Under Section 12 of the Contract Disputes Act (CDA), government interest payments for CDA claims starts from the time the contracting
The rate of government interest payments for CDA claims is established by the Secretary of the Treasury. The interest rate generally changes every six months.
- This rate is also used under the Prompt Payment Act.
- Simple interest formulas are sued.
Interest Only on Amounts Due to Contractor
As a contractor, government interest for CDA government claims only applies to amounts you actually pay out to employees, subcontractors or suppliers.
- You are not entitled to interest for loans from third parties.
- Government interest does not apply to costs that you did not incur or could not have possibly incurred.
Once a claim is submitted, the federal government’s interest obligations start to accrue. This is true regardless of whether there was defective certification. This was not always the case. See information about claims certification language.
What is the Difference Between Government Interest Rate Payments for CDA and Prompt Payment Act Interest?
Sometimes this causes confusion for many contractors. Government interest payments for CDA claims is based on just that – the claim. However, under the Prompt Payment Act, federal contractors are entitled to interest payments for undisputed delayed invoices that are not paid within 30 days after the government receives the invoice.
- Note that you are not entitled to interest for improperly submitted invoices or for work that is not satisfactorily completed.
For Cclaims, interest starts when the claim is received. However, the clock for Prompt Payment Act interest stops after one year.
- The key is that after one year of non-payment of Prompt Payment Act interest, that can also generate a separate claim under the CDA.
- Find out about the Severin Doctrine and how it applies to subcontractors.
For help with preparing or litigation for Contract Disputes Act for contract claims or Prompt Payment interest rate disputes, please call our government contract dispute lawyers at 1-866-601-5518.