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Federal Register / Vol. 86, No. 186 / Wednesday, September 29, 2021 / Proposed Rules
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implement a section of the National Defense Authorization Act for Fiscal Year 2020 to provide for accelerated payments to small business contractors and subcontractors and a comparable statute applicable only to the Department of Defense.
DATES: Interested parties should submit written comments to the Regulatory Secretariat Division at the address shown below on or before November 29, 2021 to be considered in the formation of the final rule.
ADDRESSES: Submit comments in response to FAR Case 2020007 to the Federal eRulemaking portal at https
www.regulations.gov by searching for FAR Case 2020007. Select the link Comment Now that corresponds with FAR Case 2020007. Follow the instructions provided on the Comment Now screen. Please include your name, company name if any, and FAR Case 2020007 on your attached document.
If your comment cannot be submitted using https www.regulations.gov, call or email the points of contact in the FOR
FURTHER INFORMATION CONTACT section of this document for alternate instructions.
Instructions: Please submit comments only and cite FAR Case 2020007 in all correspondence related to this case.
Comments received generally will be posted without change to https
www.regulations.gov, including any personal and/or business confidential information provided. To confirm receipt of your comments, please check https www.regulations.gov, approximately two to three days after submission to verify posting.
FOR FURTHER INFORMATION CONTACT: Ms.
Zenaida Delgado, Procurement Analyst, at 2029697207 or by email at zenaida.delgado@gsa.gov, for clarification of content. For information pertaining to status or publication schedules, contact the Regulatory Secretariat Division at 2025014755 or GSARegSec@gsa.gov. Please cite FAR
Case 2020007.
SUPPLEMENTARY INFORMATION:
I. Background DoD, GSA, and NASA are proposing to revise the FAR to implement a policy that provides for accelerated payments to contractors that are small businesses and to small business subcontractors by accelerating payments to their prime contractors. This change implements section 873 of the National Defense Authorization Act NDAA for Fiscal Year FY 2020 Pub. L. 11692. Section 873 amends 31 U.S.C. 3903a.
Specifically, section 873 requires agencies to establish an accelerated payment date for small business prime
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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 requires that, to the fullest extent permitted by law, the head of an agency 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 proposed rule implements both aspects of section 873.
The FAR currently addresses providing accelerated payments to small business subcontractors at FAR 32.009
and requires contracting officers to insert the clause at FAR 52.23240, Providing Accelerated Payments to Small Business Subcontractors, in solicitations and contracts. FAR 52.232
40 requires prime contractors to provide accelerated payments to their small business subcontractors when the Government provides accelerated payments to the prime contractors.
In addition, this rule implements 10
U.S.C. 2307, which includes the same provisions regarding accelerated payments, applicable only to the Department of Defense.
II. Discussion and Analysis The following summarizes the proposed changes to the FAR:
The policy at FAR 32.0091 has been expanded to address accelerated payments to small business contractors.
A goal of payment within 15 days after receipt of a proper invoice is added, and prime contractors are prohibited from requesting any further consideration from the subcontractor in exchange for the accelerated payments. Section 873
does not specify the number of days for the prime to make accelerated payments to the subcontractor; however, DoD, GSA, and NASA propose, as a matter of policy, that the prime contractor make payments to the small business subcontractor within 15 days of receiving the accelerated payment from the Government, after receipt of a proper invoice and all other required documentation from the small business subcontractor.
These requirements are also incorporated into the clause at FAR
52.23240, Providing Accelerated Payments to Small Business Subcontractors. For applicability to contracts for the acquisition of commercial items, because this clause is
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now based on a statutory requirement, it is incorporated into FAR clause 52.2125, Contract Terms and Conditions Required To Implement Statutes or Executive Orders Commercial Items, rather than being separately prescribed at FAR 12.301d.
There are other conforming changes at FAR 12.301, 32.903, 32.906, 52.2134, and 52.2446.
To further improve cash flow and access to the Federal marketplace, DoD, GSA, and NASA are considering additional regulatory actions to further broaden the reach of accelerated payments to small business subcontractors and welcome public comment on how this broadening might best be accomplished. This proposed rule flows down the requirement for accelerated payments from the prime contractor to small business subcontractors; the accelerated payment requirement does not flow down to other than small businesses, i.e., large business subcontractors. As drafted, large business subcontractors in the supply chain are not required to receive accelerated payments, and therefore are not required to accelerate payments to their small business subcontractors.
Should the rule be expanded to apply the accelerated payment requirement to large business subcontractors in order to reach lower tier small business subcontractors? In other words, should all businesses, large and small, be directed to accelerate payment to their subcontractors, all the way down the tiers? What are the benefits, burdens, and unintended consequences, if any, of this type of expansion?
III. Applicability to Contracts at or Below the Simplified Acquisition Threshold SAT and for Commercial Items, Including Commercially Available Off-The-Shelf COTS Items This rule does not add any new solicitation provisions or clauses. This rule proposes to amend the following FAR clauses: 52.2125, Contract Terms and Conditions Required To Implement Statutes or Executive OrdersCommercial Items; 52.2134, Terms and Conditions-Simplified Acquisitions Other Than Commercial Items;
52.23240, Providing Accelerated Payments to Small Business Subcontractors; and 52.2446, Subcontracts for Commercial Items.
The FAR rule makes the 10 U.S.C.
2307 and 31 U.S.C. 3903 statutory changes to a requirement already applicable to contracts at or below the SAT and to contracts for the acquisition of commercial items, including COTS
items. The Federal Acquisition Regulatory Council FAR Council is
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