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DOD/DARC | RIN: 0750-AK25 | Publication ID: Fall 2019 |
Title: Prompt Payments of Small Business Subcontractors (DFARS Case 2018-D068) | |
Abstract:
DoD is amending the Defense Federal Acquisition Regulation Supplement (DFARS) to implement section 852 of the National Defense Authorization Act for Fiscal Year 2019, which requires accelerated payment dates for small business prime contractors and prime contractors that subcontract with small business concerns. This rule will amend the DFARS to require accelerated payment dates with a goal of 15 days after receipt of a proper invoice, if a specific payment date is not established by contract. In addition, prime contractors that have subcontracts with small businesses must agree to make payments to their small business subcontractors in accordance with the accelerated payment date, to the maximum extent practicable, without any further consideration from, or fees charged to, the subcontractor. |
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Agency: Department of Defense(DOD) | Priority: Other Significant |
RIN Status: Previously published in the Unified Agenda | Agenda Stage of Rulemaking: Final Rule Stage |
Major: No | Unfunded Mandates: No |
EO 13771 Designation: Other | |
CFR Citation: 48 CFR 232 | |
Legal Authority: 41 U.S.C. 1303 Pub. L. 115-874, sec. 852 10 U.S.C. 2306a |
Legal Deadline:
None |
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Statement of Need: This rule will amend the Defense Federal Acquisition Regulation Supplement (DFARS) to implement section 852 of the National Defense Authorization Act for Fiscal Year 2019, which requires accelerated payment dates for small business prime contractors and for prime contractors that subcontract with small business concerns. This rule will require accelerated payment dates with a goal of 15 days after receipt of a proper invoice, if a specific payment date is not established by contract. In addition, prime contractors that have subcontracts with small businesses must agree to make payments to their small business subcontractors in accordance with the accelerated payment date, to the maximum extent practicable, without any further consideration from, or fees charged to, the subcontractor. |
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Summary of the Legal Basis: This regulation is issued under the authorities of section 852 of the National Defense Authorization Act for Fiscal Year 2019 and 41 U.S.C. 1303. |
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Alternatives: DoD considered the following alternatives: (1) taking no action; (2) amending the DFARS to implement section 852. DoD has a policy in place to pay small business prime contractors as quickly as possible after receipt of invoices and proper documentation. However, the existing policy does not fully implement the requirements of section 852. Therefore, DoD is amending the DFARS. |
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Anticipated Costs and Benefits: The clause at Federal Acquisition Regulation (FAR) 52.232-40, Providing Accelerated Payments to Small Business Subcontractors, currently requires contractors to provide accelerated payments to their small business subcontractors when the Government provides accelerated payments to the contractors. DoD contracting officers are required to include this clause in DoD contracts. As a result, DoD contractors should already be providing accelerated payments to small business subcontractors. Current DoD policy, as stated in DFARS 232.903, is to pay small business contractors as quickly as possible after receipt of invoices and proper documentation. With few exceptions, DoD will provide accelerated payments to small business contractors and to other contractors that agree to provide accelerated payments to their small business subcontractors without further consideration or fees. DoD will not be able to provide accelerated payments if such payments put DoD at risk of a violation of law. In accordance with section 852, this rule will prohibit contractors from requiring any further consideration from, or charging fees to, their small business subcontractors when making accelerated payments. This prohibition would benefit small business subcontractors who have been required to provide consideration or pay fees to the prime contractor in order to receive accelerated payments. It is not possible for DoD to estimate the number of small business subcontractors who have been required to do this, nor is it possible to estimate the dollar value of the consideration provided or fees paid. |
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Risks: |
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Timetable:
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Regulatory Flexibility Analysis Required: Yes | Government Levels Affected: Federal |
Small Entities Affected: Businesses | Federalism: No |
Included in the Regulatory Plan: Yes | |
RIN Data Printed in the FR: Yes | |
Agency Contact: Jennifer Hawes Department of Defense Defense Acquisition Regulations Council 3060 Defense Pentagon, Room 3B941, Washington, DC 20301-3060 Phone:571 372-6115 Email: jennifer.l.hawes2.civ@mail.mil |