AMENDMENTS 946 AND 948 TO S.328 (PROMPT PAYMENT ACT)

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP91-00058R000200280009-0
• Release Decision: RIPPUB
• Original Classification: K
• Document Page Count: 18
• Document Creation Date: December 23, 2016
• Document Release Date: August 28, 2012
• Sequence Number: 9
• Publication Date: October 26, 1987
• Content Type: MEMO

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STAT
STAT
JIAI
'Liaison
Division 0 A
Att n
2.
FORM 61 o use MVIOUS
1-79 EDITIONS
ROUTING AND RECORD SHEET
SUBJECT: (Optional)
Amendments 946
and 948 to S.328 (Prompt Payment Act)
EXTENSION
NO.
Chief, Procurement Ma
nagement Staff, OL
DATE
building)
? and
DATE
OFFICER'S
COMMENTS (Number each comment to show from whom
RECEIVED
FORWARDED
INITIALS
to whom. Draw a line across column after each comment.)
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
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MEMORANDUM FOR: Liaison Division, OCA
STAT ATTENTION:
FROM:
Chief, Procurement Management Staff, OL
SUBJECT: Amendments 946 and 948 to S.328 (Prompt Payment Act)
1. We have no objection to the inclusion of the subject
amendments within the referenced legislation.
2. Amendment 946 allows for alternative payment provision to a
standard payment clause which would otherwise be required. The
approach allowed by this amendment would have nominal impact on
Agency operations.
3. Amendment 948 allows for the creation of a Presidential
Advisory Panel to review Federal policies and practices relative to
this legislation. Assuming that we would not be required to
significantly interact with this Panel, we have no objection to this
amendment.
STAT
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STAT
SUBJECT: Amendments 946 and 948 to S.328 (Prompt Payment Act)
Distribution:
Orig - Addressee
1 - OL/PMS Official
/1~- OL Reader
1 - OGC/L&PLD
1 - OL/PMS Chrono
OL/PMS I(26 Oct 87)
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ROUTING AND TRANSMITTAL SUP ? _ i C- /.--% -S
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TO: (Nam , Oft* symbol, room number.
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STAT
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DO NOT use this form as a RECORD of approvals, concurrence;,, disposals.
clearances, and similar actions
Room No.-Bide.
OPTIONAL FORM 41 (Rev. 7.76)
hnc,ib 6"
FPMR (41 CFR)101-11.200
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that established various economic sanctions against South
Africa. The law further required the president to recommend
additional sanctions if he found that progress was not being
made toward ending apartheid by the Pretoria government.
In his report to Congress, required within one year of the
law's original enactment, Reagan said South Africa is no closer
toward abolishing apartheid than it was a year ago. He added
that there is "very little hope for optimism about the immedi-
ate future." But Reagan, in resisting further sanctions. said the
U.S. steps taken so far have not succeeded either "in hastening
the demise of racism in South Africa [or] punishing the South
African government."
An effort is expected on Capitol Hill to pass legislation
adopting more stringent sanctions against South Africa. though
it is unclear whether action will be taken before next year.
(1986 Almanac p. 359)
v Reagan Urged to Reconsider Saudi Arms Sale
Strong majorities of the House and Senate have asked
President Reagan to reconsider his plans for a major arms sale
to Saudi Arabia.
The administration had been ready to notify Congress the
week of Sept. 28 about a $1 billion-plus sale. to include F-15
warplanes. anti-tank missiles and upgraded equipment for
older weapons already owned by the Saudis. But in the days
before that notification was to have been made. Reagan got two
letters asking him to reconsider. One was signed by 64 senators
and the other by 225 House members.
Apparently because of the opposition - which had been
expected - the administration delayed the sale notice for at
least a week. Administration officials reportedly have consid-
ered withdrawing the most controversial part of the arms sale
package - 1,600 Maverick air-launched anti-tank missiles.
By law, Congress can block foreign arms sales by passing -
over the president's likely veto - a joint resolution of disap-
proval. The current arms sale to Saudi Arabia is the second
controversial one this year. Faced with strong congressional
opposition. Reagan on June 11 witbdrew his first proposal to
sell the Saudis the 1.600 Maverick anti-tank missiles. (p. 1254)
"Senate Opens Debate on State Department Bill
The Senate Oct. 2 began debate on a two-year reauthoriza-
tion of the State Department and related agencies (S 1394 - S
Rept 100-75i. The measure authorizes $3.6 billion for fiscal
1988. a $600 million cut below President Reagan's request for
that year.
The bill has been the vehicle for concern about the bugging
of a new U.S. Embassy building in Moscow, still under con-
struction. and the potential for espionage at a new Soviet
building in Washington, D.C.
The House on June 23 approved its own version (HR 1777)
authorizing $3.9 billion in fiscal 1988 funds. (pp. 1385, 1387)
Government Operations
v House Commit Procurement Overhaul
'
approved a x(11 (HR 3345) 91vamping several aspects of the
federal pr urement systerp/as part of a four-year reauthoriza-
100th Congress, 1st Session
House Senate
Democrats 258 54
Republicans 177 48
Vacancies 0 0
tion of the Office of Federal Procurement Policy (OFPP).
The bill creates a new body, the Federal Acquisition Regula-
tory Council, to oversee the federal procurement system. The
council would consist of officials from the OFPP, the Defense
Department. the General Services Administration and the
National Aeronautics and Space Administration. "Under this
structure, OFPP would be an equal player with DOD [Depart-
ment of Defense) and the civilian agencies in the regulatory
process." said Chairman Jack Brooks of Texas.
The bill gives OFPP overall management authority over
federal procurement when the regulatory council is unable to
agree on or fails to issue governmentwide procurement policies.
The bill also tightens ethics regulations for officials and
contractors involved in procurement. Sanctions would be im-
posed against contractors who offer jobs or items of value to
government officials involved in procurement. Also, federal
officials would be prohibited from taking jobs involving federal
contract work for five years after leaving government service.
The bill authorizes $4.5 million per year for OFPP for the
next four years.
Health/Human Services
/House GOP Urges Separate Welfare Debate
House Republicans, mindful of Democratic threats to make
welfare-overhaul legislation part of the upcoming budget-
reconciliation bill, are urging House Speaker Jim Wright, D-
Texas, to keep it separate.
In a Sept. 20 letter to the Speaker, Minority Leader Robert
H. Michel, Ill., along with members of the Republican Welfare
Reform Task Force, said. "Welfare reform is too important to
include in any legislative package.... The American public.
particularly the poor and disadvantaged, deserve a full congres-
sional debate of the issue."
Michel and his colleagues are hoping to get a chance to offer
compromise legislation (HR 3200) introduced in August as a
substitute for HR 1720. the Democratic-backed initiative that
has been approved by the Ways and Means. Education and
Labor, and Energy and Commerce committees. Leading sup-
porters of HR 1720 have hinted broadly over the past several
weeks that they would like to see their bill included in the
reconciliation package, both as a way to speed its passage and
as a possible way to avoid a presidential veto (p. 1811)
vDevelopmental Disabilities Bill Passed
The Senate Sept. 30 approved a compromise version of
legislation to reauthorize for three years a federal program that
seeks to extend services to and expand the rights of mentally
retarded and severely handicapped individuals.
By voice vote, the chamber approved a joint House-Senate
nt (in lieu of an official conference report) on S 1417.
t
eme
sta
which it passed July 21. The Senate bill was a virtual rewrite of
the so-called Developmental Disabilities program, while the
House version, HR 1871. was essentially a straight reauthoriza-
Operations Committee Sept. 29
The House Government
tion. The House passed HR 1871 Aug. 4, and is expected to
clear the revised bill the week of Oct. 5.
The compromise bill, which is essentially the Senate version.
seeks to strengthen the role of state planning councils for the
developmentally disabled and to emphasize the role of families
in helping the disabled reach their full potential. (p. 1813)
?
4
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RUUTINfi ANM TRANSMITTAL SUP
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REMARKS
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FROM: (Name, org. symbol, Agency/Post)
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OPTIONAL FORM 41 (Nov. 7.76)
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Friday, October 9, 1987
Daily Digest
HIGHLIGHTS
Senate Passed Prompt Payment Act Amendments.
Senate
Chamber Action
Routine Proceedings, pages 513937-514082
Measures Introduced'' S and two resolutions
were introduced, as follows: S. 1779-1784, and S J.
Measures Reported: Reports were made as follows:
H.R. 2890, making appropriations for the Depart-
ment of Transportation and related agencies for the
fiscal year ending September 30, 1987, and Septem-
ber 30, 1988, and for other purposes with amend-
ments. (S. Rept. No. 100-198)
Special Reports entitled "Finance Committee Al-
location of Budget Totals-Fiscal Year 1988." (S.
Rept. No. 100-199)
Measures Passed:
Prompt Payment Act Arne dments: By unanimous
vote of 86 yeas (Vote No. 318), Senate passed S.
328, to require the Federal Government to pay in-
terest on overdue payments, after agreeing to a
committee amendment in the nature of a substitute
and taking action on amendments proposed thereto,
as follows:
Adopted:
(1) Dixon Amendment No. 945, to provide for
the prompt payment of contractors for dairy and
other products and periodic payments under supply
and service contracts.
(2) Levin-Quayle Amendme4tt o. 94 o permit
a prime contractor and a subcontractor to agree not
to include in a subcontract a payment clause which
would otherwise he required to be included in such
subcontract.
Page 513961
(3) Danforth Amendment No. 947, to provide for
interest payments on certain agricultural payments if
prompt payment is not made.
(4) Grassley Amendment o. 948, ' establish a
Presidential Advisory Pan oordination of
Government Debt Collection and Delinquency Pre-
vention Activities, which shall (1) review and evalu-
ate Federal policies on debt collection and delin-
quency prevention, (2) recommend uniform poli-
cies, procedures, and guidelines for the collection of
debts owed to the United States Government, (3)
develop the priority and manner of delinquent debt
collection and procedures for the prevention of de-
linquencies, (4) establish training manuals to in-
crease the effectiveness of employees involved in
collection activities, and (5) undertake additional re-
lated tasks and make interim reports of its activities
and recommendations as the President or Congress
may determine necessary.
Pay. S13980
(5) Sasser Amendment No. 949, to make technical
corrections and to codify a general provision of the
Supplemental Appropriations Act, 1984 (Public Law
98-181; 97 Stat. 1297).
Peg. 513983
War Powers Act Compliance: Senate began con-
sideration of S J. Res. 194, to require compliance
with the provisions of the War Powers Resolution,
as modified, with amendments proposed thereto, as
follows:
Pending:
(1) Warner-Byrd Amendment No. 951, in the
nature of a substitute.
Page 514018
(2) Byrd-Warner Amendment No. 952 (to
Amendment No. 951), of a perfecting nature.
Page S14019
By 37 yeas to 52 nays (Vote No. 317), Senate
failed to table the joint resolution.
Page S13978
Veteran Beneficiary Travel Payments-Agree-
ment: A unanimous-consent agreement was reached
providing for the consideration of S. 1464, to pro-
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CONGRESSIONAL RECORD
.
Perkins. Carl C. (Ky.) ........................................ 1004
Petri, Thomas E. (Wis.) ..................................... . . 2443
Pickett, Owen B. (Va.) ....................................... 1429
Pickle,.J.J. (Tex.) ................................................ 242
Porter, John Edward (111.) ................................. 1501
Price. David E. (N.C.) ......................................... 1223
Price. Melvin (Ill.) ............................................... 2110
Prirsell, Carl D. (Mich ) ...................................... 1414
Quillen. James H. (/imntV) (renn.) ................. 102
Rahall, Nick Joe, II (W. Va.) ............................ 343
Rangel. Charles B. ! N.Y.) .................................. 2330
Rarenel, Arthur. Jr. (S.C.) ................................. 1730
Ray. Richard (Ga.). ............................................ 425
Regula, Ralph (Ohio) ......................................... 2209
Rhodes. John i_ III, Ariz.) ................................ 510
Miller, John (Wash.) ...........................................
Mineta. Norman Y. (Calif.) ...............................
Moakley, Joe (Mass.) ..........................................
Molinari, Guy V. (N.Y.) .....................................
Mollohan, Alan B. (W. Va.) ...............................
Montgomery. G.V. (Sonny) (Miss.) ..................
Moody. Jim (Wis.) ...............................................
Moorhead, Carlos J. (Calif.) ..............................
Morella, Constance A. (Md.) ..............................
Morrison, Bruce A. (Conn.) ...............................
