Overview
Title
Prompt Payment Interest Rate; Contract Disputes Act
Agencies
ELI5 AI
The government says that if they are late paying for something they bought, they have to give a little extra money—a tip of 4.625% a year—to say sorry for being late. It's like when someone is late for a playdate and brings a cookie to make up for it!
Summary AI
The Bureau of the Fiscal Service, Treasury Department has announced the prompt payment interest rate for the period from January 1, 2025, to June 30, 2025. The interest rate is set at 4 5/8 percent per year. This rate is used to calculate interest penalties owed by government agencies to businesses when they fail to pay for goods or services on time. The interest is calculated from the day after the payment was due until the payment is made.
Abstract
For the period beginning January 1, 2025, and ending on June 30, 2025, the prompt payment interest rate is 4\5/8\ per centum per annum.
Keywords AI
Sources
AnalysisAI
The document, issued by the Bureau of the Fiscal Service within the Treasury Department, serves as an official notice about the prompt payment interest rate for U.S. government agencies. For the first half of 2025, from January 1 to June 30, this rate is set at 4 5/8 percent per annum. This interest rate is specifically important in the context of the Prompt Payment Act and the Contract Disputes Act. These laws ensure businesses are fairly compensated when government agencies delay payments beyond the due date for goods or services provided.
General Summary
The notice establishes the interest rate applicable to overdue payments by federal agencies for a six-month period. When an agency delays payment beyond the agreed date, it must calculate an interest penalty using this rate, effective from the day after the payment was due until it is made. The interest is an acknowledgment of the financial impact that such delays can have on businesses. The necessary authority for setting this rate lies with the Secretary of the Treasury, and this notification formally communicates the determined rate.
Significant Issues or Concerns
The document presents the interest rate as "4 5/8 per centum per annum," which may not be immediately clear to all readers. To improve accessibility and comprehension, a decimal format (4.625%) could be used alongside the traditional format. Additionally, antiquated language such as "centum per annum" can be updated to "percent per year" to ensure understanding.
Moreover, several statutory references are included, like "31 U.S.C. 3902(a)," which might not be familiar to individuals not versed in U.S. legal code, potentially limiting the document's accessibility. While the date range the rate applies to is included, making it explicit in every section might prevent any potential confusion.
Public Impact
For the general public and businesses dealing with government contracts, this document sets the benchmark for the interest penalties that can be claimed if they experience delayed payments. By ensuring timely compensation for late payments, it not only aids businesses in maintaining cash flow but also encourages government agencies to adhere to payment schedules.
Impact on Specific Stakeholders
Businesses: This document is crucial for contracting businesses as it defines the rate at which they can claim interest on overdue payments, providing them with a level of financial predictability and protection against delayed government transactions.
Government Agencies: Agencies are reminded of their obligations under the Prompt Payment Act, which should incentivize them to process payments in a timely manner to avoid accruing unnecessary interest expenses.
Overall, while the notice is largely a technical update consistent with established practice, its contents are essential for the efficient functioning of the relationship between federal agencies and businesses engaged in government contracts. By clarifying the financial penalties for late payments, it seeks to improve compliance and promptness in government financial operations.
Issues
• The interest rate is presented as '4 5/8 per centum per annum,' which might not be immediately clear to all readers; using a decimal format (4.625%) alongside might improve clarity.
• There is potential for confusion without explicit mention of the full date range the interest rate applies to, though it may be inferred from the 'DATES' section.
• The document uses statutory references (e.g., '31 U.S.C. 3902(a)', '31 U.S.C. 3902(c)(1)') that may not be easily understood by those unfamiliar with U.S. Code, potentially limiting accessibility.
• The phrase 'centum per annum' is an archaic term that could be replaced with 'percent per year' to improve understanding.
• No potential issues related to spending that might be wasteful or favoring particular organizations or individuals were identified in this document.