Authority for Payment of Interest Charges by Navy

The Department of the Navy requested a decision as to whether it may properly certify payment of a voucher for interest on pilot services for navigation on the Great Lakes. Under a purchase order, an association of pilots, licensed to navigate on the Great Lakes, rendered pilot services to two Navy ships. The Navy was later billed for an additional amount representing interest charges on the Navy's unpaid balance. The Great Lakes Pilotage Act requires registered vessels of the United States to have in their service a pilot registered under the act to navigate in the Great Lakes. However, because the language of the act appears to include only commercial ships, GAO could not conclude that the mandatory pilot requirements of the act apply to Navy ships. Although the act could not be held to authorize payment of the interest charges, GAO held that other federal regulations which establish interest charges for unpaid balances were applicable. Because the Navy contracted for the services with the understanding that payment would be governed by the body of regulations governing charges for pilot services, which included the federal regulation authorizing interest charges, GAO held that the Navy also agreed to be bound by the late charge regulation. Accordingly, the voucher representing the late payment charge may be certified for payment.