31 U.S.C. § 3905 — Payment provisions relating to construc-

Page 365 TITLE 31—MONEY AND FINANCE § 3905 head of the agency shall pay an interest penalty on an amount remaining unpaid in violation of this section. The penalty accrues as provided under sections 3902 and 3903 of this title, except that the required payment date for the unpaid amount is the last day specified in the contract that the discounted amount may be paid. (Added Pub. L. 97–452, § 1(18)(A), Jan. 12, 1983, 96 Stat. 2476; amended Pub. L. 100–496, § 8, Oct. 17, 1988, 102 Stat. 2460.) HISTORICAL AND REVISION NOTES Revised Section Source (U.S. Code) Source (Statutes at Large) 3904 ......... 31 App.:1802. May 21, 1982, Pub. L. 97–177, § 3, 96 Stat. 86. The word ‘‘otherwise’’ is omitted as surplus. The words ‘‘may pay the discounted amount’’ are sub- stituted for ‘‘may make payment in an amount equal to the discounted price’’ to eliminate unnecessary words. The words ‘‘on such unpaid amount’’ and ‘‘the regulations prescribed pursuant to’’ are omitted as sur- plus. The words ‘‘specified in the contract that the dis- counted amount may be paid’’ are substituted for ‘‘of the specified period of time described in subsection (a)’’ for clarity. Editorial Notes AMENDMENTS 1988—Pub. L. 100–496 inserted after first sentence ‘‘For the purpose of the preceding sentence, the speci- fied time shall be determined from the date of the in- voice.’’ Statutory Notes and Related Subsidiaries EFFECTIVE DATE OF 1988 AMENDMENT Amendment by Pub. L. 100–496 applicable to pay- ments under contracts awarded, contracts renewed, and contract options exercised during or after the first fis- cal quarter which begins more than 90 days after Oct. 17, 1988, see section 14(a) of Pub. L. 100–496, set out as a note under section 3902 of this title. § 3905. Payment provisions relating to construc- tion contracts (a) In the event that a contractor, after mak- ing a certified payment request to an agency pursuant to section 3903(b) of this title, dis- covers that a portion or all of such payment re- quest constitutes a payment for performance by such contractor that fails to conform to the specifications, terms, and conditions of its con- tract (hereafter in this subsection referred to as the ‘‘unearned amount’’), then the contractor shall— (1) notify the agency of such performance de- ficiency; and (2) be obligated to pay the Government an amount equal to interest on the unearned amount (computed in the manner provided in section 3903(c) of this title), from the date of the contractor’s receipt of such unearned amount until— (A) the date the contractor notifies the agency that the performance deficiency has been corrected; or (B) the date the contractor reduces the amount of any subsequent certified applica- tion for payment to such agency by an amount equal to the unearned amount. (b) Each construction contract awarded by an agency shall include a clause that requires the prime contractor to include in each subcontract for property or services entered into by the prime contractor and a subcontractor (including a material supplier) for the purpose of per- forming such construction contract— (1) a payment clause which obligates the prime contractor to pay the subcontractor for satisfactory performance under its sub- contract within 7 days out of such amounts as are paid to the prime contractor by the agency under such contract; and (2) an interest penalty clause which obli- gates the prime contractor to pay to the sub- contractor an interest penalty on amounts due in the case of each payment not made in ac- cordance with the payment clause included in the subcontract pursuant to paragraph (1) of this subsection— (A) for the period beginning on the day after the required payment date and ending on the date on which payment of the amount due is made; and (B) computed at the rate specified by sec- tion 3902(a) of this title. (c) The construction contract awarded by the agency shall further require the prime con- tractor to include in each of its subcontracts (for the purpose of performance of such con- struction contract) a provision requiring the subcontractor to include a payment clause and an interest penalty clause conforming to the standards of subsection (b) of this section in