Prompt Payment Act

Pursuant to a congressional request, GAO reviewed whether federal agencies are complying with the Prompt Payment Act by making timely payments to private businesses for the goods and services they provide annually.

GAO evaluated payment procedures at 39 selected payment centers and found that: (1) 24 percent of federal vendor payments were made after the due date; (2) required interest penalties were seldom paid; (3) agencies paid only one of every six penalties owed; (4) almost one-fifth of the prompt payment discounts taken occurred after the offer period expired; and (5) payments were usually late because of missing data and inaccurate agency interpretations of prompt payment requirements. GAO also found that: (1) federal agencies paid about 23 percent of their bills 5 or more days before they were due; (2) the annual reports on federal bill payment performance have been misleading and have not highlighted the need for corrective action; and (3) although federal agencies have taken some initiatives to reduce excessive late payments, they must establish controls to obtain necessary data and ensure the use of appropriate criteria when paying vendor invoices.

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.

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