Government Contracts Monitor

Short Take: Treasury Increases Prompt Payment & Contract Disputes Act Interest Rates, Effective 1/1/18

January 24, 2018

The Treasury Department has announced that the Prompt Payment Act (“PPA”) interest rate is being increased to 2.625% per annum for the period of January 1, 2018 through June 30, 2018. This interest rate is used to calculate the interest penalty paid by the Government when it fails to timely pay contractors for goods and services, as well as interest due under the Contract Disputes Act (“CDA”). The interest rate for the last half of 2017 was set at 2-3/8 (2.375%, so this new rate reflects a one-quarter (0.25) percent interest rate increase. The new rate is the highest interest rate level since June 30, 2011, after falling to a low of 1-3/8% in the first half of 2013. Based upon recent comments and projections by the Fed, it looks like the direction of future rate adjustments will be up.

For an updated list of the established interest rates for all periods since January 1, 1980, see:
https://www.fiscal.treasury.gov/fsservices/gov/pmt/promptPayment/rates.htm.

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