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Supplying Principles and Practices > USPS Supplying Practices Process Process Step 5: Measure and Manage Supply > Make Payment
Make Payment
Payment is the money rendered by the Postal Service to the Supplier in
exchange for the products or services provided upon receipt of a proper
invoice. The Contracting Officer, in conjunction with Finance, must ensure
that all payments are made once a legitimate invoice has been processed
during the Process Invoices topic of the Make Payment task of Process Step
5: Measure and Manage Supply. Failure to make payment, or late payment,
can have harmful effects, such as damaged working relationships, time
delays, and interest accrual.
Payment amounts and payment schedules are addressed in contracts,
although the method used for making payment does not have to be stipulated
in the contract.
When the invoice is received from an eBuy purchase, the automatic
electronic transfer of funds is documented in a Monthly Billing Summary
report.
Generally, the Postal Service will make payment to the Supplier no later than
thirty days after receiving the invoice. Certain contracts incorporate very
specific terms of payment and delineate an actual payment date. In these
cases, the Postal Service will pay the Supplier as established in the contract.
A discount date is the date by which an early or prompt payment, monetarily
less than the normal payment amount because of its chronological
timeliness, can be made. Consequently, the (prompt payment) discount
amount is the mathematical difference between the prompt payment amount
and the normal payment amount. The prompt payment discount can be
represented as a raw fixed figure or as a percentage of the normal payment
amount. Discount dates exist when contracts incorporate very specific terms
of payment that lessen the payment amount if prompt payment is made. The
Postal Service will pay the Supplier as soon as possible, and not later than
the discount date, in these cases. Discounts are taken from the date that the
supply is delivered or the invoice is received up until the discount date.
Discount dates should be exploited whenever early payment is financially
advantageous to the Postal Service.
The Contracting Officer is responsible for approving requests for partial
payment upon delivery of goods or services that partially fulfill contract
requirements and performance expectations. The Contracting Officer will
consult the Client regarding delivery of products or services when partial
payments are to be made. When the awarded contract does not provide unit
prices for the supply, the Contracting Officer may determine an appropriate
formula for payment. The Contracting Officer must review any payments that
are to be made in accordance with payment terms incorporated in
non-fixed-price contracts.
Progress payments are payments incrementally made in exchange for
demonstrated progress toward completion of a contract and are applicable to
the performance of any contract that incurs costs over time that could
negatively affect the Supplier's operations.
The Contracting Officer is responsible for determining the need for progress
payments and must consult the Client and Legal Counsel regarding the
nature of contract performance in relation to the specific purchase and
payment terms stipulated in the contract. The Contracting Officer must obtain
monthly progress reports from the Supplier, illustrating progress of the work
as related to progress payments made. The Contracting Officer may, when
approving progress payment requests, rely on the Supplier's accounting
system. However, postpayment reviews (including audits, when considered
necessary) must be made periodically to determine the validity of progress
payments already made and expected to be made. The Contracting Officer
will consult the Client regarding the progress of contract performance when
progress payments are made.
Progress payments are explained in greater detail in the Determine Need for
Progress or Advance Payment topic of the Develop Sourcing Strategy task of
Process Step 2: Evaluate Sources.
Paragraph i of Clause 4-1: General Terms and Conditions discusses
standard payment provisions. Payments under the following contract types
have unique payment considerations that are governed by other Postal
Service clauses that may be used instead of paragraph i of Clause 4-1:
• Fixed-Price Contracts: Payments for work or supplies delivered
under these contracts are made in accordance with Clause 2-26:
Payment - Fixed Price
• Time-and-Materials and Labor-Hour Contracts: Payments for
services delivered under these contracts are made in accordance
with Clause 2-38: Payment (Time-and-Materials and Labor-Hour
Contracts)
• Construction: Payments for construction contracts are made in
accordance with Clause B-48: Payment (Construction)
• Highway Transportation Service: Payments for these services
are made in accordance with Clause B-74: Payment (Highway)
• Air Mail Taxi Service: Payments for these services are made in
accordance with Clause B-83: Payment (Air Taxi)
The Postal Service will pay interest on late payments and unearned prompt
payment discounts in accordance with the Prompt Payment Act, 31 U.S.C.
3901 et. seq., as amended by the Prompt Payment Act Amendments of
1988, P.L. 100-496, in accordance with Clause 4-1: General Terms and
Conditions, paragraph i, or Clause B-22: Interest. Interest on late payments
made will be paid automatically by the Postal Service to the Supplier when
the following conditions are met:
• A proper invoice has been received and processed; there is no
disagreement over quantity, quality, or other contract provisions;
and thirty days have passed.
• An improper invoice has been received; the Contracting Officer
has failed to notify the Supplier; and seven days have passed
since receipt.
When a prompt payment discount is taken after the discount date has
expired, the Postal Service has ten (10) days after this expiration to correct
the underpayment by making the remainder of the nondiscounted payment
amount. Failure to do so will result in automatic payment of interest, no
matter if the Supplier has requested the payment of interest or not. Interest
will be calculated beginning with the first day after the discount date through
the date the Supplier is paid in full. The percentage of interest to be paid and
successively applied to the payment is calculated by, and in accordance with:
• Clause 4-1: General Terms and Conditions, paragraph i, or
Clause B-22: Interest
• Prompt Payment Act, 31 U.S.C. 3901 et. seq., as amended by
the Prompt Payment Act Amendments of 1988, P.L. 100-496
• The interest rate due a Supplier will be published in the Postal
Bulletin
A penalty amount (calculated, as a matter of policy, in accordance with Office
of Management and Budget [OMB] regulations) will be paid, in addition to the
interest, if:
• The Supplier is owed interest
• The Supplier is not paid the interest within ten (10) days after the
date the invoice amount is paid
• The Supplier makes a written demand that the Postal Service pay
such a penalty not later than forty (40) days after the date the
invoice amount is paid
Determine Need for Progress or Advance Payment topic, Develop Sourcing
Strategy task, Process Step 2: Evaluate Sources
Process Invoices topic, Make Payment task, Process Step 5: Measure and
Manage Supply
Clause 4-1: General Terms and Conditions
Clause 2-26: Payment - Fixed Price
Clause 2-38: Payment (Time-and-Materials and Labor-Hour Contracts)
Clause 8-7: Withholding Payment (Technical Data and Computer Software
Clause B-22: Interest
Clause B-48: Payment (Construction)
Clause B-74: Payment (Highway)
Clause B-83: Payment (Air Taxi)
Prompt Payment Act, 31 U.S.C. 3901 et. seq., as amended by the Prompt
Payment Act Amendments of 1988, P.L. 100-496
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