Government Contracts DFARS Rule Proposes Accelerated Payments to Small Businesses
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Thursday, June 27, 2019

DFARS Rule Proposes Accelerated Payments to Small Businesses

By Government Contracts Editorial Staff

A proposed rule would amend the Defense Federal Acquisition Regulation Supplement to provide for accelerated payments to small business contractors and subcontractors. The rule would implement section 852 of the National Defense Authorization Act for Fiscal Year 2019 (PL 115-232), which requires the Department of Defense to establish an accelerated payment date for small business contractors, with a goal of 15 days after receipt of a proper invoice, if the contract does not establish a specific payment date. For contractors that subcontract with small businesses, section 852 requires DoD to establish an accelerated payment date with the same goal, if the contract does not establish a specific payment date and the contractor agrees to make accelerated payments to the subcontractor without charging any further consideration or fees. Section 852’s requirements are similar to current DoD policy and practice in DFARS 232.903, and the Defense Financial Accounting Service currently provides accelerated payments to nearly all DoD contractors, as permitted by law.

New Clause. To address compliance with section 852, the rule would add new DFARS 232.009, Providing accelerated payments to small business subcontractors. The FAR 52.232-40 clause, Providing Accelerated Payments to Small Business Subcontractors, already includes most of section 852’s requirements, and DoD will continue to use FAR 52.232-40 to avoid unnecessary duplication. However, the rule proposes a new contract clause at DFARS 252.232-7XXX, Accelerating Payments to Small Business Subcontractors—Prohibition on Fees and Consideration, as prescribed in proposed DFARS 232.009-2. Consistent with section 852, the proposed clause prohibits contractors from requiring any further consideration from, or charging fees to, their small business subcontractors when making accelerated payments under FAR 52.232-40. The clause would be added to the list of clauses in DFARS 212.301, Solicitation provisions and contract clauses for the acquisition of commercial items. The rule would also make a corresponding change to DFARS 232.903 regarding responsibilities for prompt payment. Submit comments referencing DFARS Case 2018-D068 by July 30, 2019. For the text of the proposed rule, see ¶70,020.434.

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