Washington DC Prompt Payment Guide and FAQs

For the purposes of this subchapter, the term:

(1) “Business concern” means any person engaged in a trade or business and nonprofit entities operating as contractors.

(1A) “Contractor” means any entity that has a direct contract with a District agency, as that term is defined in paragraph (3) of this section.

(2) “Designated payment office” means the place named in the contract for forwarding the invoice for payment or, in certain instances, for approval.

(3) “District agency” means any office, department, division, board, commission, or other agency of the District government, including, unless otherwise provided, an independent agency, required by law or by the Mayor or the Council to administer any law or any rule adopted under the authority of a law. For the purposes of this definition, the term “independent agency” means any agency of government not subject to the administrative control of the Mayor and includes, but is not limited to, the Superior Court of the District of Columbia, District of Columbia Court of Appeals, Council of the District of Columbia, Board of Elections and Ethics, Armory Board, Zoning Commission, Convention Center Board of Directors, District of Columbia Board of Education, and Public Service Commission.

(4) “Proper invoice” means an invoice which contains or is accompanied by substantiating documentation required by regulation or contract.

(5) “Subcontractor” means any entity that furnishes labor, material, equipment, or services to a contractor in performance of the contractor’s contract with a District agency.

(a)
(1) In accordance with rules and regulations issued by the Mayor of the District of Columbia (“Mayor”), each agency of the District of Columbia government (“District”), under the direct control of the Mayor, which acquires property or services from a business concern but which does not make payment for each complete delivered item of property or service by the required payment date shall pay an interest penalty to the business concern in accordance with this section on the amount of the payment which is due.

(2) Each rule or regulation issued pursuant to paragraph (1) of this subsection shall:

   (A) Specify that the required payment date shall be:

      (i) The date on which payment is due under the terms of the contract for the provision of the property or service; o
      (ii) 30 calendar days, excluding legal holidays, after receipt of a proper invoice for the amount of the payment due, if a specific date on which payment is due is not established by contract;

    (B) (i) Specify, in the case of any acquisition of meat or of a meat food product, a required payment date which is not later than 7 calendar days, excluding legal holidays, after the date of delivery of the meat or meat food product; and
      (ii) Specify, in the case of any acquisition of a perishable agricultural commodity, a required payment date which is not later than 10 calendar days, excluding legal holidays, after the date of delivery of the perishable agricultural commodity pursuant to this subchapter;

   (C) Specify separate required payment dates for contracts under which property or services are provided in a series of partial executions or deliveries, to the extent that the contract provides for separate payment for partial execution or delivery; and

   (D) Require that, within 15 days after the date on which any invoice is received, District agencies notify the business concern in writing of any defect in the invoice or delivered goods, property or services or impropriety of any kind which would prevent the running of the time period specified in subparagraph (A)(ii) of this paragraph.

(b)
(1) Interest penalties on amounts due to a business concern under this subchapter shall be due and payable to the concern for the period beginning on the day after the required payment date and ending on the date on which payment of the amount is made, except that no interest penalty shall be paid if payment for the complete delivered item of property or service concerned is made on or before: (A) the 3rd day after the required payment date, in the case of meat or a meat product, described in subsection (a)(2)(B)(i) of this section; (B) the 5th day after the required payment date, in the case of an agricultural commodity, described in subsection (a)(2)(B)(ii) of this section; or (C) the 15th day after the required payment date in the case of any other item. Interest, computed at a rate of not less than 1%, shall be determined by the Mayor by regulation.

(1A) Each contract executed pursuant to Chapter 3 of Title 2 shall include in the solicitation a description of the contractor’s rights and responsibilities under the chapter.

(1B) Paragraphs (1) and (1A) of this subsection shall apply to claims arising after October 7, 1998.

(2) Any amount of an interest penalty which remains unpaid at the end of any 30-day period shall be added to the principal amount of the debt and thereafter interest penalties shall accrue on the added amount.

(c)
This section does not authorize the appropriation of additional funds for the payment of interest penalties required by this section. A District agency shall pay any interest penalty required by this section out of funds made available for the administration or operation of the program for which the penalty was incurred.

