In latest edition of The Wright Toolbox:
- Faster Pay Days for Certain Government Contractor Small Businesses
Faster Pay Days for Certain Government Contractor Small Businesses
On February 14, 2023, the DOD, GSA and NASA issued a final rule designed to speed up payments to small businesses. This final rule provides for accelerated payments to contractors that are small businesses and to small business subcontractors by accelerating payments to their prime contractors. The rule implements section 873 of the National Defense Authorization Act (NDAA) for Fiscal Year (FY) 2020 (Pub. L. 116–92), which amends 31 U.S.C. 3903(a). The rule also implements section 815 of the NDAA for FY 2021, which amended 10 U.S.C. 2307(a). The new rule become effective on March 16, 2023.
The 2020 NDAA (Section 873) specifically required agencies to establish an accelerated payment date for small business prime contractors, to the fullest extent permitted by law, with a goal of 15 days after receipt of a proper invoice, if a specific payment date is not established by contract. Section 873 also required that, to the fullest extent permitted by law, the head of an agency shall establish an accelerated payment date for prime contractors that subcontract with small businesses, with a goal of 15 days after receipt of a proper invoice, if (1) A specific payment date is not established by contract; and (2) The contractor agrees to make accelerated payments to the subcontractor without any further consideration from, or fees charged to, the subcontractor. The new final rule implements both aspects of section 873.
The Government expects this rule to improve cash flow and access to the Federal marketplace for small businesses, which are likely to have lower cash reserves and less access to inexpensive credit when compared to large businesses. The new rule also implements other amendments to the FAR to align with SBA’s regulations related to several topic areas. The rule clarifies that SBA determines size status as of the date of initial offer for a multiple-award contract, whether or not the offer includes price, or the price is evaluated. Additionally, in accordance with FAR 19.301–2(b)(2), the ‘‘ostensible subcontractor rule’’ (a small business must not be unduly reliant on a non-similarly situated small business subcontractor or have such a subcontractor perform the primary and vital requirements of the contract) is implemented in this rule as a new ground for socioeconomic status protest. The rule also clarifies that contracting officers will not be able to exercise options past the fifth year of long-term 8(a) contracts if the 8(a) contractor no longer qualifies for the 8(a) program.
If you have any questions about the new rule please do not hesitate to contact any member of the WCS Government Contracts Practice Group.