§ 3903. — Regulations.
[Laws in effect as of January 7, 2003]
[Document not affected by Public Laws enacted between
January 7, 2003 and December 19, 2003]
[CITE: 31USC3903]
TITLE 31--MONEY AND FINANCE
SUBTITLE III--FINANCIAL MANAGEMENT
CHAPTER 39--PROMPT PAYMENT
Sec. 3903. Regulations
(a) The Director of the Office of Management and Budget shall
prescribe regulations to carry out section 3902 of this title. The
regulations shall--
(1) provide that the required payment date is--
(A) the date payment is due under the contract for the item
of property or service provided; or
(B) 30 days after a proper invoice for the amount due is
received if a specific payment date is not established by
contract;
(2) for the acquisition of meat or a meat food product (as
defined in section 2(a)(3) of the Packers and Stockyards Act, 1921
(7 U.S.C. 182(3))), including any edible fresh or frozen poultry
meat, any perishable poultry meat food product, fresh eggs, and any
perishable egg product, or of fresh or frozen fish (as defined in
section 204(3) of the Fish and Seafood Promotion Act of 1986 (16
U.S.C. 4003(3)), provide a required payment date of not later than 7
days after the meat, meat food product, or fish is delivered; and
(3) for the acquisition of a perishable agricultural commodity
(as defined in section 1(4) \1\ of the Perishable Agricultural
Commodities Act, 1930 (7 U.S.C. 499a(4))), provide a required
payment date consistent with that Act;
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\1\ See References in Text note below.
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(4) for the acquisition of dairy products (as defined in section
111(e) of the Dairy Production Stabilization Act of 1983 (7 U.S.C.
4502(e)), the acquisition of edible fats or oils, and the
acquisition of food products prepared from edible fats or oils,
provide a required payment date of not later than 10 days after the
date on which a proper invoice for the amount due has been received
by the agency acquiring such dairy products, fats, oils, or food
products;
(5) require periodic payments, in the case of a property or
service contract which does not prohibit periodic payments for
partial deliveries or other contract performance during the contract
period, upon--
(A) submission of an invoice for property delivered or
services performed during the contract period, if an invoice is
required by the contract; and
(B) either--
(i) acceptance of the property or services by an
employee of an agency authorized to accept the property or
services; or
(ii) the making of a determination by such an employee,
that the performance covered by the payment conforms to the
terms and conditions of the contract;
(6) in the case of a construction contract, provide for the
payment of interest on--
(A) a progress payment (including a monthly percentage-of-
completion progress payment or milestone payments for completed
phases, increments, or segments of any project) that is approved
as payable by the agency pursuant to subsection (b) of this
section and remains unpaid for--
(i) a period of more than 14 days after receipt of the
payment request by the place or person designated by the
agency to first receive such requests; or
(ii) a longer period, specified in the solicitation, if
required to afford the Government a practicable opportunity
to adequately inspect the work and to determine the adequacy
of the contractor's performance under the contract; and
(B) any amounts which the agency has retained pursuant to a
prime contract clause providing for retaining a percentage of
progress payments otherwise due to a contractor and that are
approved for release to the contractor, if such retained amounts
are not paid to the contractor by a date specified in the
contract or, in the absence of such a specified date, by the
30th day after final acceptance;
(7) require that--
(A) each invoice be reviewed as soon as practicable after
receipt for the purpose of determining that such an invoice is a
proper invoice within the meaning of section 3901(a)(3) of this
title;
(B) any invoice determined not to be such a proper invoice
suitable for payment shall be returned as soon as practicable,
but not later than 7 days, after receipt, specifying the reasons
that the invoice is not a proper invoice; and
(C) the number of days available to an agency to make a
timely payment of an invoice without incurring an interest
penalty shall be reduced by the number of days by which an
agency exceeds the requirements of subparagraph (B) of this
paragraph;
(8) permit an agency to make payment up to 7 days prior to the
required payment date, or earlier as determined by the agency to be
necessary on a case-by-case basis; and
(9) prescribe the methods for computing interest under section
3903(c) \1\ of this title.
(b)(1) A payment request may not be approved under subsection
(a)(6)(A) of this section unless the application for such payment
includes--
(A) substantiation of the amounts requested; and
(B) a certification by the prime contractor, to the best of the
contractor's knowledge and belief, that--
(i) the amounts requested are only for performance in
accordance with the specifications, terms, and conditions of the
contract;
(ii) payments to subcontractors and suppliers have been made
from previous payments received under the contract, and timely
payments will be made from the proceeds of the payment covered
by the certification, in accordance with their subcontract
agreements and the requirements of this chapter; and
(iii) the application does not include any amounts which the
prime contractor intends to withhold or retain from a
subcontractor or supplier in accordance with the terms and
conditions of their subcontract.
(2) The agency shall return any such payment request which is
defective to the contractor within 7 days after receipt, with a
statement identifying the defect.
