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B-186494 1 (1976-07-22)

handle is hein.gao/gaobadcwc0001 and id is 1 raw text is: DECISION1 * - WASHINGTON, D.C. 20548 NITE (i JUL 2 2 1976 FILE: -61%494 DATE: MATTER OF: Ite charges for utility services DIGEST: 1. Rule now applied by the General Accounting Office (GAO) is that Government agencies may pay interest on late pay- ments pursuant to either statute or contract provision. 51 Comp. Gen. 251 (1971), overruling 22 id. 772 (1943). Thus, if contract between Coast Guard and utility company is construed as obligating Coast Guard to pay late charges, there is no objection to payment based on absence of statu- tory provision therefor. 2, Contract between Coast Guard and utility company provides for payment of rates approved by State utility cocaission but also states that bills shall be paid uvithout penalty or interest. GAO believes that late payment charges approved by State comission as part of utility rates are properly payable under contract, and are not excluded as penalty or interest, since such charges merely recoup direct costs incurred by utility incident to late payments. Kowever, since matter is s ludice, contract construction will ultimately be adjudicated by court. The certifying officer for the Fifth Coast Guard District, Department of Transportation, has requested our opinion as to whether late payment charges for electrical service billed to the Coast Guard Air Base in Elizabeth City, North Carolina, by the Virginia Electric and Power Company (VErCO), can be paid as legal and valid obligations of the United States. The matter is being litigated in the United States District Court for the Eastern District of North Carolina, United States v. Virginia Electric and Power Company et al., No y6-000-CIV-2, and the instant request for our opinion was Ubmitted pursuant to an order by the District Court (filed April 26, 1976). YPCO and the United States Coast Guard entered into a contract on July 1, 1965. VEaCO agreed to deliver electrical service to the Air Base in return for a price to be determined in accordance with a rate schedule attached to and incorporated in the contract. db(4-6 0 313 J~.1. U,9 ?9'A7-0 O7 Fir

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