Obama wants small businesses paid in 15 days

The government will be paying some small businesses in half the time under a new proposal by President Barack Obama.

Obama announced his new “QuickPay” plan on Sept. 14. It requires agencies to cut checks in 15 days, instead of 30 days, after they receive a valid invoice. The 15-day payments apply only to prime contractors.

“Today I’m ordering all federal agencies to make sure those small-business owners get paid a lot faster than they do now. In many cases, it will be twice as fast. So that puts more money in their pockets quicker, which means they can hire folks quicker,” Obama said Sept. 14 in Raleigh, N.C.

The plan goes into effect immediately.

The administration decided getting cash to companies is necessary in these economic times and moved the payment deadline under the Prompt Payments Act, Jacob Lew, director of the Office of Management and Budget, wrote in a memo released Sept. 14.

“When small contractors get their money in 15 days instead of 30, it results in a permanent infusion of cash flow into their businesses,” Small Business Administration Administrator Karen Mills said in a statement. “Their financial footing gets stronger — permanently.”

Lew is also telling agency officials that by November, they must tell OMB officials when they began paying small businesses in 15 days and the name of the federal official responsible for it.

The government awards nearly $100 billion annually in federal contracts to small firms, and sending money out quickly would help those companies in tough times, officials said.

Rep. Sam Graves (R-Mo.), chairman of the House Small Business Committee, applauded the president's new plan.

"Small businesses bring more competition and reduced prices to federal contracting, so we should make sure the federal government pays them in a timely manner, especially considering most of them are operating on tight profit margins and trying to do more with less," he said.

On Sept. 8, Obama said the government could help struggling small-business contractors by sending payments more quickly.

Joe Jordan, associate administrator of government contracting and business development at the SBA, said the 15-day mark benefits small businesses the most while not forcing agencies to change or modify their automated systems or processes.

“It really has a great confidence component," he said.

"By taking actions that will enable these payments to be made as promptly as possible, we will improve cash flow for small businesses and provide them with a more predictable stream of resources," Jeffrey Zients, chief performance officer and deputy director for management at OMB, wrote in a new post on OMB's blog.

About the Author

Matthew Weigelt is a freelance journalist who writes about acquisition and procurement.


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