USAID OIG issued a management advisory regarding an increase in the amount of interest payments, or late charges, USAID paid to vendors in calendar year (CY) 2025. The Prompt Payment Act (PPA) requires Federal agencies to pay their bills on time and pay interest penalties to vendors when payments are late. If the debt remains unpaid after 12 months, the vendor may file a claim under the Contract Disputes Act of 1978 (CDA).
According to our analysis of the Agency’s financial data, USAID’s interest payments to vendors accelerated sharply in CY 2025, exceeding $8.9 million. USAID finance officials attributed the sharp increase to several factors. These included changes to payment processes and uncertainties due to Agency-wide staff shortages, which reduced USAID’s ability to make payments on time, even for approved expenses. Furthermore, in March 2025, USAID terminated over 5,000 awards as part of the Department of State’s review of U.S. foreign assistance and prioritized processing award terminations over making outstanding payments to vendors. As a result, more vendors could become eligible to file claims under the CDA as time passes.
We did not make recommendations; however, we urged USAID to take steps to minimize PPA violations as the Agency continues to close out awards and wind down its operations. Further delays will result in the Agency continuing to accrue interest on outstanding payments.