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B-198378 1 (1981-07-15)

handle is hein.gao/gaobabkck0001 and id is 1 raw text is: //! . UNITED STATES GENERAL ACCOUNTING OFFICE <:' C, WASHINGTON, D.C' 20548 COMMUNITY AND ECONOMIC July 15, 1981 DEVELOPMENT DIVISION Lt. General Joseph K. Bratton Chief of Engineers Army Corps of Engineers Dear General Bratton: During our recent &eview of Corps of Engineers water contracting and repayment practice, we identified a problem which warrants your attention. We found that: --Repayment contracts allow up to 30 days after the due date to pay cost-sharing installments without any pen- alty. --The percentage rate used to assess late charges is not based on the current value of funds to the Treasury. We believe that these conditions may preclude timely recovery of the installments and encourage late payments at the expense of the Federal Government. Of 23 Corps contracts we reviewed in five districts (St. Louis, Mo.; Kansas City, Mo.; Forth Worth, Tex.; Tulsa, Okla.; Washington D.C.), 11 contained clauses which exempt the water users from paying any penalty for up to 30 days after the due dates of their installments, 5 were silent with respect to penalty charges, and 7 specified interest charges from the due date. The contracts with exemption clauses specify that if payment is made 31 to 60 days after the due date, 1 month's interest will be charged. This in effect, allowed the users a 30-day penalty-free grace period on their delinquent pay- ments. A recent (November 7, 1980) revision in the Corps water supply contract regulations has reduced this penalty-free period from 30 to 15 days for new contracts. We believe that the 15-day grace period allowed by the Corps is inconsistent with the Department of the Treasury's Fiscal Requirements Manual (TFRM) for guidance of department and agencies on effective management of the Government's cash. The TFRM states that contracts under which goods or services are sold will include payment terms and provisions which at a minimum: --Requires that payment be received no later than the due date (no grace period is provided for in Treasury's TFRM). --Provide for late charges for payments received after the due date. f/s

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