Morrison, Sid (Wash.) ........................................
Mrazek. Robert J. (N.Y.) ...................................
Murphy, Austin J. (Pa) .....................................
Murtha. John P. (Pa.) ........................................
Myers, John T. (Ind.) ..........................................
Nagle, David R. (Iowa) .......................................
Natcher, William H. (Ky.) .......................
..........
Neal. Stephen L. (N.C.) ......................................
Nelson. Bill (Fla.) .......................................
Nichols, Bill (Ala.) ..............................................
Nielson, Howard C. (Utah) ...............................
Nowak, Henry J. (N.Y.) .....................................
Oakar, Mary Rose (Ohio) ..................................
Oberstar, James L. (Minn.) ...............................
Obey, David R. (Wis.) ........................................
Olin. Jim (Va.) .....................................................
Ortiz, Solomon P. (Tex.) ......................
..............
Owens. Major R. (N.Y.) .....................................
Owens. Wayne (Utah) ........................................
Oxley, Michael G. (Ohio) ...................................
Packard, Ron (Calif.) .........................................
Panetta. Leon E. (Calif.) ....................................
Parris, Stan (Va.) ................................................
Pashayan, Charles, Jr. (Calif.) ..........................
Patterson, Elizabeth J. (S.C.) ...........................
Pease. Donald J. (Ohio) .....................................
Pelosi, Nancy (Calif.) .........................................
Penny, Timothy J. (Minn.) ..............................
Pepper. Claude (Fla.) ........................................
ume. wets) (Md.) ......................................... 1107 Sharp, Philip R. (Ind.)....................................... 2452
Mica. Dan (Fla.) .................................................. 2455 Shaw. E. Clay, Jr. (Fla.)..................................... 440
Michel, Robert H. (Ill.) ....................................... 2112 Shays, Christopher (Conn.) ............................... 1630
Miller, Clarence E. (Ohio) ................................. 2208 Shumway, Norman D. (Calif.) .......................... 1203
Miller. George (Calif.) ........................................
2228 Shuster, Bud (Pa.) .............. 2268
...
Wise. Robert E.. Jr. (W. Va.) ........................ Offi....ce 142 No.
1
Wolf, Frank R. (Va.) ...........................................
Wolpe, Howard (Mich.) ......................................
Wortley. George C. (N.Y.) ..................................
Wright. Jim (Tex.) ..............................................
Wyden. Ron (Oreg.)... ........................................
Wylie, Chalmers P. (Ohio) .................................
Yates. Sidney R. (III.) ........................................
Patron. Gus (Pa.)
................................................
Young, C. W. Bill (Fla.)
.......................................
Young. Don (Alaska) ..........................................
..
Meyers, Jan (Kans.) ............................................ 315 Sensenbrenner. F. James, Jr. (Wis.)................. 2444 OFFICERS or THE HOUSE
Mf K
McMillan. /. Ales (N.C.) Office No. Office No.
..................................... 401 Sabo. Martin Olav (Minn.)............... . 2201
McMillen. C. Thomas (Md.) .............................. 1508 Saiki, Patricia F. (Hawaii)................................ 1407
Mack Connie (Fla.) ............................................ 228 St Germain, Fernand J. (R.I.)...................... 2108
MacKay, Buddy (Fla.) ....................................... 330 ....
Madigan, Edward R. (III.) ................................. 2312 Savage, Gus (i.)..io) ...................................... 1121
om C C.(Oh............-.._...................... 1338
Manton. Thomas J. (N.Y.) ................................ 327 Sawyer. T us
Markey. Edward J. (Mass.) ................................ 2133 Barton Jim (N.J.)...................._......................... 324
Schaefer, Dan (Colo.) .........................................
Marlenee, Ron (Mont.) ....................................... 2465 1317
Martin. David O'B. (N.Y.) ................................. 442 Scheuer, James H. (N.Y.).................................. 2466
Martin, Lynn (Ill.) ......................................... 1208 Schneider, Claudine (R.I.)................................. 1512
Martinez, Matthew G. (Calif.) .......................... 109 Schroeder, Patricia (Colo.)................................ 2410
Matsui, Robert T. (Calif.) .................................. 2419 Schuette, Bill )Mich .>......................................... 415
Mavroules. Nicholas (Mass.) ............................. 2432 Schulze, Richard T. (Pa.)................................... 2369
Mazzoli? Romano L. (Ky.) ................................. 2246 Schumer, Charles E. (N.Y.).............................
126
Tauke, Thomas J. (Iowa) ................................... 2244
Tauzin. W.J. (Billy) (La.) ................................... 222
Taylor, Gene (Mo.) .............................................. 2134
Thomas. Robert Lindsay (Ga.) ......................... 431
Thomas, William M. (Calif.) ............................. 2402
Torres. Esteban Edward (Calif.) ...................... 1740
T yriceili, Robert G. (N.J.) ............................... 317
T; ens, Edolphus (N.Y.) ..................................... 1726
Traficant, James A., Jr. (Ohio) ........................ 128
Traxler. Bob (Mich.) .......................................... 2366
Udall, Morris K. (Ariz.) ...................................... 235
Upton, Frederick S. (Mich.) ............................... 1607
Valentine, Tim (N.C.)... ...................................... 1510
VanderJagt. Guy (Mich.) .................................. 2409
Vento. Bruce F. (Minn.) ..................................... 2304
Visc!osk
P
t
I
J
y
e
er
(
iid) 420
,.. ................................... Ridge. Thomas J, (Pa.) .................... y.
1714 Volkmer. Harold L. (Mo ).._....................
Rinaldo. lfatthew J. (N.J.) ................................ 2469 1' .......... 2411
+.%canoi.?ich. Barbara F Nev.) ........................ 312
Ritter ter, Do Don ,Pa.) .............................................. 2447 Walgren, Doug (Pa.)........................................... 2241
Roberts. Pat (Kans.) ......................................... 1314 Walker. Robert S. (Pa.)....................................... 2445
Robinson. Tommy F. (Ark ) ............................. 1541 Watkins. Wes (Okla.)...........
Rodino. Peter W.. Jr. (NJ.) .................... _ ...... 2348
2462 Waxman. Henn, A. (Calif` ............................ 2418
P,oc Robert A. ti.J.)__............. ..................._ 2243 Wber. Vin (Minn)............................................. 106
R~emer73,;Ady(I.a.;._ .................................... 103 Weiss -(. ,
Rod-'rs. Harold (Ky.' .Fe (N .Y . ................................... 2442
..........
......................... 206 Wridort. Curt (Pa.)......_.................... ........_ ..... 1233
Rose. Charles (N.C.) .......................................... 2230
Rostenkow;ki. Dan Ill . .... .... ..... Wheat. Alan, Mo.)........ .......,................. ........ 1204
2111 [t7utlaker.Bob (Kans.)....._
Roth. Toby ,,'is.)......_ .................... 9352 2436
..................
RJlik,bia,`.large(N.J) 303 Whitten, Patiolo ~Iis ) 2334 Williams, Pat R(,.vland. u Roy 1Ga.) .............................. , 2457
5)2
Wilson. Charles (Tex.) ..................
Reu?iand. oho G. (Conn.) ............................... 512 .................. 2265
Rocbal. Edward R. Kalif.) ................................ 2211
Rus.io. Marty (Ill.) ........................ ......... .......... . 2233 Dci>-gate from Arieman Samoa
..............................
1224 Sikorskl, Gerry (Minn.) ..................................... 414
2350 Sisisky. Norman (Va.) ........................................ 426
221 Skaggs, David F. (Colo.) .................................... 1723
208 Skeen, Joe (N. Mex.) ........................................... 1007
516 Skelton, Ike (Mo.) ............................................... 2453
2184 Slattery, Jim (Kans.) .......................................... 1440
1721 Slaughter, D. French, Jr. (Va.) .......................... 319
2346 Slaughter, Louise Macintosh (N.Y.) ............... 1313
1024 Smith, Christopher H. (N.J.) ............................. 422
437 Smith, Denny (Oreg.) ......................................... 1213
1434 Smith, Lamar S. (Tex.) ...................................... 509
306 Smith. Lawrence J. (Fla.) .................................. 113
2210 Smith. Neal (Iowa) ............................................. 2373
2423 Smith, Robert C. (N.H.) ...................................... 115
2372 Smith, Robert F. (Bob) (Oreg.) ......................... 118
213 Smith. Virginia (Nebr.) ..................................... 2333 2202
2463 Snowe, Olympia J. (Maine) ............................... 2464
2404 Solarz. Stephen J. (N.Y.) ................................... 1536
2405 Solomon, Gerald B.H. (N.Y.) ............................ 2342
1229 Spence, Floyd (S.C.) ............................................ 2113
2240 SPratt, John M., Jr. (S.C.) ................................. 1118
2231 Staggers, Harley O., Jr. (W. Va.) ...................... 1504
2351 Stallings, Richard H. (Idaho) ........................... 1221
2217 Stangeland, Arlan (Minn.) ................................. 2245
1238 Stark, Fortney H. (Pete) (Calif.) ...................... 1125
1524 Stenholm, Charles W. (Tex.) ............................ 1226
114 Stokes, Louis (Ohio) ........................................... 2365
1728 Stratton. Samuel S. (N.Y.) ................................ 2205
1131 Studds. Gerry E. (Mass.) ................................... 237
316 Stump, Bob (Ariz.) .............................................. 211
339 Sundquist, Don (Tenn.) ..................................... 230
1526 Sunia. Fofo I.F.i (American Samoa) ............... 1206
129 Sweeney, Mac (Tex.) ........................................... 1713
1022 Swift, Al (Wash.) ................................................. 1502
1127 Swindail, Patrick L. (Ga.) .................................
331
1632 Synar. Mike (Okla.) ............................................ 2441
436
2239 Talton. Robin (S.C.) ........................................... 432
Speaker-Jim Wright.
Clerk-Donnald K. Anderson.
Sergeant at Arms-Jack Russ.
Doorkeeper-James T. Molloy.
Postmaster-Robert V. Rota.
Chaplain-James David Ford.
OFFICIAL REPORTERS OF DEBATES
SENATE
G. Russell Walker, Editor in Chief
Official Reporters
William D. Mohr Ronald Kavulick
C.J. Reynolds Jerald D. Linnell
Frank A. Smonskey Raleigh Milton
Joel Breitner
John M. Lacovara, Morning Business Editor
Scott M. Sanborn, Assistant Editor
Karen H. McIntosh. Staff Assistant
1535
229
1236
1406
2310
2234
2267
2407
2331
L.H. (Jim) Timberlake. Editor, Senate Daily Digest.
Thom G. Pellikaan, Assistant Editor. Senate Daily
Digest.
HOUSE
Charles Gustafson, Chief Reporter.
S. Susan Hanback. Deputy Chief Reporter.
Official Reporters
Christopher A. Heil Carol E. Bradfield
Anthony F. Tartaro Ray A. Boyum
Edward White, Chief Clerk.
George L. Russell, Assistant Chief Clerk.
Heather B. Mapes, Clerk.
Richard M. Creeger, Clerk.
JOINT ECONOMIC COMMITTEE
Senator Sarbanes (chairman). Representative Ham.
ilton (vice chairman), Senator Proxmire, Senator
Bentsen, Senator Kennedy, Senator Melcher,
Senator Bingaman. Senator Roth. Senator
Symms. Senator D'Amato, Senator Wilson. Rep-
resentative Hawkins. Representative Obey- Rep-
resentative Scheuer, Representative Stark. Rep.
resentative Solarz, Representative Wylie, Repre-
sentative Snowe, Representative Fish, and Repre-
sentative McMillan of North Carolina.
JOINT COMMITTEE ON PRINTING
Representative Annunzio (chairman). Senator Ford
nice chairman). Representative Gaydos. Repre-
sentative Panetta, Representative Badham. Rep-
resentative Roberts. Senator DeConcini. Senator
Gore. Senator Stevens, and Senator Hatfield.
JOINT COMMITTEE ON THE LIBRARY
Senator Pell (chairman), Representative Annunzio
vice chairman). Senator DeConcini. Senator
Moynihan. Senator Hatfield. Senator Stevens.
Representative Oakar. Representative Jones of
"I'rr.m --,ee Representative Gingrich, and Rrpre-
.~ otati'?e Roberts.
