The Federal Prompt Payment Act, Explained

2026-09-30

The federal Prompt Payment Act is why the government pays interest when it pays a contractor late. It applies to federal procurement, not to private or state jobs — but it is the model many state prompt payment acts follow.

What it does

• It requires federal agencies to pay contractors by the due date set in the contract and the Act (31 U.S.C. § 3901 defines the application).
• When an agency pays late, it must pay an interest penalty automatically (31 U.S.C. § 3902).
• The rules are implemented through the Federal Acquisition Regulation (FAR), including the payment clauses in federal contracts.

What it does not do

The federal Act does not govern private owners or state/local public owners. Those are covered by state prompt payment statutes, which vary in their deadlines, interest, and remedies. Check the state where the project is located.