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Advocacy Article

OMB is extending for a year a policy of encouraging federal agencies to accelerate payment to small business subcontractors. The temporary policy was set to expire on July 11, 2013, and now will expire on July 11, 2014

On July 11, 2012, OMB issued Memorandum M-12-16, “Providing Prompt Payment to Small Business Subcontractors,” to improve cash flow for small businesses and increase small business participation in all levels of Federal contracting.  Memorandum M-12-16 establishes the Executive Branch policy that agencies should, to the full extent permitted by law, temporarily accelerate payments to all prime contractors – with a goal of paying them within 15 days of receipt of proper invoices – in order to allow them to provide prompt payments to small business subcontractors. In response to this policy, agencies have temporarily accelerated payment to their prime contractors and incorporated clauses in their contracts requiring prime contractors to accelerate payments to their small business subcontractors when they receive accelerated payments from the government.

This extension will allow OMB and agencies to continue to evaluate the impact of accelerated payment on small business subcontractors.