Prompt Payment | The Contracting Education Academy

March 15, 2013 By AMK

DoD discontinues accelerated payments to prime contractors; small businesses exempt

The Department of Defense (DoD) has issued a notice that DoD has discontinued its temporary practice of providing accelerated payments to all contractors. This new rule is found at 78 FedReg 12745, issued on Feb. 25, 2013.

DoD originally provided notice in the Federal Register at 77 FedReg 63298, on October 16, 2012, that it had taken steps to accelerate payments to all DoD prime contractors, in order to implement the temporary policy established in OMB Memorandum M-12-16, Providing Prompt Payment to Small Business Subcontractors (July 11, 2012).

With the latest notice, DoD discontinues its temporary practice of accelerating payments to all prime contractors. This action does not affect DoD’s policy to assist small business prime contractors by paying them as quickly as possible after receipt of an invoice and all proper documentation, while also maintaining necessary DoD internal controls.

DoD plans to continue phased implementation of the policy at DFARS 232.903 and 232.906. This notice is effective February 25, 2013.

July 18, 2012 By AMK

Prompt payments may become contract selection factor

The Obama administration has directed agencies to make contract payments faster to all their prime contractors for the next year with the understanding that those companies will pass along those accelerated payments to their small-business subcontractors, officials said July 11.

The administration is aiming to get money into the hands of more small businesses, although it’s a short-term relief. Indeed, officials are setting clear expectations for prime contractors by making payment habits a future factor in the bid selection process.

Keep reading this article at: http://fcw.com/articles/2012/07/11/subcontractor-prompt-payment-omb.aspx.

The July 11, 2012 OMB policy directive can be found at: http://contractingacademy.gatech.edu/wp-content/uploads/2012/06/Providing-Prompt-Payment-to-Small-Business-Subcontractors-OMB-07.11.2012.pdf.

September 28, 2011 By AMK

OMB urges agencies to pay small business contracts faster

Federal agencies must accelerate their payments to small business contractors, according to an Office of Management and Budget memorandum released Wednesday.

The new guideline cuts the recommended payment time in half. Previously, under the 1982 Prompt Payment Act, agencies had to make payments within 30 days from when an invoice was received. Now, agencies should make payments within 15 days, or as soon as practicable.

With the government spending nearly $100 billion a year in small business contracts, OMB predicts this will boost cash-flow for small businesses and help create economic growth.

“This will benefit tens of thousands of small businesses by getting money into their hands faster,” Jeff Zients, deputy director for management and chief performance officer, said in a blog post for OMB. The late payment interest penalty will not change, however. A provision in the Prompt Payment Act, the penalty is triggered when an agency does not pay within the 30-day mark.

Initial reaction from the National Small Business Association is positive.

“We’re supportive of it conceptually. Expediting the payment time is a good thing,” said Molly Brogan, vice president of public affairs for the group.

Agencies are expected to notify OMB by Nov. 1 when they can begin making accelerated payments.

— by Caitlin Fairchild – Government Executive – September 15, 2011 at http://www.govexec.com/story_page.cfm?articleid=48808&dcn=e_tma.

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