(c) A contract for the procurement of subsistence items that is
entered into under the prime vendor program of the Defense Logistics
Agency may specify for the purposes of section 3902 of this title a
single required payment date that is to be applicable to an invoice for
subsistence items furnished under the contract when more than one
payment due date would otherwise be applicable to the invoice under the
regulations prescribed under paragraphs (2), (3), and (4) of subsection
(a) or under any other provisions of law. The required payment date
specified in the contract shall be consistent with prevailing industry
practices for the subsistence items, but may not be more than 10 days
after the date of receipt of the invoice or the certified date of
receipt of the items. The Director of the Office of Management and
Budget shall provide in the regulations under subsection (a) that when a
required payment date is so specified for an invoice, no other payment
due date applies to the invoice.
(d)(1) The contracting officer shall--
(A) compute the interest which a contractor shall be obligated
to pay under sections 3905(a)(2) and 3905(e)(6) of this title on the
basis of the average bond equivalent rates of 91-day Treasury bills
auctioned at the most recent auction of such bills prior to the date
the contractor received the unearned amount; and
(B) deduct the interest amount determined under subparagraph (A)
of this paragraph from the next available payment to the contractor.
(2) Amounts deducted from payments to contractors under paragraph
(1)(B) shall revert to the Treasury.
(Added Pub. L. 97-452, Sec. 1(18)(A), Jan. 12, 1983, 96 Stat. 2476;
amended Pub. L. 100-496, Secs. 4-7, 13(a), Oct. 17, 1988, 102 Stat.
2457-2459, 2465; Pub. L. 102-190, div. A, title VIII, Sec. 842, Dec. 5,
1991, 105 Stat. 1449; Pub. L. 106-65, div. A, title X, Sec. 1009, Oct.
5, 1999, 113 Stat. 738.)
Historical and Revision Notes
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Revised Section Source (U.S. Code) Source (Statutes at Large)
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3903................................. 31 App.:1801(a)(2). May 21, 1982, Pub. L. 97-177, Sec.
2(a)(2), 96 Stat. 85.
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In the section, before clause (1), the words ``The Director of the
Office of Management and Budget shall prescribe regulations to carry out
section 3902 of this title'' are added because of the restatement. In
clause (1)(A), the words ``the terms of'' are omitted as surplus. In
clause (1)(B), the words ``of the payment'' are omitted as surplus.
References in Text
The Perishable Agricultural Commodities Act, 1930, referred to in
subsec. (a)(3), is act June 10, 1930, ch. 436, 46 Stat. 531, as amended,
which is classified generally to chapter 20A (Sec. 499a et seq.) of
Title 7, Agriculture. Section 1(4) of the Act was redesignated section
1(b)(4) by Pub. L. 102-237, title X, Sec. 1011(1)(A), Dec. 13, 1991, 105
Stat. 1898, and is classified to section 499a(b)(4) of Title 7. For
complete classification of this Act to the Code, see section 499r of
Title 7 and Tables.
Section 3903(c) of this title, referred to in subsec. (a)(9), was
redesignated section 3903(d) by Pub. L. 106-65, div. A, title X,
Sec. 1009(1), Oct. 5, 1999, 113 Stat. 738.
Amendments
1999--Subsecs. (c), (d). Pub. L. 106-65 added subsec. (c) and
redesignated former subsec. (c) as (d).
1991--Subsec. (a)(2). Pub. L. 102-190 inserted provisions relating
to fresh or frozen fish as defined in 16 U.S.C. 4003(3) and substituted
``meat, meat food product, or fish'' for ``meat or meat food product''.
1988--Subsec. (a). Pub. L. 100-496, Sec. 6(1), designated existing
provisions as subsec. (a).
Subsec. (a)(2). Pub. L. 100-496, Sec. 13(a), included any edible
fresh or frozen poultry meat, any perishable poultry meat food product,
fresh eggs, and any perishable egg product.
Subsec. (a)(4). Pub. L. 100-496, Sec. 4, amended par. (4) generally.
Prior to amendment, par. (4) read as follows: ``provide separate
required payment dates for a contract under which property or service is
provided in a series of partial executions or deliveries to the extent
the contract provides for separate payments for partial execution or
delivery; and''.
Subsec. (a)(5). Pub. L. 100-496, Sec. 5(2), added par. (5). Former
par. (5) redesignated (7).
Subsec. (a)(6). Pub. L. 100-496, Sec. 6(2), added par. (6).
Subsec. (a)(7). Pub. L. 100-496, Sec. 7, added par. (7) and struck
out former par. (7), which read as follows: ``require that, within 15
days after an invoice is received, the head of an agency notify the
business concern of a defect or impropriety in the invoice that would
prevent the running of the time period specified in clause (1)(B) of
this section.''
Pub. L. 100-496, Sec. 5(1), redesignated par. (5) as (7).