1,,)P:'; COMMITTEE ON TAXATION
Representative Rostenkowski (chairman). Senator
b,'nt:.en 'rice ctairman), Representative G,n.
bons. R,'preser.tatire Pickle, Represen:aucf,
Duncan, Representati+.e Archer, Senator Ma+vi.
n aea. Senator Moynihan. Senator Pack,vood. and
S,,nator Dole
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October 9, 1987 CONGRESSIONAL RECORD - SENATE S 13947
law and see whether we are selectively If you read the War Powers Act and they will vote for the policy. But in
complying with the War Powers Act. it says that where the President think that this policy or this moving
Mr. President, the War Powers Act should have submitted a report be- or bringing up the War Powers Reso-
says, in section 4(a), to which the Sen- cause of imminent hostilities, a literal lution-and I know it was scheduled to
ator from Connecticut's resolution reading of that means that they ought come up before this latest incident-
refers, the introduction of Armed to come home. but having it come up on every inci-
Forces "into hostilities or situations I do not endorse that, but that is dent sends a message of vacillation, a
where imminent involvement in hostil- what is in this law that is, in fact, un- message of uncertainty; a message
ities is clearly indicated by the circum- constitutional; that is unworkable; and that we are gripped with paralysis and
stances." I think there is a question of whether indecision.
Now, you can argue whether you it should be applied here because I do Unfortunately, I think that this
have hostilities or do not have hostil- not believe that we were taking into
ities or whether this is predicated account terrorist types of activities. Congress is indecisive; 535-it is very
upon going into a conventional type Mr. President, this is not unusual for sus. Thhaa s whymes, to get a c andnr
war, which I do not believe it is. I the Congress, trying to get into every sus. t is why is have a commander
have one
think what we have is terrorism. foreign policy operation. It is not un- in chief. That is why we have one
I think this Act was written to pre- usual for the Congress to try to have it President who can, in fact, deploy
vent the United States from marching both ways. Because from a clear state- forces. If the Congress does not like it,
down the road to an undeclared war. I ment of what is in the War Powers the Founding Fathers gave them the
think this legislation was written so Act, the amendment that ought to be power to stop that, and that power
we could not go in on the side of a before us is to say: OK, let us come ought to be exhibited if they feel that
combatant nation like South Vietnam home. way.
without the consent and without the I have been absolutely amazed at But, no, we always sort of want to
invocation of the War Powers Resolu- this debate that has gone on for sever- have it both ways. We do not have a
tion with the Congress. al weeks and several months here be- straight up or down vote of what the
That is not the case in the Persian cause for some reason the Congress War Powers Act says. The War Powers
Gulf. The Persian Gulf operation is and many of the Senators and Con- Act basically said, and these people
one of stability and making sure that gressmen will stand up and say: Well, said he should have invoked it, it says
we have the navigation of the waters. Congress has got to be involved. You if he should have invoked it and if he
We are not siding with a combatant know, the President is going outside is there over 60 days and the Congress
nation. We are siding with Kuwait. his scope of responsibility; that the has not acted in the affirmative that
This legislation says that, within 60 Congress has got to be involved in they have to come home.
days, the President, in fact, should this. There has been consultation and That is the reading. That is the liter-
report to the Congress. Let me just there will be more consultation. There al reading of the War Powers Act.
read section 5(b). "Within 60 days will be consultation on this issue and We do not want to get down to read-
after a report is submitted or"-and this incident. But the Congress has to ing, really, what is in this thing be-
these are the operative words, to get be involved. cause when you start to read what is
down to what this law says-"is re- Well, the Congress can clearly in this thing it scares people. People
quired to be submitted pursuant to become involved whenever it wants to. know that this is simply an unwork-
section 4(a)(1), whichever is earlier." I am amazed at the lack of respect for able piece of legislation and we are not
Mr. President, we have been debat- the authority that the Founding Fa- talking about a UDAG grant; we are
ing the invocation of the War Powers thers gave the Congress of the United
not
Act for months now. Those that are States. Because the Founding Fathers rt nng about domestic credit a on.
the proponents of the War Powers Act gave the Congress of the United States important to our domestic situation.
say that imminent hostilities in the the power of the purse and anytime and re talking about foreign American
War Powers Act apply. I can tell you somebody wants to stop what is going anwe are talking about American
hances foe
that over 60 days, over 60 days, accord- on over there, instead of this in be- greater In fact, I believe increase the r
ing to their pronouncement, have, in tween, indecisive, ambiguous, and I do instability ireawhen w
fact, expired. think harmful, ambiguous law, you do these kinds of things. That is my
Then it goes on to say that any time, vote on any foreign operation straight judgment and it is a judgment of a lot
if in fact a resolution is not passed: if a up or down. of others, that when we get into this
resolution is not passed, then in fact, Congress can do that. Congress is a kind of action and bringing these
the deployment of that operation powerful institution. Congress is on things up. we have to keep bringing
must cease and terminate, equal footing with the executive them up every little time steer is a
It does not say whether the Con- branch. hostility-I mean, hostilities happen
cress in fact determines that there I do not think that Congress ought all the time. You walk down tiie
have been hostilities. The law merely to be intimidated by the executive streets, you have hostile acts or poien-
sa;s that when there have been, the branch if they do not like what the ex- tial hostile acts.
President is required to submit a ecutive branch is doing. Be straight- If we had to take the literal inter-
report. forward about it. Be straightforward pretation of this, we would not he
Those that argue that we ought to about it and what this law says. Be- doing anything but passing War
have the War Powers Act certainly be- cause if you believe the technical defi- Powers Resolutions all the time. This
livve that the President should have nition of imminent hostilities hap? is a risky, hostile world. There are a
been required to send a report up here pened more than 60 days ago, then lot of potential risks out there and.
more than 60 dais a.-o. Therefore, the there is a violation according to the thank God, we have got the Armed
law itself hays that we ought to termi- law and the President has to cease op- Forces and the courageous men and
nate-ought to terminate our actions erations over there. That is what the aromen that volunteer to serve this
in the Persian Gulf. War Powers Resolution requires, country: we have got the cooperation
So, what we should be voting on, and which everybody says is such a great of our allies-West Ge.-many joined
that the vote ought to be, if you want piece of legislation. today. We have a policy that is mop lag
to r -ad, strictly the War Powers Act, is So. I really believe that this Con- for.v ard, a policy that has, in fact. I
whether they should be coming home g rvss can, in fact, do whatever it wants think, been successful and will coni.in-
or not. to do as far as the power of the purse. tie to be successful.
I have heard the Senator from Con- Now the question is whether they But this type of micromanagement,
necticut and other Senators say: Well, will do it. I seriously doubt it. I have of messing around in foreign policy, is
this is not an amendment to bring heard a number of statements by dis- counterproductive to peace. It is coun-
them home. This is not an amendment tinguished Senators who support the terproductive to having stability. It is
to bug out of the Persian Gulf. WWar Powers Resolution but say that counterproductive to seeing the na-
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S 13948 CONGRESSIONAL RECORD - SENATE
tional security interests of this coun-
try enhanced.
I wish that we would cease this con-
versation. It is going to keep coming
up. It has come up in the past and I
presume it will come up. But if you
want to look at the reading of this res-
olution, if you want to read the word-
ing of this resolution, Mr. President,
the literal reading of this resolution
means they ought to come home now.
I do not believe there are too many
that advocate that, but they certainly
could. Congress has that power.
The PRESIDING OFFICER. The
Senator's time has expired.
PROMPT PAYMENT ACT
AMENDMENTS
The PRESIDING OFFICER. Under
the previous order, the Senate will
now proceed to consideration of Calen-
dar No. 132, S. 328. The clerk will
report.
The assistant legislative clerk read
as follows:
A bill (S. 328) to amend chapter 39 of title
31, United States Code, to require the Fed-
eral Government to pay interest on overdue
payments, and for other purposes.
The Senate proceeded to consider
the bill which had been reported from
the Committee on Governmental Af-
fairs, with an amendment to strike all
after the enacting clause and insert in
lieu thereof, the following:
SHORT TITLE
SECTION 1. This Act may be cited as the
"Prompt Payment Act Amendments of
1987".
CONGRESSIONAL FINDINGS
SEC. 2. The Congress finds that-
(1) the billpaying practices of most Feder-
al Government agencies generally have im-
proved, with certain exceptions, after four
years of experience under the Prompt Pay-
ment Act (codified in chapter 39 of title 31,
United States Code):
(2) the improvement in such billpaying
practices has resulted in fairer treatment of
contractors who furnish supplies, services,
or construction to the Federal Government,
especially small businesses:
(3) nonetheless, many contractors who
deal with the Federal Government continue
to experience persistent problems of untime-
ly Government payments as a result of-
(A) the failure to implement the provisions
of the Prompt Payment Act through the Gov-
ernment-wide Federal Acquisition Regula-
tion;
(B) the implementation of the provisions
of the Prompt Payment Act in a manner
that denies the Act's protections in cases of
certain contract payments, such as progress
payments for work satisfactorily performed
under construction contracts and payment
of amounts which have been retained by a
Federal Government agency during the per-
formance of construction contracts and are
to be released upon final acceptance of the
construction work by the agency;
(C) the unlimited time presently afforded
Federal Government agencies formally to
accept supplies delivered or services per-
formed by contractors, which may be im-
properly used by such agencies to deny late
payment interest penalties to contractors
delivering such supplies or performing such
services in a timely manner as prescribed by
the contract;
October 9, 1987
(D) the implementation of the provisions (B) Effective with respect to payments
of such Act in a manner which has permit- made on or after October 1, 1989, section
led Federal Government agencies to take 3902(b) of title 31, United States Code, is
discounts for early payment months after amended by striking out the second sen-
the expiration of the discount period speci- tence.
fied in the contractor's invoice; Ib) Section 3902 of such title is further
(E) the failure of the Act explicitly to re- amended by redesignating subsections (c)
quire Federal Government agencies auto- through (e) as subsections (e) through Ig), re-
matically to pay late payment interest pen- spectively, and by inserting after subsection
alties due to contractors; Ib) the following new subsections Ic1 and
(F) the absence of incentives effectively to (d)'
dissuade Government employees from at- "(c)(l) Any amount of an interest penalty
tempting to withhold late payment interest of $1.00 or more which is owed a business
penalties which contractors are entitled to concern under this section shall be paid
receive; without regard to whether the business con-
(G) the continued availability of certain cern has requested payment of such penalty.
payment grace periods which affords Feder- "(2) If a business concern-
al Government agencies the opportunity to (2) is owed an interest
pay their bills late without incurring any penalty by an
late payment interest penalty and, thus, uni- agency,
laterally to extend the payment due date "(B) is not paid the interest penalty in a
upon which the contractors have based their payment made to the business concern by
contract prices; the agency on or after the date on which the
(H) the failure of Federal Government interest penalty becomes due;
agencies to implement the requirement in "(CI is not paid the interest penalty by the
the Act to pay, during the contract period, agency within 10 days after the date on
for the periodic delivery of supplies or the which such payment is made; and
periodic performance of services if permit- `(D) makes a written demand, not later
led by the contract; and than 40 days after the date on which such
(I) the failure of the Act explicitly to pro- payment is made, that the agency pay such
tect contractors doing business with the a penalty,
United States Postal Service; such business concern shall be entitled to re-
(4) the Federal Government will realize ceive an interest penalty equal to twice the
substantial benefits if Government con- amount of the interest payment that-would
struction contracts require Government otherwise be due.
contractors to pay their subcontractors and "(d) The unavailability of funds to make a
suppliers in a timely manner, in accordance timely payment due for property or services
with prevailing industry standards, or be does not relieve the head of an agency from
subject to the same late payment interest the obligation to pay interest penalties
penalties prescribed in the Act; and under this section.
(5) a strengthening of the provisions of the
Prompt Payment Act, and its vigorous en- INTEREST PENALTIES ON PROGRESS PAYMENTS
forcemeat, is a key recommendation made AND RETAINED AMOUNTS UNDER CONSTRUCTION
to the President and the Congress by the del- CONTRACTS
egates to the 1986 White House Conference SEC. 5. Section 3903 of title 31, United
on Small Business. States Code, is amended-
DEFINITIONS AND APPLICATION (1) by striking out clause /4);
SEC. 3. (a) Section 3901(a)(4) of title 31, (2) by redesignating clause (5) as 161; and
United States Code, is amended to read as (3) by inserting after clause (3) the follow-
follows: ing new clause (4):
"(4) the head of the agency is deemed to re- "(4) in the case of a construction contract.
ceive an invoice on the later of- provide for the payment of interest on-
"(A) the date on which the place or person "(A) any progress payment due under the
designated by the agency to first receive contract for-
such invoice actually receives a proper in- "lit a period of more than 7 days; or
voice; or "(ii) a longer period if the contracting of-
"(B) on the fifth day after the date on ficer determines that the prevailing practice
which, in accordance with the terms and in private construction contracts is to pro-
conditions of the contract, the property is vide such longer payment period; and
actually delivered or final performance of "(B) any amount which has been retained
the services is actually completed, as the during the performance of the contract and
case may be, unless- are due to be released to the contractor after
"lit the agency has actually accepted such final acceptance of the construction, if such
property or services before such fifth day; or retained amount is not paid to the contrac-
"(ii) the contract specifies a longer period for by the required payment date;":
for agency acceptance of the property or PERIODIC PA YNENTS UNDER SUPPLY AND SER VICE
services.".