each of its subcontracts and to require each of its subcontractors to include such clauses in their subcontracts with each lower-tier subcon- tractor or supplier. (d) The clauses required by subsections (b) and (c) of this section shall not be construed to im- pair the right of a prime contractor or a subcon- tractor at any tier to negotiate, and to include in their subcontract, provisions which— (1) permit the prime contractor or a subcon- tractor to retain (without cause) a specified percentage of each progress payment other- wise due to a subcontractor for satisfactory performance under the subcontract, without incurring any obligation to pay a late pay- ment interest penalty, in accordance with terms and conditions agreed to by the parties to the subcontract, giving such recognition as the parties deem appropriate to the ability of a subcontractor to furnish a performance bond and a payment bond; (2) permit the contractor or subcontractor to make a determination that part or all of the subcontractor’s request for payment may be withheld in accordance with the subcontract agreement; and (3) permit such withholding without incur- ring any obligation to pay a late payment pen- alty if— (A) a notice conforming to the standards of subsection (g) of this section has been pre- viously furnished to the subcontractor; and (B) a copy of any notice issued by a prime contractor pursuant to subparagraph (A) of this paragraph has been furnished to the Government. (e) If a prime contractor, after making appli- cation to an agency for payment under a con- Page 366 TITLE 31—MONEY AND FINANCE § 3905 tract but before making a payment to a subcon- tractor for the subcontractor’s performance cov- ered by such application, discovers that all or a portion of the payment otherwise due such sub- contractor is subject to withholding from the subcontractor in accordance with the sub- contract agreement, then the prime contractor shall— (1) furnish to the subcontractor a notice con- forming to the standards of subsection (g) of this section as soon as practicable upon ascertaining the cause giving rise to a with- holding, but prior to the due date for subcon- tractor payment; (2) furnish to the Government, as soon as practicable, a copy of the notice furnished to the subcontractor pursuant to paragraph (1) of this subsection; (3) reduce the subcontractor’s progress pay- ment by an amount not to exceed the amount specified in the notice of withholding fur- nished under paragraph (1) of this subsection; (4) pay the subcontractor as soon as prac- ticable after the correction of the identified subcontract performance deficiency, and— (A) make such payment within— (i) 7 days after correction of the identi- fied subcontract performance deficiency (unless the funds therefor must be recov- ered from the Government because of a re- duction under paragraph (5)(A)); or (ii) 7 days after the contractor recovers such funds from the Government; or (B) incur an obligation to pay a late pay- ment interest penalty computed at the rate specified by section 3902(a) of this title; (5) notify the Government, upon— (A) reduction of the amount of any subse- quent certified application for payment; or (B) payment to the subcontractor of any withheld amounts of a progress payment, specifying— (i) the amounts of the progress payments withheld under paragraph (1) of this sub- section; and (ii) the dates that such withholding began and ended; and (6) be obligated to pay to the Government an amount equal to interest on the withheld pay- ments (computed in the manner provided in section 3903(c) of this title), from the 8th day after receipt of the withheld amounts from the Government until— (A) the day the identified subcontractor performance deficiency is corrected; or (B) the date that any subsequent payment is reduced under paragraph (5)(A). (f)(1) If a prime contractor, after making pay- ment to a first-tier subcontractor, receives from a supplier or subcontractor of the first-tier sub- contractor (hereafter referred to as a ‘‘second- tier subcontractor’’) a written notice in accord- ance with section 3133(b) of title 40, asserting a deficiency in such first-tier subcontractor’s per- formance under the contract for which the prime contractor may be ultimately