[Response to Army Request for Advance Decision on Payment of Prompt Payment Act Interest Penalties on Utility Bills]

The Army requested a decision regarding: (1) the propriety of paying interest penalties on late payments for telephone services in states whose regulations do not provide for late charges for telephone customers; and (2) the computation of late charges for combined local and long-distance telephone bills. GAO held that: (1) the late payments were subject to Prompt Payment Act interest penalties; and (2) state regulatory authorities should determine the propriety of late charges for combined bills. Accordingly, the Army should pay late charges on its telephone bills.