Government Contracts DFARS Rule Provides for Accelerated Payments to Small Businesses
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Thursday, May 7, 2020

DFARS Rule Provides for Accelerated Payments to Small Businesses

By Government Contracts Editorial Staff

The DFARS Case 2018-D068 proposed rule (¶70,020.434) has been finalized. The rule amends the Defense Federal Acquisition Regulation Supplement to provide for accelerated payments to small business contractors and subcontractors. The rule implements 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.

New Contract Clause. To address compliance with section 852, the rule adds new DFARS 232.009, Providing accelerated payments to small business subcontractors, and subsections DFARS 232.009-1 and DFARS 232.009-2. The rule also adds a new contract clause at DFARS 252.232-7017, Accelerating Payments to Small Business Subcontractors—Prohibition on Fees and Consideration, as prescribed in DFARS 232.009-2. Consistent with section 852, the 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 rule adds the clause to the list of commercial items solicitation provisions and contract clauses in DFARS 212.301. The rule also makes a corresponding change to DFARS 232.903 regarding prompt payment responsibilities. The final rule makes a significant change to the proposed rule by adding a definition of “accelerated payment” to DFARS 252.232-7017. The definition states that accelerated payments are made as quickly as possible, with a goal of 15 days or less after receipt of payment from the government or receipt of a proper invoice from the subcontractor, whichever is later. The text of the rule, which went into effect April 8, 2020, appears at ¶70,017.34.

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