Legality of Refunding Prompt Payment Discount

B-194308: Apr 13, 1979

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The Defense Logistics Agency (DLA) requested an advance decision as to the legality of refunding a $15,746 prompt payment discount previously taken on payment to a private firm. The contract called for a 1.5 percent prompt payment discount for payments made within 20 days of submission of an invoice. The contract also contained provisions requiring that invoices be submitted with any supporting statements for review and transmittal to the cognizant paying office. DLA believed that the 20 day discount period commenced the date the approved voucher was received by the Defense Contract Administration Services Region (DCASR), not the date the voucher was submitted to the Defense Contract Audit Agency (DCAA) as claimed by the firm. Contrary to the agency's assertions, an invoice or voucher is correct at the time it is submitted if it can be paid without being returned to the contractor for correction or without a statement of disallowances involving payment in a reduced amount. Since the firm's voucher was paid without being returned and without a statement of disallowances, it follows that it was a correct voucher when it was submitted to DCAA. Since payment was not made within the discount period, DLA should refund the prompt payment discount erroneously taken in this case.