(b)(1) Section 3901 of such title is further CONTRACTS
amended by adding at the end the following SEC. 6. Section 3903 of title 31, United
new subsection (c): States Code, as amended by section 5, is fur-
-'(c) This chapter, except section 3906 of Cher amended by inserting after clause /4I
this title, applies to the United States Postal the following:
Service. However, the Postmaster General "(5) provide for periodic payments, in the
shall be responsible for issuing the imple- case of a supply or service contract which
meriting procurement regulations, solicita- authorizes periodic payments during the
Lion provisions, and contract clauses for the contract period, upon-
United States Postal Service. ". '(A) submission of an invoice for supplies
(2) Section 410(b) of title 39, United States delivered or services performed during the
Code, is amended by inserting after clause contract period, if an invoice is required bu
(8) the following new clause 191: the contract; and
'Y9) Chapter 39 of title 31.': "BI either-
INTEREST PENALTIES: REDUCTIONS IN GRACE "(0 acceptance of the supplies or services
PERIOD; INCREASED PENALTIES,- OBLIGATION To by an employee of an agency authorized to
PAY PENALTIES accept the supplies or services; or
SEC. 4. Ia)(1)(A) Section 3902(b) of title 31, "(ii) certification, by such an employee.
United States Code, is amended by striking that the performance covered by the pay
out "16th" in clause (3) in such sentence ment conforms to the terms and conditio'.
and inserting in lieu thereof-8th". of the contract. ".
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October 9, 1987 CONGRESSIONAL RECORD - SENATE S 13949
PAYMENT CLAUSE FOR SUBCONTRACTS UNDER bursement from the United States for such (2l Requirements to make periodic pay-
CONSTR UCTION CONTRAC1 interest penalty. A contract modification ments, in the case of a supply or service con-
Sec. 7. (a) Chapter 39 of title H. United may not be made for the purpose of provid- tract which authorizes periodic payments
States Code, is amended- ing reimbursement Ql such interest penalty. during the contract period, upon-
(1) by redesignating sections 3905 and A cost reimbursement claim may not in- (A) submission of an invoice for supplies
3906 as 3906 and 3907, respectively; and clude any amount for reimbursement of delivered or services performed during the
(2) by inserting after section 3904 the fol- such interest penalty.': contract period, if an invoice is required by
lowing: (b) The table of sections at the beginning the contract, and
"03905. Payment clause for subcontracts under of such chapter is amended by striking out (B) either-
construction contracts the items relating to sections 3905 and 3906 (i) acceptance of the supplies or services
"(a) Each construction contract awarded and inserting in lieu thereof the following: by an employee of the contracting agency
by an agency shall include a clause that re- "3905. Payment clause for subcontracts authorized to accept the supplies or services;
quires the prime contractor to include, in under construction contracts. or
each subcontract for property or services en- "3906. Reports. (ii) certification, by such an employee,
tered into by the prime contractor and a "3907. Relationship to other laws.that the performance covered by the pay-
subcontractor (including a material suppli- LIMITATIONS ON DISCOUNT PA YMENTS ment conforms to the terms and conditions
er) for the purpose of performing such con- SEC. 8. Section 3904 of title 31, United of the contract
struetion contract, a payment clause which States Code, is amended by inserting after (3) A conclusive presumption, for the pur.
obligates the prime contractor- the first sentence the following.- "For the Poses of determining timely payment, that
"(1) to pay the subcontractor promptly (as purpose of the preceding sentence, the speci- the Federal Government has accepted prop-
determined in accordance with the prevail- fied time shall be calculated from the date erty or services by the fifth day after the
ing industry standard) out of such amounts the invoice under the contract is received by date on which, in accordance with the terms
as are paid to the prime contractor by the the office or employee of the agency desig- and conditions of the contract, the property
agency for work satisfactorily performed by nated by the agency to first receive such in. is delivered or final performance of the serv-
the subcontractor under that contract; and voice until the date of payment.ices is completed, unless the circumstances
"(2) to pay to the subcontractor an inter- REPORTS of the procurement require a longer period
est penalty on amounts due in the case of SEC. 9. Section 3906(a) of title 31, United for acceptance by the Federal Government
each
each payment not made in accordance with States Code (as redesignated by section and such longer period is specified in the so.
payment clause- licitation for such contract.
7/all1/, is amended to read as follows: "(A) for the period beginning on the day " (4) The limitation that the Federal Gov-
after the required payment date and ending I?/I By the 60th day after the end of the ernment may take a discount offered by a
fiscal year, the head of each agency shall
on the date on which payment of the contractor for to the Director of the Office c f Man- or early payment by the Federal
amount due is made; and agement and Budget a report on the agen- Government only in accordance with the
"(B) computed at the most current rate of time limits specified by the contractor.
interest that has been determined the Sec- cy's payment practices during that fiscal
year, including a description of the extent to (5) The requirements of section 3902(c) of
retary of the. Treasury for interest payments
which those practices satisfy the require- title 31, United States Code.
under section 12 of the Contract Disputes ments of this chapter. (c) The regulations required by subsection
Act of 1978 (41 U.S.C. 611) and published by "(2) In addition to such other information (a) shall be published as proposed regula.
the Secretary in the Federal Register. may be required by the Director, the
mtired by svhsortin tions for public comment as provided in see-
"(b) In addition n /n/ the n ~nrimo payment nn~r,Iclausernn)re-nr report required by paragraph (1) shall in. tion 22 of the Office of Federal Procurement
tray 7V-1- L/Llh permits uLG savcvn? "(A) the number, dollar value, and per- after the date of the enactment of this Act.
tract a provision n which permits the prime
contractor to make a determination before tentage of invoices for which interest or EFFECTIVE DATES
making application to the agency fora pay- other late payment penalties were paid, the SEC. 11. (a) Section 31a1(2) and the amend-
ment for work performed by a subcontrac- amount of such late payment interest and ments made by sections 3(a)(1), 4. 5. 6, 7.
tor, that- other penalties, and the reasons the interest and 8 shall apply to payments under con.
"(D all or part of the subcontractor's re- penalties were not avoided by prompt pay- tracts awarded, contracts renewed, and con-
quest for payment may be withheld for good ment: and tract options exercised during or after the
cause; and "(B) the number, dollar value, and per- first fiscal quarter which begins more than
"(2) a specified percentage of any progress centage of invoices paid after the required 90 days after the date of the enactment of
payment otherwise due to the subcontractor payment date without payment of an inter- this Act.
may be retained for the protection of the est penalty or other late payment penalty, (b) The amendments made by section 3(b)
prime contractor and be paid to the subcon- and the reasons no obligation to pay such shall apply to payments under contracts
tractor within seven days after such amount penalties was incurred with respect to such awarded on or after October 1, 1988.
is released to the prime contractor by the invoices or no amount for such penalties (c) The amendment made by section 9
Government. were included in the payments of such in- shall apply to the report required by section
"(C) A prime contractor may not request voices.', 3906 of title 31, United States Code, for each
payment from the agency of any amount IMPLEMENTATION THROUGH THE FEDERAL fiscal year beginning after September 30,
withheld or retained in accordance with ACQUISITION REGULATION 1987.
subsection (b) until such time as the prime SEc. 10. (a) The Federal Acquisition Regu- The amendment was agreed to.
contractor has determined and certified to lation shall be modified to provide appropri- The bill was ordered to be engrossed
the agency that the subcontractor is entitled ate solicitation provisions and contract for a third reading, read the third
to the payment of such amount. clauses that implement chapter 39 of title time, and passed.
"(d) A dispute between a prime contractor 31, United States Code, and the regulations
and a subcontractor relating to the amount prescribed under section 3903 of such title. Mr. BYRD. Mr. President, I suggest
or entitlement of a subcontractor to a pay- (b) The solicitation provisions and con- the absence of a quorum. I suggest the
ment or a late payment interest penalty tract clauses required by subsection (a) shall time be equally charged.
under a subcontract clause conforming to include the following matters: The PRESIDING OFFICER. With-
the standards of subsection (a) does not con- (1) Authority for a contracting officer to out objection, it is so ordered. The
stitute a dispute to which the United States specify for a contract or class of contracts a clerk will call the roll.
is a party. The United States may not be in- specific payment period, which- The assistant legislative clerk pro-
terpleaded in any judicial or administrative (A) in the case of payments for commercial ceeded to call the roll.
proceeding involving such a dispute. items or services, is similar to the payment Mr. SASSER. Mr. President, I ask
"(e) Except as provided in subsection (d), period of periods permitted in prevailing
this section shall not limit or impair any private industry contracting practices; unanimous consent that the order for
contractual, administrative, or judicial rem- (B) in the case of payments for noncom- the quorum call be rescinded.
edies otherwise available to a subcontractor mercial items and services, does not exceed The PRESIDING OFFICER. With-
or a contractor in the event of a dispute in- 30 days unless the circumstances of the pro- out objection, it is so ordered.
volving late payment or nonpayment by a curement action require a longer period for Mr. SASSER. Mr. President, earlier
prime contractor. payment; and this
year A prime contractor's obligation to pay (C) in the case of progress payments under year I introduced S. 328, the
an interest penalty to a subcontractor pur- construction contracts, does not exceed 7 Prompt Payment Act Amendments of
suant to the payment clause included in a days, unless the contracting officer deter- 1987. At the time of introduction, the
subcontract under subsection (al may not be mines that the prevailing practice in pri- bill had some 56 original cosponsors.
construed to be an obligation of the United rate construction contracts requires a Since that time, the number of co-
States A contractor may not obtain reim- longer payment period. sponsors has grown to 85. This, I have
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S 13950 CONGRESSIONAL RECORD - SENATE
little doubt that this measure will be
approved by an overwhelming majori-
ty in the Senate.
This broad base of support for S. 328
is not confined to this Chamber. An
ever-growing list of business organiza-
tions supports this measure. At last
count, more than 40 business organiza-
tions had registered their support for
this bill. Mr. President, I ask unani-
mous consent that a list of the organi-
zations supporting S. 328 be included
in the RECORD at the conclusion of my
opening remarks. I further ask con-
sent that letters of support for this
legislation from a variety of business
groups appear in the RECORD at that
point.
The PRESIDING OFFICER. With-
out objection, it is so ordered.
(See exhibit 1.)
Mr. SASSER. The support for this
legislation is strong evidence of the
desire to fulfill the promise inherent
in the Prompt Payment Act-getting
the Government to pay its bills on
time. My colleagues will recall that we
first focused attention on this issue in
the 97th Congress. I introduced the
first prompt payment bill in the
Senate that session. The legislation
which eventually became law was in-
troduced at a later date by our col-
leagues, Senators DANFORTH and
CHILES.
To refresh my colleagues' memory,
the intent behind the Prompt Pay-
ment Act is simply enough. The Feder-
al Government is the single largest
purchaser of goods and services in this
country. Yet, the Federal Government
has a history of being notoriously slow
in paying its bills. Such late bill paying
increases costs to business.
At a time of high interest rates, it
can increase the cost of doing business
very, very substantially. Indeed, Mr.
President, my attention was first at-
tracted to this problem by complaints
from small business people doing busi-
ness with the Federal Government in
and around Oak Ridge, TN. These
small business owners indicated that
they simply did not want any more
Government business back in the days
of very high interest rates because
they could not afford to carry the
Government for 45 to 60 to 90 days
when interest rates were running 15,
16, and 17 percent. So that gives you
some idea about how late bill paying
can increase the cost of doing business
to the point that some businesses
simply do not want to do business with
the Government.
These higher costs on Government
contracts have two direct results. One,
we see fewer and fewer firms wanting
to do business with the Government.
And two, those firms which continue
to contract with the Government will
raise prices to offset added costs asso-
ciated with late payment.
