Contracting and Payment Options Essay Example | Topics and Well Written Essays - 1500 words

Contracting and Payment Options - Essay Example According to â€Å"Subpart 32.9-Prompt Payment† of the Federal Constitution, the act stipulates the ideal elements to justify effectiveness in contracts under the prompt payment approach. The first crucial element is that government agencies should effect payments on a timely basis for all products delivered by contractors. For instance, the IRS just like other federal agencies and departments is accorded the mandate to issue payments promptly after receiving services or goods from its contractors. Products such as the software for processing tax returns are critical for the IRS operations; hence, the need for prompt payments. Subsequently, the act stipulates the need for the contractor and the government agency to understand the withstanding penalties at the event of lateness in the delivery of services or payment for the completed tasks. For example, if the delivery of the software for processing taxes is delayed, then the IRS should impose the ideal penalty. The IRS would b ear the penalty to the extent that it fails to make payments after the software is delivered on time. Lastly, the act allows federal agencies to accommodate any substantial and economically justifiable discounts from the contractors. In elaborating the case, a government agency such as the IRS will be acting legally if it opts to accept a certain percentage discount on the cost stipulated by the contractor for the tax processing software. The Congress should amend the Prompt Payment Act over time in order to ensure effectiveness in this payment option.