USDANEWS VOLUME 56 NO. 2 - FEBRUARY 1997

And the Winner Is...USDA!
"Now, in the category of 'Best Performance In On-Time Prompt Payments,' this year's Oscar goes to...the envelope please...THE U.S. DEPARTMENT OF AGRICULTURE!" (Thunderous Applause Follows).

Well, we probably won't be viewing a scene like this while we're glued to the tube, watching the Academy Awards on March 24. But USDA did cop the honor for having the highest on-time payment record of all Federal departments for FY 1996.

Its payment record was 99.3 percent. This represented a 0.4 percent increase over USDA's FY95 payment rate of 98.9 percent--which, in turn, was the highest "prompt payment record" of all Federal departments for FY95.

Dick Guyer, director of the Fiscal Policy Division in the Office of the Chief Financial Officer, explained that these payment records refer to the degree to which USDA agencies--which either are paying for services to suppliers in the private sector or are making payments for entitlements and crop subsidies as required by law--complete those payments on time, and thereby avoid being charged any penalties for tardy payments.

"During FY96 our penalty occurrence rate was only 0.3 percent--the best record of all Federal departments," he said. The dollar amount of those interest penalties was $776,652. Guyer then noted that this was a decrease of about 30 percent from the $1.1 million in interest penalties paid by the Department in FY95--which was the best record for Federal departments for that year, too.

"The decrease in the interest penalty dollar amount and occurrence rate," Guyer said, "resulted from our continued emphasis on preventing interest penalties by all USDA agencies, plus a substantial decrease in late payments of the Farm Service Agency/Commodity Credit Corporation."

But even if $776,652 in interest penalties is regarded as exemplary when compared to the penalty payments of other Federal departments, isn't that still a sizable amount?

"First, keep in mind that USDA is the second largest of the Federal departments in dollars that are subject to the provisions of the Prompt Payment Act," pointed out OCFO cash management team leader Dale Theurer. "Second, USDA made over 10.5 million payments in entitlements, as well as for goods and services, during FY96--so put those payments for penalties in that context."

"However," he underscored, "our goal is no interest penalties at all per year!"

Theurer then explained the various occurrences which might cause tardy payments--which, in turn, might lead to interest penalties or other forms of late payment penalties assessed to the appropriate USDA agency.

They consisted primarily of (1) delays or errors by the USDA paying office in taking discounts, notifying vendors of defective invoices, or computer processing; or (2) delays in the USDA paying office's receipt of receiving reports, proper invoices, purchase orders, or contracts.

Theurer emphasized that 100 percent of USDA's penalty payments are audited--and that each penalty payment is audited by the agency making that payment.

"In addition," he said, "our financial specialists in OCFO send periodic reports to agency managers, as appropriate--in which we assess the strengths and weaknesses in agency payment practices."

Guyer noted the increased use, by USDA employees, of government-issued American Express travel cards, "fleet cards" for gas purchases during official travel in government vehicles, and USDA-issued procurement credit cards. "All these cards," he said, "make it easier to reconcile accounts, which result in quicker payments to suppliers--and which means that USDA can pay its bills on time, without penalties."

"It's in the enlightened self-interest of each USDA agency to reduce its interest penalty payments," Guyer said, "because they come right out of that agency's budget." ¤

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