Northrop Worldwide Aircraft Services, Inc. v. Department of the Treasury
General Services Board of Contract Appeals
GSBCA No. 1162-TD (1992)
- Written by Liz Nakamura, JD
Facts
Pursuant to a cost-reimbursement contract between Northrop Worldwide Aircraft Services, Inc. (Northrop) (plaintiff) and the Department of the Treasury’s Customs Service (Customs) (defendant), Northrop provided transportation, storage, maintenance, and auction services for items seized by Customs. Northrop did not request, and did not receive, contract financing or any other form of advance payment. Customs notified Northrop when its services were needed, and Northrop then invoiced Customs for each service after performance was complete. Northrop operated under Customs’ strict supervision. Customs found Northrop’s performance acceptable and never disputed any of Northrop’s invoices. However, Customs failed to promptly pay Northrop’s invoices. Northrop submitted a claim to Customs’ contracting officer for interest-penalties under the Prompt Payment Act (PPA), which was denied. Northrop appealed the denial to the General Services Board of Contract Appeals (Board), arguing that the PPA’s interest-penalty provisions applied because the invoices were for services rendered in partial performance of its contract with Customs. Customs countered, arguing that it was not required to pay interest-penalties on the late invoices because the PPA did not apply to cost-reimbursement contracts.
Rule of Law
Issue
Holding and Reasoning (LaBella, J.)
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