Saying they need the cash when it's due and not 60 days later, a group of D.C. business representatives announced yesterday it will push for passage of a "Quick Payment Act" that would impose financial penalties on District government agencies that don't pay their bills on time.
To bolster arguments that the bill-paying problem is a chronic one, the group released the results of a recent survey of local businesses, 95 percent of whom reported they have trouble getting paid promptly for the goods and services they sell the city.
The quick-payment legislation, which has been stalled in a City Council committee for more than a year, would require payment to suppliers within 30 days. City agencies would thereafter incur a late payment charge of 1 to 1.5 percent a month on each overdue bill.
"When they don't pay on time, they are borrowing money interest-free from us," complained Ronald D. Henry, president of the AVCOM/CMC Corp., a District-based audio-visual firm and a founder of the newly formed D.C. Businesses for Prompt Pay.
Henry organized a meeting at the Mayflower Hotel yesterday of nearly two dozen D.C. firms. They echoed some of his complaints and agreed to join forces on behalf of the legislation.
"This is a business issue. . . . Getting paid for what we do is a business issue, large and small," said Henry, who protested that small businesses, the ones who can least afford it, "are being used to run the city government."
The bill, similar to prompt-payment legislation enacted by the federal government and 36 states, including Maryland and Virginia, is sponsored by council member Nadine Winter (D-Ward 6) and cosponsored by Betty Ann Kane (D-At Large). It has been pending before the D.C. Committee on Government Operations, chaired by William Spaulding (D-Ward 5), since a public hearing in May 1983.
During the hearing on the proposed measure last year, Alphonse G. Hill, deputy mayor for finance, argued against passage, saying the District government had improved its payment methods and the problem was no longer signficant. But he also noted that the legislation could cost the city an additional $4.5 million a year in late-payment charges.
The D.C. auditor subsequently reported that enacting the bill "in the near future" would cost the city a substantial amount in interest payments, while waiting six months to consider it "won't cost the District anything."
Pointing to the survey, which was conducted by the Coalition for State Prompt Pay among 50 District firms -- most of them minority-owned -- Henry said most of the local businesses reported they were not getting paid any more promptly that they did a year ago. The majority of the firms, he said, rated the D.C. government either "poor" or "very bad" when it comes to paying their bills on time.
"And these are not huge sums . . . We're talking about amounts of $350 to $500," Henry said. He added that at a time when the District government is trying to lure businesses to the city, many firms are increasingly wary of doing business with the city.
The normal payment time is about 60 days, Henry said, though some businesses surveyed said some payments had been owed them for as long as 120 days. The problem, he added, is citywide, not attributable to any one agency. But he said the situation is exacerbated because vendors can't go to any one central authority seeking payment, but must deal with various city agencies separately.
"Bills get lost in the departments or the agencies can't find the purchase orders or the purchase orders are not validated properly," said Henry.
Citing a 1983 U.S. General Accounting Office report to Mayor Marion Barry, Henry said 72 percent of the city's bills were paid late in 1981. He said the city lost $383,000 in purchase discounts because it didn't pay bills promptly and that vendors lost an estimated $612,000 in borrowing expenses and potential investment income.