New FAR Provision Requiring Faster Payment to Subcontractors On Horizon


A proposed rule is scheduled for publication in the Federal Register today that would add a new FAR clause requiring accelerated payments to small business subcontractors. This would implement the temporary policy by the Office of Management and Budget, Policy Memo M-12-16, July 2012. Accelerated payments would be to the “maximum extent possible” and tied to the receipt of “proper invoice and all proper documentation” from the small business subcontractor.

The proposed rule is not, however, expected to provide any new rights under the Prompt Payment Act. The proposed rule would seem to be impractical to implement without accelerated payments by the government to the prime contractor, but the effect upon payments remains to be seen, if implemented. Interested persons should provide their comments to the proposed rule within the timeline established upon publication in the Federal Register.

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