H.R. 454 - PAYMENT OF INTEREST ON OVERDUE PAYMENTS TO SMALL BUSINESS FIRMS

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP85-00988R000200170002-1
• Release Decision: RIPPUB
• Original Classification: K
• Document Page Count: 3
• Document Creation Date: December 16, 2016
• Document Release Date: December 2, 1998
• Sequence Number: 2
• Publication Date: June 17, 1977
• Content Type: MF

Approved"F,o Release 2005/06/22: CIA-RDP85-00$R000200170002-1
MEMORANDUM FOR: Office of Legislative Counsel
STAT ATTENTION:
STAT FROM:
Chief, rocurement Management Staff, OL
H.R. 454 - Payment of Interest on Overdue
Payments to Small Business Firms
RFRS dtd 9 June 77 to DD/A from OLC,
forwarding H.R. 454
1. Action Requested: It is requested that the Office
of Legislative Counsel indicate to the House that this Agency
nonconcurs with the subject legislation.
2. Background:
a. Some form of the subject resolution has been
around on the Hill for at least a year. This is
evident from the proposed language which requires
promulgation of regulations not later than 1 July 1976
while the instant resolution is actually dated
4 January 1977. The law if passed would require
that the Government pay interest of 12% per annum
on overdue payments to suppliers which qualify as
small businesses.
b. Motivation to pay small business or other
invoices on a timely basis has been positive in the
past. It has been in the form of a discount of
usually from 1 to 5 per cent for payment within
some specified period of time. A further motivation
for the Government exists in the fact that continuing
delinquent payment usually will encourage suppliers
to increase their prices or stop doing business with
the Agency involved.
A rove For Release 2005/06/22 : CIA-RDP85-00988R000200170002-1
STAT N ~; `3
 Approved to Release 2005/06/22 : CIA-RDP85-00 8R000200170002-1
SUBJECT: H.R. 454 - Payment of Interest on Overdue
Payments to Small Business Firms
3. Staff Position: We believe that the following
factor or questions should be considered prior to making
any decision on the subject legislation:
a. Additional expense will accrue to the
Government as a result of having to establish
systems for identifying small business invoices
from others. This will require more staffing.
b. Computational time will be necessary as
Government personnel will be required to determine
how late a payment is and apply the 12% factor to
establish what penalty should be paid. Again, more
Government personnel would be required.
c. Large numbers of man-hours will be expended
in correcting accounting and financial records to
reflect the amount actually paid versus the amount
committed for the purchase order or contract.
d. The risk of violation of anti-deficiency
laws will exist at year-end when the 12% factor
could result in over-obligation of appropriated
annual funds.
e. Contracting and paying office staffs will
have to be enlarged because of time required to
resolve with vendors any disagreement over amounts
of penalties.
f. The extra expense which will result from
contracting with small business firms, if H.R. 454
is passed, could encourage Government buyers to
buy less from them.
g. Negative motivation, i.e., punishing an
individual or business entity to encourage positive
behavior has not proven successful in other areas;
and we do not believe it is the right way to go
on this issue.
Approved For Release 2005/06/22 : CIA-RDP85-00988R000200170002-1
 Approved Release 2005/06/22: CIA-RDP85-00 ,8R000200170002-1
SUBJECT: H.R. 454 - Payment of Interest on Overdue
Payments to Small Business Firms
4. Recommendation: While this Agency supports the
objective of our small business programs and is dependent
on large numbers of small business entities, we believe
for the reasons stated above that H.R. 454 should not be
passed. It will result in larger Government staffs and
additional expense while not achieving its objective.
Other methods than those proposed in H.R. 454 should be
studied which would compensate small business suppliers
for delinquent Government remittance.
STAT
Att:
Ref
cc: AI/DDA w/att
Distribution:
Orig - Adse w/att
-< PMS Subject w/att
1 - PMS Chrono w/att
1 - OL Reader w/att
OL/PMS/ (17 June 77)
Approved For Release 2005/06/22 : CIA-RDP85-00988R000200170002-1