Government Contracts Monitor

Short Take: Treasury Announces Decreased 2-3/8% Prompt Payment & Contract Disputes Interest Rate for 7/1/17-12/31/17

July 25, 2017

The Treasury Department has announced that the Prompt Payment Act interest rate is being decreased to 2-3/8% per annum for the period of July 1, 2017 through December 31, 2017. 82 Fed. Reg. 34348 (7/24/17). This interest rate is used to calculate the interest penalty payable by the Government when it fails to timely pay contractors for goods and services, as well as interest due on claims under the Contract Disputes Act. The prior interest rate for the first half of 2017 was set at 2-1/2%. The new rate thus reflects a 1/8% interest rate decrease, notwithstanding two intervening Fed funds 1/4% rate increases.

For an updated list of the established interest rates for all periods since January 1, 1980, see https://www.fiscal.treasury.gov/prompt/rates.html. The Treasury Department provides a Calculator that can be used to calculate the interest payable on claims and late payments, which is accessible here.