Subsec. (a)(8), (9). Pub. L. 100-496, Sec. 7, added pars. (8) and
(9).
Subsecs. (b), (c). Pub. L. 100-496, Sec. 6(3), added subsecs. (b)
and (c).
Effective Date of 1988 Amendment
Amendment by Pub. L. 100-496 applicable to payments under contracts
awarded, contracts renewed, and contract options exercised during or
after the first fiscal quarter which begins more than 90 days after Oct.
17, 1988, see section 14(a) of Pub. L. 100-496, set out as a note under
section 3902 of this title.
Implementation Through Federal Acquisition Regulation
Section 11 of Pub. L. 100-496 provided that:
``(a) The Federal Acquisition Regulation shall be modified to
provide appropriate solicitation provisions and contract clauses that
implement chapter 39 of title 31, United States Code, as amended by this
Act [see Short Title of 1988 Amendment note set out under section 3901
of this title], and the regulations prescribed under section 3903 of
such title (as amended).
``(b) The solicitation provisions and contract clauses required by
subsection (a) of this section shall include (but not be limited to) the
following matters:
``(1) Authority for a contracting officer to specify for a
contract or class of contracts a specific payment period, which--
``(A) in the case of payments for commercial items or
services, is similar to the payment period or periods permitted
in prevailing private industry contracting practices;
``(B) in the case of payments for noncommercial items and
services, does not exceed 30 days unless the circumstances of
the procurement action is determined to require a longer period
for payment and such determination is approved above the level
of the contracting officer;
``(C) in the case of payments for items of property or
services in an amount less than the amount specified as a small
purchase in section 303(g)(2) of the Federal Property and
Administrative Services Act of 1949 (41 U.S.C. 253(g)(2)), does
not exceed 15 days after the date of receipt of the invoice,
if--
``(i) the contract provides for such `fast payment'
terms;
``(ii) title to any property will vest in the Government
upon delivery (including delivery to a common carrier); and
``(iii) the business concern offers appropriate
warranties to furnish property or services conforming to the
requirements of the contract or purchase order, if payment
will be due prior to acceptance of the items or services;
and
``(D) in the case of progress payments under construction
contracts, does not exceed 14 days, unless the solicitation
specifies a longer period which the contracting officer has
determined is required to afford the Government a practicable
opportunity to adequately inspect the work and to evaluate the
adequacy of the contractor's performance under the contract.
``(2) Requirements to make periodic payments, in the case of a
property or service contract which does not prohibit periodic
payments for partial deliveries or other contract performance during
the contract period, upon--
``(A) submission of an invoice for property delivered or
services performed during the contract period, if an invoice is
required by the contract; and
``(B) either--
``(i) acceptance of the property or services by an
employee of the contracting agency authorized to accept the
property or services; or
``(ii) the making of a determination by such an
employee, that the performance covered by the payment
conforms to the terms and conditions of the contract.
``(3) A conclusive presumption, exclusively for the purposes of
determining when an agency becomes obligated to pay a late payment
interest penalty (other than under construction contracts), that the
Federal Government has accepted property or services by the 7th day
after the date on which, in accordance with the terms and conditions
of the contract, the property is delivered or final performance of
the services is completed, unless the solicitation specifies a
longer period which is determined by the contracting officer to be
required to afford the agency a practicable opportunity to inspect
and test the property furnished or evaluate the services performed.
``(4) The limitation that the Federal Government may take a
discount offered by a contractor for early payment by the Federal
Government only in accordance with the time limits specified by the
contractor, determined in accordance with the second sentence of
section 3904 of title 31, United States Code.
``(5) The requirements of section 3902(c) of title 31, United
States Code.
``(6) The requirements of section 3903(a)(6) of title 31, United
States Code.
``(7) The requirements of section 3905 of title 31, United
States Code.
``(c) The regulations required by subsection (a) of this section
shall be published as proposed regulations for public comment as
provided in section 22 of the Office of Federal Procurement Policy Act
(41 U.S.C. 418b) within 120 days after the date of the enactment of this
Act [Oct. 17, 1988].''
Edible Fresh or Frozen Poultry Meat, Perishable Poultry Meat Food
Products, Fresh Eggs, and Perishable Egg Products
Pub. L. 98-181, title II, Sec. 2002, Nov. 30, 1983, 97 Stat. 1297,
to the extent that it provided that the terms ``meat'' and ``meat food
products'' as used in 31 U.S.C. 3903(2) also included edible fresh or
frozen poultry meat, perishable poultry meat food products, fresh eggs
and perishable egg products, was stricken by Pub. L. 100-496,
Sec. 13(b), Oct. 17, 1988, 102 Stat. 2465, applicable to payments under
contracts awarded, contracts renewed, and contract options exercised
during or after the first fiscal quarter which begins more than 90 days
after Oct. 17, 1988.
Section Referred to in Other Sections
This section is referred to in sections 3904, 3905 of this title.