(d)
Any contract awarded by a District agency shall include:

(1) A payment clause that obligates the contractor to take one of the 2 following actions within 7 days of receipt of any amount paid to the contractor by the District agency for work performed by any subcontractor under a contract:

   (A) Pay the subcontractor for the proportionate share of the total payment received from the District agency that is attributable to the subcontractor for work performed under the contract; or

   (B) Notify the District agency and the subcontractor, in writing, of the contractor’s intention to withhold all or part of the subcontractor’s payment with the reason for the nonpayment;

(2) An interest clause that obligates the contractor to pay interest to the subcontractor or supplier as provided in subsection (b)(1) and (2) of this section; and

(3) A clause that obligates the contractor to include in any subcontract a provision that requires each subcontractor to include the payment and interest clauses required under paragraphs (1) and (2) of this subsection in a contract with any lower-tier subcontractor or supplier.

(e)
(1) A contractor’s obligation to pay an interest charge to a subcontractor pursuant to subsection (d)(2) of this section shall not constitute an obligation of the District agency.

(2) A contract modification shall not be made for the purpose of providing reimbursement for any interest charge pursuant to subsection (d)(2) of this section.

(3) A cost reimbursement claim shall not include any amount for reimbursement for any interest charge pursuant to subsection (d)(2) of this section.

(f)
(1) A dispute between a contractor and subcontractor relating to the amount or entitlement of a subcontractor to a payment or a late payment interest penalty under the provisions of this subchapter does not constitute a dispute to which the District of Columbia is a party. The District of Columbia may not be interpleaded in any judicial or administrative proceeding involving such a dispute.

(2) This subsection shall not limit or impair any contractual, administrative, or judicial remedies otherwise available to a contractor or subcontractor in the event of a dispute involving late payment or nonpayment by a prime contractor or deficient subcontract performance or nonperformance by a subcontractor.

(a) If a business concern offers a District agency a discount from the amount otherwise due under a contract for property or services in exchange for payment within a specified period of time, the District agency may make payment in an amount equal to the discounted price only if payment is made within the specified period of time.

(b) Each District agency which violates subsection (a) of this section shall pay an interest penalty on any amount which remains unpaid in violation of subsection (a) of this section. The interest penalty shall accrue on the unpaid amount in accordance with the regulations issued pursuant to § 2‑221.02, except that the required payment date with respect to the unpaid amount shall be the last day of the specified period of time described in subsection (a) of this section.

(a)
(1) Claims for interest penalties which a District agency has failed to pay in accordance with the requirements of §§ 2‑221.02 and 2‑221.03 shall be filed with the contracting officer for a decision. Interest penalties under this subchapter shall not continue to accrue: (A) after the filing of an appeal for the penalties with the Contract Appeals Board; or (B) for more than one year.

(2) The contracting officer shall issue a decision within 60 days from the receipt of any claim submitted under this subchapter.

(3) Within 90 days from the receipt of a decision of the contracting officer, the contractor may appeal the decision to the Contract Appeals Board.

(4) The contractor shall file a claim for interest penalties and any amendments to such claim within 90 days after the principal is paid, except that if the contractor notifies the contracting officer in writing of the contractor’s intent to file a claim within the 90-day period, the contractor shall be allowed 180 days after the principal is paid to file such claim.

(b)
Except as provided in § 2‑221.03 with respect to disputes concerning discounts, this subchapter shall not be construed to require interest penalties on payments which are not made by the required payment date by reason of a dispute between a District agency and a business concern over the amount of that payment or other allegations concerning compliance with a contract. Claims concerning any dispute, and any interest which may be payable with respect to the period while the dispute is being resolved, shall be subject to the ruling of the Contract Appeals Board.

(c)
(1) With respect to any claim arising from a payment between March 15, 1985, and October 7, 1998, the contractor shall file a claim for interest penalties and any amendments to such claim with the contracting officer within 180 days of October 7, 1998.

(2) The 180 days specified in paragraph (1) of this subsection shall be extended to 270 days to file a claim if the contractor notifies the contracting officer in writing of the contractor’s intent to file a claim for interest penalties within 180 days of October 7, 1998.

(3) A claim filed by a contractor may be amended at any time prior to the issuance of a decision by the contracting officer.

(d)
Subsection (a) of this section shall apply to claims arising after October 7, 1998.

(a) An invoice shall be deemed to have been received by an agency on (1) the date on which the agency’s designated payment office actually receives a proper invoice, or (2) the date on which the agency accepts the property or service concerned, whichever is later.

(b)
(1) District agencies shall mail or otherwise deliver checks to a business concern on or about the same day that the checks are dated.

(2) If a District agency makes a payment by check on or about same day as the date of the check, then the payment shall be considered made on the date on which a check for payment is dated.

(c) A contract for the rental of real or personal property is a contract for the acquisition of that property.