PNWC’s Government Contracting Update

Back in 2011, the Office of Management and Budget (OMB) started requiring agencies, to the fullest degree permitted for legal reasons, to accelerate payments to small business contractors with the purpose of making obligations within 15 days (instead of 30 days). This requirement was conditional upon contractors submitting every one of the proper paperwork, including invoices.

So, how’s it working? Are small businesses getting paid quicker now than these were a couple of years ago? We don’t know. And OMB doesn’t know either. Anecdotal proof suggests a combined bag. We’ve talked with small business contractors that are amazed with the quickness they’re receiving payment. We’ve talked with others that reveal that it is still taking close to thirty days.

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We’ve talked to still others who tell us the time for payment uexplainedly fluctuates between 15 and thirty days. That’s for the leading-Government companies. For small business subcontractors its a different story. From what we should can discern, accelerated payments are not influencing them significantly. Sometimes it’s because of subcontract terms such as “payments to subs will be made after the Government pays the prime”. OMB is planning to gather some data on how well the scheduled programs are working.

It’s requesting each agency to provide quarterly reviews on its improvement in making accelerated obligations to prime contractors and the improvement of the agency’s twenty-five largest perfect contractors are making in accelerating payments to small business subcontractors. It will be interesting to see those reports. If you’re a high twenty-five contractor for just about any Governmental agency, you can expect to be pinged by those agencies for data necessary to prepare these mandated reports.

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