. It is general bsnessprati andwe 7plrvjudent one--to withhold a por_ on of '_ nts on construcfionh ntrac6ts -to en sure satxsfactory completion. Such withholding, serves to po ect agPi'nt i'shoddyj3-' anship that may not be discovered 'until final acceptancbe iznspe66tion by the Government. Further, on other than fixed-price 'contr acts, the withholding also serves to guard against the Government's paying for costs determined subsequently to be unallowable. el!. alteh- \'-1A Jw L4_ -- ' rL 'befor In recent testimony reiated part-to thisssue, before your'.Committee, the r4'nseIDeputy Inspector Genera, i.\Derek Vander- Schaafr;also., indicatedg-that iretiention of a.percent4age of progress payments'has 'substantial v&-le. While 'he testimony covered progress 'payniit rates for dther than constrution contracts, we believe the issu'e is the same as that rgdised 'by S. 1181. The Department of Defen 'e (DOD).increased payment rates in 1981 from.85 percent for small businesses and 80 percent for large contractors, to 95 and 90 percent, respectively. Mr. Vander Schaaf indicated that with recent decreases in inflation and interest rates, DOD should consider reducing the current high progress payment rates.

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