Sequestration

Sequestration hinders DOD Quickpay plan

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Defense officials announced they are ending their own temporary efforts to accelerate payments to all prime contractors, according to a Feb. 25 Federal Register notice.

Sequestration is the cause.

"Yes, this is a direct result of the budget uncertainty DOD is facing with sequestration and the continuing resolution," a DOD spokeswoman said Feb. 25.

Joe Jordan, administrator of the Office of Federal Procurement Policy, said Feb. 25 that it's "unfortunate but understandable" based on DOD's budgetary unknowns.

Jordan, a long-time small business advocate, said OFPP would work with DOD to maximize contracting opportunities for small companies. Unfortunately, he said, "there is no amount of planning that will spare these innovative and entrepreneurial members of our government supply chain from the potentially devastating impacts that these across-the-board cuts will cause.”

A Feb. 21 defense acquisition memo gives notice that DOD will curtail the portion of its "Quickpay" initiative that extended accelerated payments to all prime contractors. The initiative was launched in September 2011. DOD set up policies to pay small companies within 15 days. Normally, if a bill is due in 30 days, DOD would hold it until the 30th day, or close to that.

In July 2012, OMB issued a memo, ensuring that prime contractors pay their small subcontractors faster. DOD extended Quickpay to all prime contractors, which resulted in a one-time decrease in cash as it paid more quickly.

Now though, DOD will return to the September 2011 guidance. Quickpay will available only for eligible small businesses.

The spokeswoman said the move should provide a one-time increase of several billion in the department's cash position.

"It's unfortunate that we have to take this step," but it is necessary, she said.

About the Author

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

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