Contracting officers within the Department of Defense (DoD) have been ordered to modify existing contracts and establish new contracts in such a way that small business subcontractors are paid on an accelerated basis.
Richard Ginman, director of defense procurement and acquisition policy, issued this order on Aug. 15, 2012 in response to a policy announced by the Office of Management and Budget (OMB) in mid-July.
The DoD directive sets forth a “class deviation” so that all new solicitations and contracts contain a clause that requires prime contractors to pay small business subcontractors on an accelerated timetable. In addition, existing solicitations and contracts are to be modified, if possible, to include the new accelerated payment clause.
To facilitate the prompt payments to subcontractors, DoD is to provide accelerated payments to its prime contractors after receipt of a proper invoice and appropriate documentation.
The OMB policy is a temporary one, in effect for one-year.
A copy of DoD’s Aug. 15, 2012 class deviation can be found here: DoD Class Deviation – Accelerated Payment to SB Subs 08.15.2012
A copy of OMB’s July 11, 2012 policy memorandum can be found here: OMB Policy Memo – Prompt Payment to SB Subs 07.11.2012