The Prompt Payment Act uses a
series of incentives to prod the Gov-
ernment into more timely payment of
its bills. In short, the Prompt Payment
Act seeks to make the Government a
more efficient and reliable business
partner. As the Government makes
progress toward this goal we will see
increased benefits. We will see a Gov-
ernment contracting system which at-
tracts contractors, rather than one
which turns them away. This should
lead to increased competition on Gov-
ernment contracts and lower costs.
Government agencies have now had
4 years of experience with the Prompt
Payment Act. And we have seen sub-
stantial improvement in the Govern-
ment's bill paying practices. Most no-
tably, we have seen a sharp drop in ex-
cessively late payments, those more
than 60 days late. Unfortunately, im-
provements under the Prompt Pay-
ment Act have not been as great as we
intended.
The General Accounting Office re-
leased a study of the effectiveness of
the Prompt Payment Act in the
summer of 1986. The title of this
report just about sums up the present
situation. The title reads "Prompt
Payment Act-Agencies Have Not
Fully Achieved Available Benefits."
The study goes on to find that the
full potential of the Prompt Payment
Act has not yet been realized. A signif-
icant percentage of bills are still being
paid later than they should be. In the
GAO study, 24 percent of the Govern-
ment's bills were paid after the
prompt payment due date. And the
report points out that the number of
excessively late payments remains too
high. GAO found that 7 percent of the
late payments in its sample were be-
tween 46 and 150 days late. Some 1.3
percent of the payments were more
than 90 days late.
This situation is aggrevated by the
fact that the interest penalty pay-
ments called for under the Prompt
Payment Act are often not paid.
Indeed, the GAO study shows that
Government agencies only paid one of
every six interest penalties owed. Over
one 4-month perid, the GAO report
found that the failure to pay interest
penalties alone cost businesses some
$15 million owed them.
The GAO report also found that
some Government agencies are abus-
ing discounts offered by businesses.
Contractors will often offer the Gov-
ernment a discount if payment is made
within a specified time frame. Yet, the
GAO found that almost a fifth of the
discounts taken by the Government
occurred after the offered period had
expired.
The problems documented in the
GAO report are for the most part, di-
rectly attributable to agencies seeking
to circumvent the act's provisions.
Agency personnel have successfully
found a number of loopholes in the
act. By carefully exploiting these loop-
holes, Government bureaucrats have
managed to undermine the intent of
the Prompt Payment Act.
The legislation we are considering
today will close these loopholes. S. 328
reaffirms that Congress meant what it
said when we passed the Prompt Pay-
October 9, 1987
ment Act-the Government should
pay its bills on time.
Mr. President, I would like to take a
few minutes and discuss some of the
loopholes which we close with S. 328.
One problem area has involved the
15-day grace period under the Prompt
Payment Act. The act directed the
Government to pay its bills within 30
days. However, the final version of the
act provided agencies with a 15-day
grace period in which to make timely
payments. What we see are some Fed-
eral agencies routinely using the 15-
day grace period to extend their pay-
ment terms. Thus, the 30-day payment
deadline we thought we had established
in the Prompt Payment Act has
become a 45-day payment deadline 'in
many cases.
This clearly flies in the face of the
congressional mandate in the Prompt
Payment Act. Yet, we see nearly a
fifth of the payments covered in the
GAO study were made during the
grace period. I can only agree with the
assessment of this abuse in the GAO
report: "Paying almost a fifth of the
payments during grace periods seems
to defeat the purpose of having grace
periods."
S. 328 speaks directly to this prob-
lem. Our bill phases out the grace
period in two steps. The grace period
is initially reduced to 7 days. And all
grace periods are eliminated on Octo-
ber 1, 1989.
A second problem under the existing
act has centered on automatic pay-
ment of interest penalties. The intent
of the act and the regulations imple-
menting the act are clear on this
point-interest penalties are to be paid
automatically when owed. Despite this
clear directive some Federal agencies
fail to pay interest when they pay
their bills late. I indicated earlier that
the GAO calculated that this practice
cost business some $15 million over a
4-month period. I would add that GAO
estimates there were some 278.000
unpaid interest penalties in that
period.
The reason we see foot-dragging
here is simple enough. Agency person-
nel look bad when they reprot they
have to pay interest penalties. The
Office of Management and Budget pe-
riodically reviews agency compliance
with the Prompt Payment Act and fo-
cuses in on the question of interest
payments. Thus, if a clever bureaucrat
sends out a payment late, but with-
holds any interest penalty, he may be
able to sneak by the eye of OMB. And
the odds are that he or she will be
succesful.
A small business person who has
waited to be paid on a Government
contract will likely forego challenging
the Government for the interest pen-
alty. The business person has already
seen how difficult it was to collect the
billed amount. The owner can only
imagine the headaches and paperwork
which await if they try to obtain the
interest penalty payment.
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October 9, 1987 CONGRESSIONAL RECORD - SENATE 61/ S 13961
nois and we would accept it, subject to vided private sector buyers who pay Mr. LEVIN. Mr. President, I ask
the acceptance of my friend from Vir- their bills in 10 days. unanimous consent that further read-
ginia. Mr. President, the whole purpose of ing of the amendment be dispensed
Mr. TRIBLE. Mr. President, as the the Prompt Payment Act is to ensure with.
Senator from Illinois said this estab- fair treatment for companies that do The PRESIDING OFFICER. With-
lishes a 10-day payment term for dairy business with the Federal Govern- out objection, it is so ordered.
products. This conforms to industry ment. The practices I've described are The amendment is as follows:
standards. And the current act already not fair. It is simply wrong for the On page 23, line 12, insert ??(1)(A)" before
contains special payment provisions Government to demand prevailing "Each".
for meat products and other perish- prices and then refuse to pay on pre- On page 23, line 17, strike out all begin-
able products. So it makes good sense. vailing payment terms. The fact that ping with "Which" through line 26 and
I support it on the Republican side the Government has gotten away with insert in lieu thereof "described in subpara-
and would urge us to act positively. this practice is no reason to permit it graph (B), unless the prime contractor certi-
Mr. DIXON. I thank the managers. to continue. We have the opportunity fies to the agency that such contractor-
Mr. KASTEN. Mr. President, I am to correct this problem in the Dixon- '?(i) has provided notice of payment terms
in solicitations fors by ills; and
pleased to join with Senator DIXON in Kasten amendment, which would re- ) agrees to be bound o
offering an amendment to S. 328 that quire prompt payment as a matter of terms bund by such payment
n any subcontract resulting sulting from
would ensure 10-day payment for con- law. such solicitations.
i solicitations.
tractors who supply the Government When the Government enters the ??(B) The payment clause included in a
with dairy products, as defined in the commercial marketplace, as the com- subcontract pursuant to subparagraph (A)
Dairy Products Stabilization Act of mittee report states, the Government shall obligate the prime contractor to pay
1983, including cheese and process "should conform its payment terms to the subcontractor promptly (as determined
cheese products, butter, yogurt, ice those of the market, unless compelling in accordance with the prevailing industry
cream, and milk. The amendment reasons dictate otherwise." There are standard) out of such amounts as are paid
would also provide for 10-day payment no compelling reasons here that would work to the satisfactorily contractor performed by the ygeey for
sa by the sub-
on contracts for food oils and oil-based justify ignoring commercial terms. contractor under such h contract.
food products, such as cooking oils, While the committee report urges "(2) Each construction contract awarded
salad oils and dressings, margarine, agencies to honor commercial pay- by an agency shall include a clause that re-
and mayonaisse. ment terms, I believe that the prob- quires the prime contractor to include. in
Mr. President, as everyone knows, lems confronting the dairy and food each subcontract for property or services
the Prompt Payment Act requires the oil industries demand a legislative so- entered into by the prime contractor and a
Federal Government to lution. Indeed, the committee report subcontractor (including a material suppli-
est pay inter- cites the experience of these industries er) for the purpose of performing such con-
penalty whenever it fails to o pay its struction contract, a clause which obligates
bills on time. As the Government has in highlighting the problems confront- the prime contractor to pay to the subcon-
sought to gain control over its bill ed by industries with prompt payment tractor an interest penalty on amounts due
paying practices, it has moved to re- terms. I am pleased to learn, there- in the case of each payment not made in ac-
luire payment within 30 days on its fore, that the managers of the bill sup- cordance with the payment clause included
'intracts for commercial products. port this amendment. There simply is in the subcontract pursuant to paragraph
This is certainly an improvement no point in waiting for an administra- (1)(A) or the payment terms agreed to pur-
-er past practices, when payment was tive fix for this problem when we suant to divisions (i) and (ii) of paragraph
-tetimes delayed for weeks, and the know what the problem is and we (1)(A)
know what it takes to fix it. On page 24, line 12, insert "(1)(A)" after
endments made by S. 328 will close I urge my colleagues to support (a) '.
Limber of loopholes that have al- this On page 25, lines 9 and 10, strike out
lowed some agencies to perpetuate amendment. "standards of subsection (a)" and insert in
lackadaisical bill paying practices. But The PRESIDING OFFICER. The lieu thereof "standards of subsection
it is important to note that not all Senators have yielded back their time (a)(1)(A), payment terms agreed to pursu-
commerical products are priced and on the amendment. All time has ex- ant to divisions (]) and (ii) of subsection
sold on the assumption that payment pired on the amendment. (a)(1)(A), or a payment clause included in
will be made in 30 days. In some indus- The question occurs on the amend- the subcontract pursuant to subsection
ment of the Senator from Illinois. (a)(2)".
tries, even prompter payment terms The amendment (No. 945) was On page 25, line 21, insert "(2)" after
prevail. For example, meat is sold on (a)".
agreed to.
7-day terms, and fresh fruit and vege- DIXON. Mr. LEVIN. Mr. President, this
tables on 10-day terms. reconsider idr the e vote by President, I which the move amendment is being offered on behalf
The Prompt Payment Act recognizes amendment nto. of myself and Senator QUAYLE, also on
these special cases by requiring that was agreed behalf of the Governmental Affairs
payment for meat be made within 7 to Mr. SASSER. Mr. President, I move Committee.
days-and for fresh fruit and vegeta- The motion that motion moti moti lay . Mr. President, before I briefly de-
bles within 10 days. In the dairy indus- m toon lay y on the the table.
was scribe this amendment, let me con-
try-and in the food oil industry-10- agreed to.
Mr. DIXON. I thank the managers. gratulate our colleagues, Senators
day payment terms also prevail. None- The PRESIDING OFFICER. The SASSER and TRIBLE, for the effort that
theless, the Government has refused Senator from Michigan. ~~ they have made to bring this bill to
to honor industry practice and has in- the floor.
sisted on 30-day terms in contracts for AMENDMENT NO. 9
Purpose: To permit a prime contractor and I happen to be one the cosponsors
dairy and food oil products. Even in a subcontractor to agree not to include in of the prompt payment bill. It is a bill
those rare cases where a company has a subcontract a payment clause that which is very necessary to close loop-
succeeded in securing a 10-day pay- would otherwise be required to be includ- holes in the existing legislation which
ment commitment in its supply con- ed in such subcontract) have allowed us to avoid the intent of
tract, the Government has counter- Mr. LEVIN. Mr. President, I send an the Prompt Payment Act, which is
manded that commitment in its supply amendment to the desk and ask that it that we pay our bills on time or we
orders, specifying that payment will be be reported. pay interest to people who are owed
made in 30 days. Contractors are told The PRESIDING OFFICER. The money by the Federal Government.
to accept these payment terms or take clerk will report the amendment. Senator SASSER and Senator TRIBLE
their business elsewhere. This is bad The legislative clerk read as follows: have really worked extraordinarily
enought-but to make matters worse The Senator from Michigan [Mr. LEVINI, hard to get to the point where we are
the Government insists that these for himself, Mr. QUAYLE, Mr. RUDMAN, Mr. now and without their leadership this
suppliers give the Government prices BAucus, and Mr. BINGAMAN proposes an bill would not be here today. A
at least as advantageous as those pro- amendment numbered 946. number of hurdles have been raised
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S 13962 CONGRESSIONAL RECORD - SENATE
and indeed I am one who has raised
one of those hurdles, so I know per-
sonally about hurdle raising. I am the
first to congratulate them, as one of
their cosponsors and also as somebody
who worked closely with them and the
staffs who have worked together to
try to work out a compromise on a
very difficult section 7.
