The U.S. Navy, a major customer for many Virginia firms, is one of the worst federal agencies for paying its bills on time, the director of a coalition of businesses that deal with federal and state governments complained yesterday.
"The Navy has taken altogether too long to come to grips with this problem," said Kenton Pattie, director of the Coalition for State Prompt Pay. Pattie testified before the Senate Committee on Small Business, which held hearings on the issue in Norfolk.
Pattie said that reports by the Office of Management and Budget in 1984 and 1985 showed that the Defense Department was the most likely to pay its bills late, and OMB officials said the Navy accounted for most of the late payments.
"Small businesses have enough difficulty in attracting and retaining capital," said Trible. "They should not be forced to borrow money simply because the federal government cannot or will not pay its bills on time."
A Navy spokesman said there have been problems with slow payment of bills, but the problems are being dealt with and progress is being made.
In 1982, Congress passed the Prompt Payment Act, ordering federal agencies to pay their bills within 30 days. When bills are 45 days overdue, interest must be paid. Since then, Virginia, Maryland, the District of Columbia and 39 other states have passed prompt-pay legislation for state governments.
According to the annual OMB reports tracking payment records, there have been general improvements in payments by most federal agencies. But Pattie said OMB records show Navy payments have continued to lag.
Rep. Norman Sisisky (D-Va.) conducted House hearings in Portsmouth in January 1984 on the issue, after receiving continued complaints about the Navy from businessmen.
In the spring of this year, the Senate Appropriations Committee also reported receiving complaints from small businesses that the Navy was often late in paying its bills. And in August, the issue of late payments by the Navy was raised at the Virginia session of the White House Conference on Small Business.
"The Navy has policies in place which implement the Prompt Payment Act of 1982," said a Navy spokesman. In addition, Navy officials said there are "a few implementational problems, which have yet to be resolved" and they said they can advise contractors on how they can make the process run more smoothly.
In addition to improvements by the Navy, the business coalition is pushing for some changes in the law, including the elimination of the 15-day grace period. Under the current law, the federal government is supposed to pay in 30 days, but has another 15 days before it must begin late penalty payments. Businessmen have complained that this represents millions of dollars that thousands of firms are forced to lend the government interest free for 15 days.
Pattie said that although the law requires notification if there is a problem with an invoice or a shortage in goods delivered, such notification sometimes fails to occur. He said that the notification requirement should be strengthened.