What is the Federal Prompt Payment Act

March 6, 2012 — 1,487 views  

There are many federal regulations governing the construction industry, but there are also laws that require the government to pay for services in a timely manner. A late check can be detrimental to industry professionals, and the government can be penalized by tardy payments due to the Federal Prompt Payment Act (PPA).

This specific legislation is not widely known, and therefore some construction services are unaware of the federal measures they can benefit from in the event of a late payment. The document was drafted and ratified in the 1990s, and explicitly states that federal agencies are required to pay for services rendered within 30 days of receipt and acceptance of such employment.

If this does not occur, the PPA automatically adds interest to the final amount. If a bill is delivered and the addition is not reflected in the final tally, construction experts can file a claim for the accumulated interest. In order to file a claim, a company must make an invoice "good and proper." The PPA mandates for such an invoice are as follows:

1.) Name of the Contractor
2.) Invoice Number and Date
3.) Contract number or Purchase Order Number (PO) and Delivery Order Number (DO) or Task Order (TO- if applicable)
4.) Description, Unit Prices and Extended (exactly as written on the purchase order)
5.) Quantities, Shipping Terms and Payment Terms (followed as written on the PO and clearly stated on the invoice)
6.) Line Items on the Invoice Which Agree with Line Items on the Procurement Document
7.) Complete Remittance Address
8.) Other information as required in the contract, i.e., Statement of Work (SOW), Standard of Performance (SOP), or Contract Data Requirements (CDRLs).