In 1982 Congress passed the Prompt Payment Act. In most cases, a federal agency that pays a contractor late must pay interest. Under the 1982 act, a bill was due 30 days after the agency received a proper invoice, unless the contract set a date. The act also gave agencies a grace period. For most bills, no interest was due if the agency paid within 15 days after the due date.
The 1982 act said the interest must come out of the agency’s own funds for the program, not from new money. Today the contractor does not have to ask. The payment office adds the interest “automatically, without request from the contractor.” For the first half of 2026, the rate was 4 1/8 percent a year.