rubber stamp. Truly! The stamp had blocks to record the date the invoice was received, the date of acceptance, and often the date the invoice was for- warded for payment. While this payment due date pro- cess sounds very straightforward, if awkward, originally there were some loopholes that allowed the govern- ment to delay payments without seeming to be late. One such loophole
was delayed acceptance. As an exam- ple, perhaps supplies were received on May 1, but the government did not officially accept them until July 1. That meant that the 30-day clock for the payment due date did not start until July 2 rather than May 2. And some- times we even started using the sup- plies well before July 1, essentially a ruse to avoid interest. This was clearly contrary to the intent of the Act.
After enough uproar, Congress passed Public Law 100-496 , Prompt Pay- ment Act Amendments of 1988 to create something called “construc- tive acceptance.” That means, only for purposes of the PPA, acceptance will be deemed to have occurred on the sev- enth day after delivery/performance. This does not limit our rights to fur- ther inspect, reject, or avail ourselves of other rights under the contract. But it does start the clock ticking to establish the payment due date and potential liability to pay interest. Our contract may specify a different pe- riod depending on what is being pur- chased, but the default is seven days. If actual acceptance occurred before the seventh day, that earlier date would start the clock. Another loophole was the govern- ment’s failure to properly document the receipt date of invoices. Again, harking back to earlier times, most of- fices had a date/time stamp machine to document receipt of invoices. The receiving unit occasionally did not process or immediately stamp the
Exclusionary Note Per Federal Acquisition Regulation (FAR) 32.901, the Prompt Pay- ment Act only applies to invoice payments, not contract financing payments as defined in FAR 32.001. Invoice payments are made for supplies or services accepted by the government. On the other hand, contract financing payments are those that provide for the govern- ment to make payments before acceptance of supplies or services. They include advance payments, performance-based payments, and most progress payments.
July-August 2025 | DEFENSE ACQUISITION | 15
Made with FlippingBook - Online Brochure Maker