liable, and the prime contractor determines that all or a portion of future payments otherwise due such first-tier subcontractor is subject to with- holding in accordance with the subcontract agreement, then the prime contractor may, without incurring an obligation to pay an inter- est penalty under subsection (e)(6) of this sec- tion— (A) furnish to the first-tier subcontractor a notice conforming to the standards of sub- section (g) of this section as soon as prac- ticable upon making such determination; and (B) withhold from the first-tier subcontrac- tor’s next available progress payment or pay- ments an amount not to exceed the amount specified in the notice of withholding fur- nished under subparagraph (A) of this para- graph. (2) As soon as practicable, but not later than 7 days after receipt of satisfactory written noti- fication that the identified subcontract perform- ance deficiency has been corrected, the prime contractor shall pay the amount withheld under paragraph (1)(B) of this subsection to such first- tier subcontractor, or shall incur an obligation to pay a late payment interest penalty to such first-tier subcontractor computed at the rate specified by section 3902(a) of this title. (g) A written notice of any withholding shall be issued to a subcontractor (with a copy to the Government of any such notice issued by a prime contractor), specifying— (1) the amount to be withheld; (2) the specific causes for the withholding under the terms of the subcontract; and (3) the remedial actions to be taken by the subcontractor in order to receive payment of the amounts withheld. (h) A prime contractor may not request pay- ment from the agency of any amount withheld or retained in accordance with subsection (d) of this section until such time as the prime con- tractor has determined and certified to the agency that the subcontractor is entitled to the payment of such amount. (i) A dispute between a contractor and subcon- tractor relating to the amount or entitlement of a subcontractor to a payment or a late payment interest penalty under a clause included in the subcontract pursuant to subsection (b) or (c) of this section does not constitute a dispute to which the United States is a party. The United States may not be interpleaded in any judicial or administrative proceeding involving such a dispute. (j) Except as provided in subsection (i) of this section, this section shall not limit or impair any contractual, administrative, or judicial remedies otherwise available to a contractor or a subcontractor in the event of a dispute involv- ing late payment or nonpayment by a prime contractor or deficient subcontract performance or nonperformance by a subcontractor. (k) A contractor’s obligation to pay an inter- est penalty to a subcontractor pursuant to the clauses included in a subcontract under sub- section (b) or (c) of this section may not be con- strued to be an obligation of the United States for such interest penalty. A contract modifica- tion may not be made for the purpose of pro- viding reimbursement of such interest penalty. A cost reimbursement claim may not include any amount for reimbursement of such interest penalty. Page 367 TITLE 31—MONEY AND FINANCE § 3907 (Added Pub. L. 100–496, § 9(a)(2), Oct. 17, 1988, 102 Stat. 2460; amended Pub. L. 107–217, § 3(h)(7), Aug. 21, 2002, 116 Stat. 1300.) Editorial Notes PRIOR PROVISIONS A prior section 3905 was renumbered section 3906 of this title. AMENDMENTS 2002—Subsec. (f)(1). Pub. L. 107–217 substituted ‘‘sec- tion 3133(b) of title 40’’ for ‘‘section 2 of the Act of Au- gust 24, 1935 (40 U.S.C. 270b)’’. Statutory Notes and Related Subsidiaries EFFECTIVE DATE Section applicable to payments under contracts awarded, contracts renewed, and contract options exer- cised during or after the first fiscal quarter which be- gins more than 90 days after Oct. 17, 1988, see section 14(a) of Pub. L. 100–496, set out as an Effective Date of 1988 Amendment note under section 3902 of this title. [§ 3906. Repealed. Pub. L. 105–362, title XIII, § 1301(c)(1), Nov. 10, 1998, 112 Stat. 3293] Section, added Pub. L. 97–452, § 1(18)(A), Jan. 12, 1983, 96 Stat. 2476, § 3905; renumbered § 3906 and amended Pub. L. 100–496, §§ 9(a)(1), 10, Oct. 17, 1988, 102 Stat. 2460, 