Actions To Improve Timeliness of Bill Paying by the Federal Government Could Save Hundreds of Millions of Dollars

GAO assessed proposed legislation which would require that Federal agencies pay interest on overdue payments made to private contractors and determined if previous GAO recommendations for monitoring the Government's bill payment performance, for developing payment due-date standards, and for including specific payment terms in contracts and purchase orders have been implemented.

Although GAO made specific recommendations more than 3 years ago for bill payment monitoring and changes in procurement regulations, little has been done in these areas. GAO noted continued ineffective monitoring of Federal bill payment practices and failure to provide appropriate guidance to Federal agencies on bill paying requirements. Contractors continue to complain that the Government is not paying its debts when due, a situation that has been made more critical by high interest rates. Furthermore, GAO saw indications that Government agencies, while paying some bills late, are still paying others too early. Both late payments and early payments are costly. Together, late payments cost contractors and early payments cost the Government possibly hundreds of millions of dollars annually. Early bill payment costs the Government interest and causes some contractors to stop offering discounts. The Treasury monitoring of Federal bill payment practices has been ineffective, and responsible agency headquarters offices apparently do little payment performance monitoring themselves. Payment due-date standards for the major types of goods and services have not yet been developed, and contract documents generally still do not include specific payment due dates. As a result, the Office of Management and Budget, the Treasury, and responsible agency headquarters do not know how good the Government's current bill payment performance is. More specific guidance for agency monitoring and reporting is needed.

Recommendations

Our recommendations from this work are listed below with a Contact for more information. Status will change from "In process" to "Open," "Closed - implemented," or "Closed - not implemented" based on our follow up work.

Director: John F. Simonette Team: General Accounting Office: Accounting and Financial Management Division Phone: (202) 275-1581