Agencies told to ensure subcontractors get prompt payments

Agencies have to pay their prime contractors promptly and, in turn, try to get the primes to make faster payments to their small-business subcontractors, and the Office of Management and Budget wants to see their progress.

OMB is requiring two reports—one in six months and the second report a year from now—to assess agencies’ work to get money into the hands of subcontractors faster, according to a memo released July 11.

The reports have three aspects:

First, OMB wants to know about agencies’ progress on accelerating prompt payments to all prime contractors. Since September, the administration has had the government working to pay prime contractors in 15 days, instead of 30 days. Officials hope to push the quicker cash flow down further into the business chain. They want the new policy to help out small subcontractors by having prime contractors pay them faster.

Agencies will also have to report on how their 25 largest prime contractors have incorporated the prompt subcontractor payment policy into their contracts with small businesses.

Finally, OMB wants to know of any other policies agencies have put in place to carry out the intent of the initiative.

Government officials want to help small businesses caught in the tough economic situation. In September 2011, President Barack Obama set up the initial Quick Pay plan. The point was to pay small prime contractors sooner. Karen Mills, administrator of the Small Business Administration, said July 11 the Quick Pay plan has helped small companies with cash flow and getting enough resources to begin new projects.

Now, the Obama administration expanded the Quick Pay policy with a focus on subcontractors. With that in mind, administration officials are seeking to help out the next tier of small businesses.

“This policy will have a real impact on small businesses across the country to do business with the federal government. It will get money into their hands faster,” Jeffrey Zients, acting OMB director, said July 11.

About the Author

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

FCW in Print

In the latest issue: Looking back on three decades of big stories in federal IT.


  • Anne Rung -- Commerce Department Photo

    Exit interview with Anne Rung

    The government's departing top acquisition official said she leaves behind a solid foundation on which to build more effective and efficient federal IT.

  • Charles Phalen

    Administration appoints first head of NBIB

    The National Background Investigations Bureau announced the appointment of its first director as the agency prepares to take over processing government background checks.

  • Sen. James Lankford (R-Okla.)

    Senator: Rigid hiring process pushes millennials from federal work

    Sen. James Lankford (R-Okla.) said agencies are missing out on younger workers because of the government's rigidity, particularly its protracted hiring process.

  • FCW @ 30 GPS

    FCW @ 30

    Since 1987, FCW has covered it all -- the major contracts, the disruptive technologies, the picayune scandals and the many, many people who make federal IT function. Here's a look back at six of the most significant stories.

  • Shutterstock image.

    A 'minibus' appropriations package could be in the cards

    A short-term funding bill is expected by Sept. 30 to keep the federal government operating through early December, but after that the options get more complicated.

  • Defense Secretary Ash Carter speaks at the TechCrunch Disrupt conference in San Francisco

    DOD launches new tech hub in Austin

    The DOD is opening a new Defense Innovation Unit Experimental office in Austin, Texas, while Congress debates legislation that could defund DIUx.

Reader comments

Mon, Jul 16, 2012 Peter G. Tuttle, CPCM

Want to ensure that primes pay their subcontractors in a timely manner? Make that an evaluation factor in soliciations - perhaps ask a question as part of the past performance (risk) factor. Once a few primes get dinged for sloppy or unfair business practices with their subs, perhaps you'll see a change. A well-placed comment on the subject in PPIRS (or whatever ePast Performance system is available) would have a similar effect. Anything that actually may impact obtaining future business and revenue will be taken seriously.

Please post your comments here. Comments are moderated, so they may not appear immediately after submitting. We will not post comments that we consider abusive or off-topic.

Please type the letters/numbers you see above

More from 1105 Public Sector Media Group