2463, required submission of reports to Director of the Office of Management and Budget by 60th day after end of fis- cal year by head of each agency concerning agency’s payment practices during that fiscal year. A prior section 3906 was renumbered section 3907 of this title. § 3907. Relationship to other laws (a) A claim for an interest penalty not paid under this chapter may be filed under section 7103 of title 41. (b)(1) An interest penalty under this chapter does not continue to accrue— (A) after a claim for a penalty is filed under chapter 71 of title 41; or (B) for more than one year. (2) Paragraph (1) of this subsection does not prevent an interest penalty from accruing under section 7109(a)(1) and (b) of title 41 after a pen- alty stops accruing under this chapter. A pen- alty accruing under section 7109(a)(1) and (b) may accrue on an unpaid contract payment and on the unpaid penalty under this chapter. (c) Except as provided in section 3904 of this title, this chapter does not require an interest penalty on a payment that is not made because of a dispute between the head of an agency and a business concern over the amount of payment or compliance with the contract. A claim re- lated to the dispute, and interest payable for the period during which the dispute is being re- solved, is subject to chapter 71 of title 41. (Added Pub. L. 97–452, § 1(18)(A), Jan. 12, 1983, 96 Stat. 2477, § 3906; renumbered § 3907, Pub. L. 100–496, § 9(a)(1), Oct. 17, 1988, 102 Stat. 2460; amended Pub. L. 111–350, § 5(h)(8), Jan. 4, 2011, 124 Stat. 3849.) HISTORICAL AND REVISION NOTES Revised Section Source (U.S. Code) Source (Statutes at Large) 3906(a) ..... 31 App.:1803(a)(1). May 21, 1982, Pub. L. 97–177, § 4, 96 Stat. 87. HISTORICAL AND REVISION NOTES—CONTINUED Revised Section Source (U.S. Code) Source (Statutes at Large) 3906(b) ..... 31 App.:1803(a)(2), (3). 3906(c) ..... 31 App.:1803(b). In the section, the words ‘‘be construed to’’ are omit- ted as surplus. In subsection (a), the words ‘‘not paid under this chapter’’ are substituted for ‘‘which a Federal agency has failed to pay in accordance with the requirements of section 2 or 3 of this chapter’’ to eliminate unneces- sary words. In subsection (b)(2), the word ‘‘accruing’’ is added for clarity. The word ‘‘both’’ is omitted as surplus. In subsection (c), the words ‘‘with respect to disputes concerning discounts’’, ‘‘by the required payment date’’, and ‘‘other allegations concerning’’ are omitted as surplus. Editorial Notes AMENDMENTS 2011—Subsec. (a). Pub. L. 111–350, § 5(h)(8)(A), sub- stituted ‘‘section 7103 of title 41’’ for ‘‘section 6 of the Contract Disputes Act of 1978 (41 U.S.C. 605)’’. Subsec. (b)(1)(A). Pub. L. 111–350, § 5(h)(8)(B), sub- stituted ‘‘chapter 71 of title 41’’ for ‘‘the Contract Dis- putes Act of 1978 (41 U.S.C. 601 et seq.)’’. Subsec. (b)(2). Pub. L. 111–350, § 5(h)(8)(C), substituted ‘‘section 7109(a)(1) and (b) of title 41’’ for ‘‘section 12 of the Contract Disputes Act of 1978 (41 U.S.C. 611)’’ and ‘‘section 7109(a)(1) and (b) may’’ for ‘‘section 12 may’’. Subsec. (c). Pub. L. 111–350, § 5(h)(8)(D), substituted ‘‘chapter 71 of title 41’’ for ‘‘the Contract Disputes Act of 1978 (41 U.S.C. 601 et seq.)’’. 1988—Pub. L. 100–496 renumbered section 3906 of this title as this section. SUBTITLE IV—MONEY Chap. Sec. 51. Coins and Currency ............................ 5101 53. Monetary Transactions ...................... 5301 CHAPTER 51—COINS AND CURRENCY SUBCHAPTER I—MONETARY SYSTEM Sec. 5101. Decimal system. 5102. Standard weight. 5103. Legal tender. SUBCHAPTER II—GENERAL AUTHORITY 5111. Minting and issuing coins, medals, and nu- mismatic items. 5112. Denominations, specifications, and design of coins. 5113. Tolerances and testing of coins. 5114. Engraving and printing currency and security documents. 5115. United States currency notes. 5116. Buying and selling gold and silver. 5117. Transferring gold and gold certificates. 5118. Gold clauses and consent to sue. 5119. Redemption and cancellation of currency. 5120. Obsolete, mutilated, and worn coins and cur- rency. 5121. Refining, assaying, and valuation of bullion. 5122. Payment to depositors. SUBCHAPTER III—UNITED STATES MINT 5131. Organization. 5132. Administrative. 5133. Settlement of accounts.