Section 7 of this bill is intended to
provide for the subcontractors some
equity. Senator SASSER and Senator
TRIBLE have pointed out and others on
the committee have pointed out and
fought hard for the principle that
where the general contractors of the
Government are paid, the subcontrac-
tors should also be paid and that if the
general contractor, our contractor, is
paid promptly, their subcontractors
should be paid promptly. There is a
great deal of equity in that principle
and they, being Senators who are sen-
sitive to needs of equity, have pointed
that out and they have put language
in this bill which would provide a flow-
through for the subcontractors.
I was troubled, frankly, by what I
viewed as some inflexibility in this ap-
proach. The approach which was used
is a requirement that a provision be in-
serted in the contracts between the
generals and the subs which would re-
quire the general contractors in effect
pay their subs within 7 days of being
paid themselves on all Federal con-
struction projects.
I felt that there was too much in-
flexibility In that approach, that there
are times when the 7-day flow through
provision would not be appropriate,
that it also would be extraordinarily
complex administratively to operate.
And so, at the subcommittee level, I
tried to delay the effective date of this
provision. I failed there.
Along with Senator QUAYLE now, on
the floor, we have worked out a provi-
sion which I believe would provide
some flexibility but also keep the in-
herent fairness that Senator SASSER
and Senator TRIBLE have insisted
upon.
This provision would provide that
general contractors can opt out of the
7-day flow-through payment require-
ment in very carefully defined circum-
stances: If the prime contractor certi-
fies that he has provided notice of dif-
ferent payment terms in its solicita-
tions for subcontract bids and that it
will agree to be bound by those pay-
ment terms in any subcontract result-
ing from those solicitations, and if
there is a contractual interest penalty
for late payments to the subcontrac-
tors, whether or not the provision in
the contract between the general and
the subs is the section 7 provision or
some alternative preannounced provi-
sion. Under those carefully defined
and limited circumstances, we have
then permitted an opt out on the part
of the general contractor.
Mr. President, this maintains the es-
sential equity which is sought under
section 7, but it also permits some
flexibility in the provision because of
the unprecedented intrusion in private
contracts which section 7 would other-
wise have provided.
Mr. President, I know that the provi-
sion now has been worked out on both
sides. Indeed this is now a subcommit-
tee amendment.
Again, I want to thank my col-
leagues, the managers of this bill, for
the hard work that they put in on the
bill and their willingness to work with
Senator QUAYLE and me to try to put
in a provision which keeps the spirit of
the equity which they have insisted on
while allowing for some flexibility in
the arrangement between these pri-
vate parties.
The PRESIDING OFFICER. The
time of the Senator from Michigan
has expired.
The Senator from Virginia controls
5 minutes on the amendment.
Mr. TRIBLE. I am happy to yield to
my colleague from Tennessee.
Mr. SASSER. I thank my distin-
guished friend from Virginia.
Mr. President, the distinguished
Senator from Michigan is correct. This
has been a contentious amendment. I
am pleased that we have been able to
arrive at a conclusion here that I
think will be equitable for all parties
concerned.
I wish to congratulate and commend
our colleague from Michigan and the
distinguished Senator from Indiana
[Mr. QUAYLE] for their cooperation in
this effort.
Mr. President, I rise in support of
the committee amendment dealing
with section 7 of this bill. As originally
drafted, section 7 of S. 328 sought to
assure subcontractors on Federal con-
struction projects of prompt pay for
work performed. This committee
amendment preserves that objective,
but achieves it in a more balanced
manner.
The need for extending prompt pay
protection to construction subcontrac-
tors has been well established. This
issue has been discussed in five hear-
ings over several sessions of Congress.
The most recent hearing was a March
19, Governmental Affairs Committee
hearing which I chaired. Moreover,
the delegates to the 1986 White House
Conference on Small Business recom-
mended extending prompt payment
protection to such contractors as one
of their final recommendations.
These hearings and debate within
the small business community estab-
lished clearly that when subcontrac-
tors are not paid promptly, the Gov-
ernment suffers-through higher
costs, slower competition, and poorer
quality. Now, my colleagues may
wonder why this impact is so signifi-
cant. Because on Federal construction
projects, subcontractors perform at
least 80 percent on the onsite con-
struction.
To rectify this situation, we reported
S. 328 out of the Governmental Af-
fairs Committee with language ex-
tending the basic protections of the
Prompt Payment Act to Federal con-
October 9, 1987
struction subcontractors. To address
concerns raised by our colleagues from
Michigan and Indiana, we have re-
structured these important provisions
in the bill. The language contained in
this amendment would still protect
subcontractors, but would do so by es-
sentially mirroring what the Prompt
Payment Act prescribes for the pay-
ment relations between the Govern-
ment and the prime contractor.
My colleagues will recall that the
1982 act established a 30-day payment
term between the Government and
the prime contractor-unless the con-
tract specifies otherwise. Section 5 of
the bill we have before us today estab-
lishes a 7-day payment term between
the Government and the prime con-
tractor-unless the contract specifies
otherwise. The Government is re-
quired to announce all the terms of
the prospective contract in advance,
that is, before soliciting bids from
competing prime contractors.
The committee amendment under
consideration would expand this prin-
ciple of knowing the payment terms
before bidding to subcontractors on
Federal contruction.
Today, a subcontractor bids on a
project without the knowledge of the
subcontract terms. The subcontractor
is legally bound to its bid on that
project, since the prime contractor has
relied on the subcontract bid, incorpo-
rating it into its bid price to the Gov-
ernment. Once the general contracto'
wins the construction contract wit
the Government, the general contra(,
tor begins to negotiate the terms
the subcontract agreement, starti
from a subcontract offered by the g
eral contractor. At this stage, with the
Federal contract in its hands, the gen-
eral contractor is in a very superior
bargaining position. If the subcontrac-
tor refuses the subcontract terms, es-
pecially those relating to payment, the
general contractor can shop the sub-
contract opportunity to other subcon-
tractors until one is found that will
accept the terms of its agreement and
accept a payment schedule longer
than the 7-day industry standard.
As reported by the Governmental
Affairs Committee, section 7 would set
a minimum standard for the payment
provision a prime contractor must in-
clude in its subcontracts for Federal
construction. It states that the subcon-
tract clause must reflect the "prevail-
ing industry standard." This currently
is deemed to be payment of subcon-
tractors by the prime contractor
within 7 days of receipt of payment
from the Government.
Under the amendment before us,
section 7 would be modified to parallel
the 1982 act and section 5 of S. 328. It
would allow a prime contractor to
elect to use an alternative payment
term to the "prevailing industry stand-
ard." But, if the prime contractor
elects to use a payment term other
than the "prevailing industry stand-
ard" in its subcontracts, it must an-
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October 9, 1987 CONGRESSIONAL RECORD - SENATE S 13963
nounee that payment term in its bid Levin, Senator Stevens, and others. These ment terms are reflected in their subcon-
soileitations to potential subcontrac. amendments, derived from the section-by- tracts, thus helping to ensure that subcon.
tore, and it must agree to be bound by section a ysis that accompanied the bill at tractors are in fact paid in a timely manner.
the payment terms in any subcon- introduction, will: (a) protect the Oovern- The amendment is designed to mirror the
tracts resulting from those bid solicits- went from becoming involved in the resolu. treatment of payments to non-construction
Lions. Then, the prime contractor tion of performance or payment disputes be. contractors under the Prompt Payment Act.
must certify to the contracting agency tractors: (b) preserve the option for a prime to pay a prime contractor on the date pro-
that it has actually taken these ac- contractor to manage its subcontractors vided in the contract or, if no specific pay-
tions. through the use of the contract administra-
Section 7, as modified by this com- tion tools of "withholding" for good cause ment date is established in the roneract,
mittee amendment, will bring greater and "retainage" notwithstanding the mini- within 30 acceptance after receipt goods a proper v-
certainty into the subcontract bidding mum payment standard in Section 7; (c) voice and acceptance of the gor serv-
Froeess on Federal construction provide that any amounts so withheld or re- ices by the Government. Similarly, Section
projects. Subcontractors will know tamed from a subcontractor by the prime 5 (Interest Penalties on Progress Payments
prior t preparing their bids the time contractor shall remain in the hands of the and Retained Amounts Under Construction
on Government until progress payments to o
frame in which they will be paid. They contractor determines lthatime tt thessuthe bcontr prime - Contracts) of 32 prime requires Payment
will no longer be faced with the tor is entitled to be paid such funds: and (d) construction contracts within seven days,
moving target they are now confront- provide that any contractual, administra- unless the Government's contract solicita-
ed with. t!ve, or judicial remedies presently available tion announces a longer payment period re-
Because subcontractors will knew to contractors or subcontractors for the res- fleeting prevailing private industry practice.
the terms of payment in advance of olution of payment disputes shall be left un- The amendment permits alternative -pay-
preparing their bids, they will be able t Haired. ment terms" rather than merely an a)rarna_
to factor in the cost of money. Pru-
dent subcontractors will likely bid
lower on projects with longer payment
terms. Those prime contractors which
offer untenable payment terms will re-
ceive higher bids from their subs and
are unlikely to be the low bidder for
the Government's contract.
Thus, market forces should work to
keep subcontract payment terms rea-
sonable in the Federal construction
market. They will also serve to keep
Federal construction prices lower be-
cause subcontractors will no longer
have to inflate their bids against the
contingency of extended payment
terms being foisted upon them during
the negotiation of the subcontract
agreement.
Mr. President, I urge the adoption of
this amendment.
I also have, Mr. President, an analy-
sis of this particular section of the bill
which I ask unanimous consent to
have printed in the RECORD.
There being no objection, the mate-
rial was ordered to be printed in the
RECORD, as follows:
EXPLANATION AND STATEMENT OF INTENT
AMENDMENT TO SECTION 7 PAYMENT CLAUSE
FOR SUBCONTRACTS UNDER CONSTRUCTION
CONTRACTS TO BE OFFERED BY SENATORS
LEVIN AND QUAYLE
Section 7 (Payment Clause for Subcon-
tracts Under Construction Contracts) is de-
signed to address payment problems faced
by subcontractors on federal construction
projects. As originally introduced, this pro-
vision requires that a payment clause meet-
i_ig two minimum standards be included in
each agreement between a federal construc-
tion prime contractor and its subcontrac-
tors. First, the subcontract payment clause
must reflect payment of subcontractors by a
prime contractor "prompQajas defined in
accordance with the Ong industry
standard)", now deemed to be within seven
days of receipt of payment from the Gov-
ernment. Second, Section 7 requires that
the subcontract payment clause must enti-
tle the subcontractor to payment of inter-
est, at the same rate applicable between the
prime contractor and the Government, if
the prime contractor fails to make timely
payment as requried by the clause mandat-
ed by Section 7.
During Committee consideration, clarify-
ing amendments were made to Section 7
which addressed concerns raised by Senator
ator Levin and other Committee Members
continued to express concern that Section 7
might be insufficiently flexible to accommo.
date the myriad payment relationships that
can exist between construction prime con-
tractors and their subcontractors. Specifi.
cally, while Section 7, as reported, would
permit the use of a payment clause result-
ing in subcontractor payment within seven
days or less [for example, the three-day
term specified in the AIA Form A-401
(Standard Form of Agreement Between
Contractor and Subcontractor)], It would
not permit the use of a payment clause that
does not specify payment within this period.
An alternative payment clause may be ap-
propriate for any number of valid reasons,
and should not be presumed to be abusive of
subcontractors. For example, the Commit-
tee has learned of a prime contractor who
has an excellent reputation for fair dealings
i
ment is intended to encompass a broad vari-
ety of alternative payment arrangements. In
many cases, it is anticipated that the alter-
native payment clause would specify pay-
ment a certain number of days after the
prime contractor's receipt of payment from
the agency (for example, 10 days after re-
ceipt of payment or 20 days after receipt of
payment). In other cases, the alternative
payment clause might require payment by a
specific date during the month (for exam.
ple, by the 10th of each month). In yet
other cases, the prime contractor's solicita-
tion might establish specific dates for pay-
ment (for example, 10% to be paid on
March 1, 10% on June 1, etc.).
