Rule to Require Reporting of Untimely Subcontractor Payments

A proposed rule would amend the Federal Acquisition Regulation to require prime contractors to self-report reduced or untimely payments to small business subcontractors.

The rule would implement section 1334 of the Small Business Jobs Act of 2010 (PL 111-240), which requires contractors to notify the contracting officer in writing if the contractor pays a reduced price to a small business subcontractor, or if the contractor’s payment to a small business contractor is more than 90 days past due.

The rule would also require COs to record the identity of contractors with a history of late or reduced payments to small business subcontractors in the Federal Awardee Performance and Integrity Information System.

The new requirements would be added at FAR 42.1502 and FAR 42.1503, and implemented in a new clause at FAR 52.242-XX, Payments to Small Business Subcontractors (prescribed at proposed FAR 42.1504).

The rule would apply to prime contracts that require small business subcontracting plans, including contracts for commercial items and commercial-off-the-shelf items.

Comments on the proposed rule referencing FAR Case 2014-004 are due March 21, 2016. The text of the rule appears at 81 FR 3087.

About William Van Huis

Bill Van Huis is a Senior Writer/Analyst for Wolters Kluwer Law & Business who tracks and analyzes new regulations impacting federal government contracting. He also follows court decisions involving bid protests and contract disputes. You can find his work in WK publications like Government Contract Reports and the FAR and DFARS Matrix Tools. Bill is a Certified Professional Contracts Manager, and he has a law degree from Southern Illinois University, where he graduated summa cum laude. Prior to joining WK, Bill worked both inside and outside state and local government in the areas of procurement and municipal finance. Bill also worked as a staff attorney for the Illinois Supreme Court.
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