DOD Proposes to Accelerate Payments to Small Contractors and Subcontractors
The Department of Defense (DoD) is proposing a rule that would revise the Defense Federal Acquisition Supplement to implement section 852 of the 2019 National Defense Authorization Act (Public Law 115 – 232) which provides for accelerated payments to small business contractors and to small business subcontractors by accelerating payments to their prime contractors.
The proposed rule would:
- Require DoD to establish, to the fullest extent permitted by law, an accelerated payment date for small business contractors, with a goal of 15 days after receipt of a proper invoice if a specific payment date is not established by contract;
- Require DoD to establish an accelerated payment date for contractors that subcontract with small businesses, with a goal of 15 days after receipt of a proper invoice, if: (1) A specific payment date is not established by contract, and (2) the contractor agrees to make accelerated payments to the subcontractor without any further consideration from, or fees charged to, the subcontractor;
- Prohibit contractors from requiring any further consideration from, or charging fees to, their small business subcontractors when making accelerated payments under this rule.
DoD estimates that 40,282 contractors (including 30,498 small businesses), or about 99 percent of the past average, will receive accelerated payments each year under the new rule.