'Irrespective of the particular alternative
payment terms established by the prime
contractor's solicitation and reflected in the
subcontract agreement, these terms must
w
t
payment system currently results in objectively determined. A cl at speci-
payments to subcontractors within ten days fled subcontractor payment inWever the
party or a governmental agency. Without appropriate", to cite the extreme example,
the benefit of this amendment, Section 7 would not qualify as an alternative payment
would require this prime contractor, and term under Section 7(a)(1). This require-
others in similar situations, to completely ment for specificity is necessary to avoid thgs
revise their subcontractor payment systems inclusion of payment terms that would
without any evidence that they have abused render meaningless the protections provided
subcontractor funds, by Section 7 and it late payment interest
Under the amendment offered by Sena- penalty. If the date of payment can not be
tors Levin and Quayle, this inflexibility in objectively determined, it will be impossible
Section 7 would be addressed by permitting to determine when interest is due.
a prime construction contractor to offer its It is anticipated that Section 7 will en-
own payment terms during the solicitation hance the ability of construction subcon-
of subcontractor bids, if specified conditions tractors to obtain fair and equitable pay-
have been met. As modified by the amend- went terms in their subcontract agree-
ment. Section 7 would require each prime ments. At the same time, the amendment
contractor on a federal construction project will assure much-needed flexibility for con-
to reflect in its subcontracts the "prevailing tractors to structure their own payment ar-
industry standard" regarding timely pay- rangements. Because prime contractors will
nient (that is, payment of its subcontractors be required to announce payment terms in
within seven days of payment by the federal their solicitations for subcontract bids and
government), unless the prime contractor to adhere to the announced terms. subcon.
has certified to the agency that (I) it has tractors will be able to make an informed
provided notice of alternative payment business judgment concerning these terms
terms in its solicitations for subcontractor as they develop their bids and reflect their
bids; and (ii) it will agree to be bound by impact upon the prices offered, or the deci-
s ich payment terms in any subcontract re- sion even to tender a bid.
sulting from such solicitations. For this reason, it is likely that prime con-
Under the amendment, Section 7 would tractors who include fair and reasonable
still require each prime construction con- payment terms in their solicitations can
tractor to include in all its subcontracts the expect to receive lower subcontract bids,
interest penalty clause specified in Section thus improving their position in the compe-
7(a)(2), irrespective of whether the subcon- tition for federal construction contracts,
tract payment clause reflects the prevailing which are awarded on a low bid basis. Con-
industry standard or alternative payment versely, prime contractors who insist upon
terms announced during the solicitation of unfair or unreasonable payment terms can
s.!bcontract bids. This late payment interest expect to receive fewer bids and higher bids.
penalty provision is necessary to ensure that substantially diminishing their chances of
prime contractors adhere to whatever pay- winning the prime contract.
(/
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S 13964 CONGRESSIONAL RECORD - SENATE
This market pressure should result in fa-
vorable payment terms for subcontractors
that may approach the "prevailing industry
standard" while preserving the flexibility
for private parties to vary from this stand-
ard. It should also improve the prices of-
fered to the Government, since subcontrac-
tors, who perform 80% of the actual work
on most federal projects, will on longer have
to routinely inflate their bid prices against
the contingency of unknown and extended
payment terms. Certainly of payment terms
should benefit the Government, the subcon-
tractor, and the prime contractor.
ASSOCIATED SPECIALTY
CONTRACTORS, INC.,
Bethesda, MD, September 30, 1987.
Hon. James Sasser.
U.S. Senate, Washington, DC.
DEAR SENATOR SASSER: The Associated
Specialty Contractors and its member orga-
nizations are especially appreciative of the
strong and extensive efforts you have made
on behalf of the specialty contract construc-
tion industry in the struggle to pass Prompt
Payment Act amendments with protections
for subcontractors doing Federal work. We
continue to feel that the language of S. 328
as reported out of the Senate Governmental
Affairs Committee would provide the most
fair and equitable payment provisions for
all parties.
However, the exigencies of the moment
have mitigated against achieving the goal of
bringing that bill to the floor in any kind of
timely fashion. Alternative language has
been developed in discussions with all par-
ties. which provides more flexibility for
prime contractors in setting terms of pay-
ment for their subcontractors. This lan-
guage requires advance notice to subcon-
tractors of any payment conditions outside
of the prevailing industry standard and re-
tains provisions for payment of an interest
penalty on late payments not meeting those
terms. This l 1guage is acceptable to the
Associated ty Contractors.
This me has been awaiting Senate
floor action more than four months. We
hope that our acceptance of this alternative
will help move S. 328 to swift action and
passage. Thank you, again, for your exten-
sive and conscientious work in crafting and
moving this legislation.
Sincerely yours,
DANIEL G. WALTER,
President.
AMERICAN SUBCONTRACTORS
ASSOCIATION, INC..
Alexandria, VA, October 2, 1987.
Hon. WILLIAM V. ROTH. Jr..
U.S. Senate, Washington. DC.
DEAR SENATOR ROTH: When the Senate
takes up S. 328, the Prompt Payment Act
Amendments of 1987. Senator Levin will in-
troduce an amendment for the Governmen-
tal Affairs Committee, concerning Section 7.
The American Subcontractors Association
supports this amendment.
Section 7, as reported by the Governmen-
tal Affairs Committee, required a prime con-
tractor to include a payment term reflecting
the "prevailing industry standard" in its
subcontracts for federal construction. The
Committee amendment would allow a prime
contractor to elect to use on alternative pay-
ment term to the "prevailing industry
standard". But it the prime contractor
elects to use a payment term other than the
"prevailing industry standard" in its subcon-
tracts, it must announce that payment term
in its bid solicitations to potential subcon-
tractors, and it must agree to be bound by
the payment terms in any subcontracts re-
sulting from these bid solicitations. Then,
the prime contractor must certify to the
contracting agency that it has actually
taken these actions.
Section 7, as modified by the Committee
Amendment, will bring greater certainty
into the subcontract bidding process on fed-
eral projects. Subcontractors will know-
prior to preparing their bids-the time
frame in which they will be paid. Prudent
subcontractors will tend to bid lower to
prime contractors with shorter payment
terms than to prime contractors with longer
payment terms. Prime contractors who
offer untenable payment terms, thus, are
unlikely to be the low bidder for the Gov-
ernment's contract.
Senator Ruth, the members of ASA ap-
preciate your ongoing support for "prompt,
pay for subcontractors".
Sincerely,
M.R. "Mac" Sullivan. Jr..
Chairman,
Government Relations Committee.
Mr. SASSER. I thank my friend
from Virginia.
Mr. TRIBLE. Mr. President, let me
say at the outset that the Senator
from Michigan [Mr. LEvIN] is an able
and tenacious advocate for the point
of view that he has voiced this day.
I strongly supported section 7 as re-
ported by the Governmental Affairs
Committee. However, I do believe that
the amendment before us will provide
subcontractors with the assurance of
prompt payment for work performed,
while providing prime contractors
with additional flexibility. It seems
that that is an equitable result and I
support it, and I encourage my col-
leagues to support this amendment.
Mr. President, this provision will
provide the basic payment protections
of the Prompt Payment Act to subcon-
tractors on Federal construction
projects. I have long supported this
concept.
As originally reported by the Gov-
ernmental Affairs Committee, section
7 requires prime contractors on Feder-
al construction to pay their subcon-
tractors according to "prevailing in-
dustry standards." This standard is
the minimum standard for the pay-
ment term a prime contractor must in-
clude in its subcontracts for Federal
N.)nstruction.
"Prevailing industry standard" is un-
derstood to be payment of subcontrac-
tors by the prime contractor within 7
days of receipt of payment from the
Government. This is based on a joint
policy statement adopted by the
boards of directors of the Associated
General Contractors of America, the
American Subcontractors Association,
and the Associated Specialty Contrac-
tors.
Mr. President, I ask unanimous con-
sent to have printed in the RECORD a
copy of the AGC/ASA/ASC joint
policy statement on prompt payment.
There being no objection, the mate-
rial was ordered to be printed in the
RECORD, as follows:
JOINT POLICY STATEMENT Or ASSOCIATED
GENERAL CONTRACTORS OP AMERICA, AMERI-
CAN SUBCONTRACTOR ASSOCIATION, AND AS-
SOCIATED SPECIALTY CONTRACTORS ON
PROMPT PAYMENT
Undue delays by owner, architects/engi-
neers, general contractors, subcontractors,
October 9, 1987
and sub-subcontractors in processing
amounts due to general contractors, subcon-
tractors, sub-subcontractors, and suppliers,
or in making timely payments of these
amounts, impose hardships and improper fi-
nancing burdens on the contractors and
suppliers and amount to extensions of credit
by the contractors and suppliers to their re-
spective higher tiers.
Accordingly, it is the policy of Associated
General Contractors and the American Sub-
contractors Association and the Associated
Specialty Contractors that all payments
must be made on all contracts promptly.
This should include payment for all labor,
services, and materials stored on the job site
or other approved storage sites as of the
closing date of requisitions. This applies to
both progress payments and final payments.
All local chapters of the Associated Gen-
eral Contractors, the American Subcontrac-
tors Association and the Associated Special-
ty Contractors are urged to make efforts,
singly or cooperatively where possible to
persuade all owners, architects/engineers.
general contractors, subcontractors and sub-
subcontractors to adopt and adhere to this
policy in the conduct of their business.
The following schedule of billings, certifi-
cates and payments by various participants
in the construction process is recommended.
The schedule assumes normal trade con-
tract terms allowing monthly progress pay-
ments for work performed and materials
suitably stored through the end of the
month. This schedule does not refer to pay-
ments to suppliers who are not subcontrac-
tors.
It is important to note that along the se-
quence of events, any recipient of a pay
ment request who takes exception to an
item of billing should immediately contact
the initiating party by telephone and at-
tempt to resolve the matter. Failing resolu-
tion, the party taking exception should
notify the other party in writing the rea-
sons for the action.
Day of calendar month, and event:
20th-Sub-subcontractors request pay-
ment from subcontractors.
25th-Subcontractors request payment
from contractor, incorporating the sub-sub-
contractors request in the billing.
1st-Contractor submits to the owner's
representative an itemized application for
payment with the necessary supporting
data, covering the monthly progress of the
entire contract being performed.
5th-The owner's representative issues
the certificate for payment to the owner for
the amount requested.
10th or sooner-The owner makes pay-
ment to the contractor for the amount certi-
fied by the owner's representative.
No more than 7 days after receipt-The
contractor pays each subcontractor the
amount received from the owner on his ac-
count promptly but not later than seven
days after receipt.
No more than 7 days after receipt-Each
subcontractor pays each sub-subcontractor
the amount received from the contractor on
his account Promptly but not later than
seven days aftat.
The schedule' Mould be adjusted by
making appropriate billings and payments
on the last working day prior to any listed
Saturday, Sunday or holiday. It is also rec-
ommended that collection efforts be com-
menced immediately following the day any
payment due was not paid.
Mr. TRIBLE. Mr. President, I
strongly supported section 7, as re-
ported by the Governmental Affairs
Committee. However, I believe the
amendment before us will provide sub-
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October 9, 1987 CONGRESSIONAL RECORD - SENATE
S 1396 5
contractors with the assurance of Government pays its contractors in a subcontractor bids and agreeing to be
prompt payment for work performed, timely fashion. The Prompt Payment bound by such payment terms in any
while providing prime contractors At substantially improved the Feder- subcontract resulting from such solici-
with additional flexibility. al Government's record in this regard. tations. The primes under our amend-
Congress recognized the need for Ambiguities in the act and in the im- ment would be required as a matter of
flexibility in business dealings when plementing regulations that were principle to pay their subs interest on
we adopted the Prompt Payment Act drafted for the agencies have, howev- the amounts due to the subs in cases
in 1982. A 30-day payment standard er, enabled the certain agencies of the where a prime has not made a pay-
for payments by the Government to Government to not carry out the full- ment to a sub in accordance with their
prime contractors was established. We est intent of the Congress. S. 328 was contract's payment clause.
require that this 30-day payment term drafted by the Governmental Affairs This agreement, I believe, satisfies
be met unless the Government sets Committee, therefore, to rectify these the concern that the primes currently
forth a different payment term in its problems and ambiguities. This was have no incentive or motivation to
contracts. If a different payment term and is a worthy goal, and I am a co
is used, this must be announced before s onsor of the bill. promptly pay their subs, yet keeps it
a prime contractor prepares and sub- In examining the matter of improv, sspecifying Government from simply
mits his bid to the Government. ing the Prompt Payment Act, the Gov- specifying in detail the exact arrange-
This amendment accords subcon- ernmental Affairs Committee, however, ments the primes and subs shall adopt
tractors the same rights as the prime heard many horror stories about regarding payment terms and sched-
contractor. It sets a 7-day payment undue delays that subcontractors have uses.
