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DECISION !
FILE: B-219474
THE COMPTROLLER GENERAL
OF THE UNITED STATED
WASHINGTON. D.C. 20548
DATE: August 18, 1986
MATTER OF: Liability for Prompt Payment Interest Penalties
Under Interagency Agreement
DIGEST:
Provision in interagency agreement between Federal
Emergency Management Agency (FEMA) and General
Services Administration (GSA) required FEMA to
reimburse GSA for expenses incurred by GSA in pro-
viding the requested assistance. Under this pro-
vision, FEMA should reimburse GSA for interest
penalties incurred under Prompt Payment Act, since
late payment interest is an ordinary business ex-
pense and thus within scope of reimbursement
provision. 63 Comp. Gen. 338 (1984) distinguished.
In separate submissions, officials of the Federal
Emergency Management Agency (FEMA) and the General Services
Administration (GSA) have sought our opinion regarding which
agency is ultimately liable for late payment interest penal-
ties owed to a private contractor under the Prompt Payment
Act. The contract under which these interest penalties were
incurred was executed by GSA on behalf of FEMA, pursuant to an
interagency agreement between the two agencies. For the
reasons given below, we find that FEMA must reimburse GSA for
the interest penalties at issue.
BACKGROUND
Under the Disaster Relief Act of 1974, GSA and FEMA
entered into an interagency agreement intended to assist FEMA
in carrying out its responsibilities in the event of a disas-
ter. In that agreement, GSA agreed to provide various ser-
vices at FEMA's request. The relevant portion of the
interagency agreement states:
III. PROVISION OF ADMINISTRATIVE SERVICES BY GSA
GSA, upon the request of [FEMA], shall
provide a full range of administrative services
and materials in order to support the disaster
field operation. These services ordinarily
shall include:
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