Chapter 3

The Final Rule (5 CFR 1315)

This chapter deals with the Final Rule on the Prompt Payment Act codified in 5 CFR 1315. The document details the exact procedures agencies and vendors are expected to follow. How the Final Rule came to be and how it is used are the focus of this chapter.

16. hortly after Congress passed the Prompt Payment Act,OMB published Circular A-125 to implement its provisions. What prompted OMB to replace Circular A-125 with the Final Rule?

In 1996, Congress passed the Debt Collection Improvement Act, which required some changes in the Prompt Payment rules. At about the same time, increasing use of electronic commerce, such as electronic payment systems and electronic funds transfer, by the federal government and the private sector required additional rules changes to accommodate this new way of doing business. A major rewrite of the rules was necessary, so OMB decided to ask for public comment on its proposed revisions, then adopted them as codified regulations in the Code of Federal Regulations.

17. Does OMB Circular A-125 still exist?

No, the Final Rule superseded and rescinded A-125.

18. Can I find the Final Rule on the Internet?

Yes, it is available in many forms on the Internet. Perhaps the best source is Title 5 (Administrative Personnel) of the Government Printing Office (GPO) Electronic Code of Federal Regulations (http://ecfr.gpoaccess.gov/). The electronic version of the code is always kept cur rent. You can also find the Final Rule at www.access.gpo.gov/nara/cfr/waisidx_02/5cfr1315_02.html; this page provides both text and PDF versions of the regulation.

19. Do federal agencies publish their own regulations to implement the Prompt Payment Act?

Agencies certainly may, and do, publish their own implementation regulations. However, agency regulations must always comply with the requirements of both the act and the Final Rule. Agencies often add details in their own regulations about how they will do business. In some cases, they may prescribe rules that are more restrictive than what the Final Rule prescribes. But they may not, without specific statutory authority, allow practices that are more expansive than what the law allows.

20. Can you give me an example of a more restrictive payment rule an agency might implement?

The Final Rule states that payments are to be made as close to the due date as practicable, but no more than seven days early, unless authorized on a case-by-case basis. An agency could make a more stringent rule, calling for payments to be made no more than five days early unless similarly authorized on a case-by-case basis.

21. What is an example of a more expansive agency regulation on payment?

The Final Rule states that interest payments of less than $1.00 need not be made. An agency does not have the authority to redefine what constitutes a negligible payment, so it cannot prescribe that any interest payment under $5.00 need not be made.

22. Is the Final Rule difficult to understand?

For someone who is not familiar with making government payments, it can be very hard to understand. Many of the requirements are worded in such a way that their intent may seem unclear, unless you have a basic understanding of normal payment processing. Though it is difficult for the uninitiated to understand, it is remarkably comprehensive. Virtually every question that can be asked about Prompt Payment is answered in those few pages. Chapter 4