standard for payments by the prime e-?:perienced in receiving payment I am very pleased that the members
contrator to its subcontractors. How- from prime contractors employed by of the Government Affairs Committee
e er, if a prime contractor wishes to the Federal Government and Its agen- have worked with us in addressing our
use a longer payment term in his sub- ties. While this fell outside the scope concern, and I welcome their support
contracts for Federal construction, he o the original act, it was clearly a seri- for this compromise. I urge our fellow
may-provided he meets certain condi- ous problem the committee felt it had Senators to support this amendment.
tions. to address. The PRESIDING OFFICER. Does
These conditions include announcing I fully suport the call for fairness in the Senator from Virginia yield back
in his solicitations for subcontractors' tide business dealings on our Nation's the balance of this time?
bids what the alternative payment subcontractors with their prime con- Mr. TRIBLE. The Senator from Vir-
term will be before the subcontractors tractors. I have been intimately famil- ginia does.
prepare and submit their bids. In addi- iar with the Federal procurement The PRESIDING OFFICER. All
tion, the prime contractor must agree process, given my chairmanship of the time has been consumed or yielded
to be bound by the payment term he Senate Armed Services Committee's back. The question is on agreeing to
announces. This provision will be en- task force, and the subcommittee, on the amendment of the Senator from
forced by requiring the prime contrac- the procurement reform. I fully agree Michigan.
tor to certify to the Federal contract- with the committee that these experi- The amen m Put (No 0413) was
ing agency that he has announced his ences are unfortunate and need to be avreei payment term in advance and has remedied. Mr. LEVIN. Mr. President, I move to
agreed to be bound by it. I do not, however, believe this con- reconsider the vote by which the
Mr. President, this provision will cern should be used to insert the Fed- amendment was agreed to,
allow subcontractors to know the rules eral Government more deeply into the Mr. SASSER. I move to lay that
of the game in advance of bidding. It relationship of private parties-in this motion on the table.
will allow subcontractors to know case the relationship of a prime con- The motion to lay on the table was
what the payment scheme on a con- tractor to its subcontractors. I ques- agreed to.
tract will be before they are commit- tioned one particular aspect of S. 328
ted to performing work. The subcon- as it was reported by the committee- AMENDMENT NO. 947
tractor can then bid each contract ac- it simply mandated specified benefits (Purpose: To provide for interest payments
cordingly-bidding lower to prime con- and payment schedules, thrusting the on certain agricultural payments if
tractors with shorter payment terms Federal Government into the relation- prompt payment is not made)
than to prime contractors with ship of two private sector entities to Mr. DANFORTH. Mr. President, I
lengthy payment terms. control the form and time limitations send an amendment to the desk and
Mr. President, I believe we have of a certain portion their contractural ask for its immediate consideration.
crafted a system in which market relationship. The PRESIDING OFFICER. The
forces will protect subcontractors from The evidence supporting title 7's clerk will report the amendment.
lengthy payment terms. At the same remedy was not in my and Senator The legislative clerk read as follows:
time, we will assure that the subcon- LEVIN's judgment sufficient to justify The Senator from Missouri fMr. DAN-
tractor gets paid in a timely manner or tiie unpallatable step of inserting the eoaruul, for himself, Mr. PRYOR, Mr. Bump-
is reimbursed for the prime contrac- Federal Government's nose in the pri- ERs. Sir. ExoN, Mr. KARNES, Mr. BOND. Mr.
tar's use of his funds. vate business dealings between primes HEFLIN. Mr. CONRAD. Mr. NICKLES, Mr.
Mr. President, I urge the adoption of and subs. Further, the specific and GRASSLEY, Mr. DASCHLE, Mr. HARKIN, Mr.
the committee amendment to section 7 narrow terms of section 7 do not make MArsUN;GA, Mr. DIxoN, Mr. LEAHY. Mr.
of S. 328. sufficient allowance for the wide range BE r K CFR. ' Mr. DRDI , Mr. B Symmsos, Mr. . and
Mr. QUAYLE. Mr. President, I urge of conditions and special bt circum- M T N proposes s an s an amendment ment and
K!s 1.m-
propo7,
the Senate to support this amendment stances that face companies doing bt -,.dy47.
offered by myself, Senator LEVIN, and business in the real world. Mr. DANFORTH. Mr. President, I
the members of the Governmental Af- Our proposed amendment offers an ak unanimous consent that further
fairs Committee to S. 328, the pro- alternative in fulfilling the intent of reading of the amendment be dis-
posed Prompt Payment Act Amend- the committee in drafting section 7- per.,;,ed with.
ments of 1987, an alternative that avoids the direct The PRESIDING OFFICER. Wit!i-
The senior Senator from Tennessee insertion of the Federal Government out objection, it is so ordered.
and the Senator from Virginia have into the relationship between a prime Tile amendment is as follows:
explained in some detail our amend- contractor and its subcontractors. Our
ment and its intent. I shall briefly amendment allows companies the Qu rage 21, between lines 10 and ti,
Insert my perspective on the question. flexibility needed to cope with reality. '(i) Section 3902 (as amendedlin sub~ec?
The central goal of the original Under our amendment, the prime is tion (b) of this section) is further amended
Prompt Payment Act, and these pro- given the option of providing notice of by adding at the end thereof the following
posed amendments, is to ensure the payment terms in its solicitations for new subsection:
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S 13966 CONGRESSIONAL RECORD - SENATE
"(h)(1) This section shall apply to con-
tracts for the procurement of property or
services entered into pursuant to section
4(h) of the Act of June 29. 1948 (15 U.S.C.
714 et seq.).
"(2)(A) In the case of a payment to which
producers on a farm are entitled under the
terms of an agreement entered into under
the Agricultural Act of 1949 (7 U.S.C. 1421
et seq.), an interest penalty shall be paid to
the producers if the payment has not been
made within 30 days after the date on
which-
"M the producers fulfill all of the require-
ments for payment provided for in the
agreement:
"(ii) the Secretary of Agricultural deter-
mines the amount of the payment to which
the producers are entitled; and
"(iii) if applicable, the producers demand
the payment from the Secretary.
-(B) Interest under this paragraph shall
accrue beginning on the date the require-
ments described in this paragraph are met
and ending on the date on which the
amount owed under the agreement and the
amount of the interest penalty is paid.
"(3) Payment of the interest penalty
under this subsection shall be made out of
funds available under section 8 of the Act of
June 29. 1948.
"(4) Section 3906 shall not apply to inter-
est penalty payments made under this sub-
section.".
(2) The amendment made by paragraph
(1) shall not be construed to authorize-
(A) a modification of the payment prac-
tices (including practices relating to pay-
ment due dates) that are prevailing, in the
case of agreements referred to in such
amendment, on the date of the enactment
of this Act; or
(B) a modification of any such agreement
that is in effect on such date in order to
extend the payment due date in such agree-
ment.
(3) The amendment made by paragraph
(1) shall take effect with respect to pay-
ments that a producer or business concern
referred to in such amendment had not yet
received or first became entitled to receive
under the terms of an agreement referred to
in such amendment on or after April 30.
1987.
Mr. DANFORTH. Mr. President,
this amendment is offered on behalf
of myself and Senators PRYOR, BUMP-
ERS, EXON. KARNES. BOND, HEFLIN,
CONRAD, NICKLES, GRASSLEY, DASCHLE,
HARKIN, MATSUNAGA, DIXON, LEAHY,
BENTSEN, DOLE, SYMMS, DURENBERGER,
BURDICK, BOSCHWITZ, and KASTEN.
It would extend the prompt pay-
ment coverage to farmers and farm-re-
lated businesses who deal with the
CCC.
Mr. President, during the past 2
years, there have been five separate
occasions when farmers have not re-
deived CCC payments in a timely
basis. These delays in payments have
affected the farmers themselves, and
they have affected agribusiness, as
well. During the last delay, last July,
from May to July, there was a delay in
payment of some $2 billion in obliga-
tions nationwide. The delay lasted 71
days. Farmers around the country
were literally hanging on by their fin-
gernails.
Mr. President, what we are talking
about here is farm programs that are
contractual relationships between the
Federal Government and the farmer.
The farmer is told that if he does
something, then the Government will
pay him for his work product. It is like
any other contractual relationship.
My assumption had been that the
Prompt Payment Act did in fact apply
and I believe as a legal matter the
Prompt Payment Act does apply to
farmers and to agribusiness.
However, that has been called into
question. And, therefore, the point of
this amendment is to make it absolute-
ly clear that the Prompt Payment Act
does apply to farmers and does apply
to those who do business with the Fed-
eral Government in the agribusiness
sector.
I would submit, Mr. President, that
it makes no sense whatever. If the
Federal Government enters into a con-
tract with a trucking company to haul
corn of soybeans and does not pay its
bill to the trucking company on time,
that trucking company is covered by
the prompt payments bill. But when
the Federal Government enters into a
contract with a farmer to raise the
soybeans or the corn in the first place,
that is not covered by the Prompt Pay-
ment Act.
Now a lot of people criticize the
farm program. And I do not intend to
open up the whole subject of the farm
program and whether the farm pro-
gram is a good one or a bad one. But
the fact of the matter is, it is our pro-
gram. We have agreed to it. I am sure
that there are a lot of contracts that
the Federal Government enters into
that some of us might criticize.
But we enter into contracts regard-
less of any criticism that might come,
and those contracts are covered by the
Prompt Payment Act.
It would seem to me peculiar indeed
if the Federal Government got into
the business of entering into contracts
with farmers, welshed on those prom-
ises, did not pay their bills on time-a
71-day delay in the most recent case-
and then claimed that farmers are a
special case and that they should not
receive interest payments under the
Prompt Payment Act.
Mr. President, some might say: Well,
if the farm programs are covered, is
that not a costly matter? CBO esti-
mates that the cost is $12 million a
year to cover farmers under the
Prompt Payment Act. That $12 mil-
lion, of course, under this amendment.
does not come out of the Treasury.
This does not require an additional ap-
propriation, does not require the ex-
penditure of additional dollars of Fed-
eral money. But, rather, it comes out
of the basic CCC program, just as
every other payment under the
Prompt Payment Act, every other in-
terest payment comes out of the basic
program that was delayed in making
the payment.
So, it absolutely mirrors the rest of
the Prompt Payment Act. I believe it
is eminently fair and it is my hope
that the Senate would agree to this
amendment.
October 9, 1987
Mr. McCONNELL. Would the Sena-
tor yield?
Mr. DANFORTH. How long would
the Senator like?
The PRESIDING OFFICER. The
Senator from Missouri has control of
one-half of the time. The Senators in
opposition have control of one-half
the time. The Senator from Missouri
has control on the amendment at this
point.
Mr. DANFORTH. How much time?
The PRESIDING OFFICER. The
Senator has 14 minutes remaining.
Mr. McCONNELL. May I have 4?
Mr. DANFORTH. I yield 4 minutes
to the Senator from Kentucky.
The PRESIDING OFFICER. The
Senator from Kentucky is recognized
for 4 minutes.
Mr. McCONNELL. I want to con.
gratulate the Senator for his excellent
amendment. It makes no sense for
farmers not to be covered by the
Prompt Payment Act.
However, what we ought to do is
solve the problem entirely. Not only
make farmers within or covered by the
Prompt Payment Act but assure that
this kind of problem does not occur
again.
On June 10. I, along with my distin-
guished colleagues Senators BOND and
KARNES, offered an amendment to the
trade bill which was approved by a
vote of 80 to 15. This amendment pro-
posed to specify a current indefinite
appropriation for the Commodity
Credit Corporation which would cure
this problem for the future.
I certainly think that, if farmer's
payments were ever suspended again,
it would be important for farmers to
be covered under prompt payment and
that is why I commend the Senator
from Missouri for his leadership in ad-
vancing his amendment. The trade
bill, of course, is still in conference and
I along with Senators BOND and
KARNES intend to offer the amend-
ment, once again, in the Agriculture
Committee as a part of the reconcilia-
tion measure in hopes that we can two
track the process of trying to get this
problem solved once and for all.
As my friend from Missouri has ac-
curately stated, this is a contractual
obligation between the Federal Gov-
ernment and the farmers of this coun-
try and we ought to honor it. If, per-
chance, it is not honored, certainly
they ought to be covered by the
prompt payment legislation.
So I commend my friend from Mis-
souri. I would ask that he add me as a
cosponsor to his amendment and point
out to the Senate that Senators BOND,
KARNES, and I will be offering, once
again, the provision to provide a cur-
rent indefinite appropriation for the
Commodity Credit Corporation in the
Agriculture Committee on budget rec-
onciliation.
Mr. DANFORTH. I thank the Sena-
tor from Kentucky and I ask that he
be added as a cosponsor to the amend-
ment.
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