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A New Rule Designed to Assist Small Business Subcontractors

By Edward T. DeLisle & Amy Kirby on November 27, 2013
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On November 25th, the DOD, GSA and NASA issued a final rule incorporating a new clause into the FAR regarding accelerated payments to small business subcontractors on Government projects. The new rule, which takes effect December 26, 2013, requires large business prime contractors receiving accelerated payments from the Government to, in turn, accelerate payments to all of their small business subcontractors. The purpose of the new clause is to ensure that small business subcontractors are paid as promptly as possible.

The clause will be inserted into all new solicitations and resulting contracts issued after the effective date, including those contracts for the acquisition of commercial items. Unfortunately, the rule does not create any new remedies, where accelerated payments must be issued and they are not. Under such circumstances, the Government can discontinue accelerated payment to the prime contractor, but nothing more.

One interesting aspect of the new rule is that large business prime contractors cannot prevent their small business subcontractors from speaking to the contracting officer about the status of payment. Subcontract Agreements often state the exact opposite. Prime contractors typically do not want their subcontractors asking the contracting officers questions of any kind, let alone questions regarding payment. While this is certainly understandable, by virtue of the new rule, large business prime contractors will not have the same legal support for their position.

There’s not a lot to sink your teeth into here. However, the fact that small business subcontractors can go right to the contracting officer about payment issues without fear of legal retribution is at least something. If you have any questions about this, or other, aspects of the new rule, please contact us. The information contained above was reported yesterday by Law360.

Edward T. DeLisle is a Partner in the firm and a member of the Federal Contracting Practice Group.

Amy Kirby is an Associate in the firm’s Federal Practice Group.

Photo of Edward T. DeLisle Edward T. DeLisle

Edward T. DeLisle is Co-Chair of the Federal Contracting Group at Cohen Seglias Pallas Greenhall & Furman PC. He concentrates his practice in the areas of federal contracting, construction law, construction litigation and small business procurement and litigation. He has drafted and negotiated…

Edward T. DeLisle is Co-Chair of the Federal Contracting Group at Cohen Seglias Pallas Greenhall & Furman PC. He concentrates his practice in the areas of federal contracting, construction law, construction litigation and small business procurement and litigation. He has drafted and negotiated construction contracts, teaming agreements and joint venture agreements for subcontractors, contractors, developers and owners. Ed also actively monitors the progress of his client’s construction projects in order to safeguard those rights and remedies to which they are entitled.

Ed has been a frequent lecturer and author on issues of concern to the construction and federal contracting industries, and is a legal content contributor to both VetLikeMe and Onvia.

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Amy Kirby

Amy M. Kirby is an Associate in the Federal Construction Group and focuses her practice on government construction litigation. Amy’s practice includes a wide variety of federal construction matters. She provides support to clients during all stages of contract management from assisting with…

Amy M. Kirby is an Associate in the Federal Construction Group and focuses her practice on government construction litigation. Amy’s practice includes a wide variety of federal construction matters. She provides support to clients during all stages of contract management from assisting with the preparation of contract proposals through negotiating final contract close-out and beyond. Specifically, Amy assists clients with preparation of proposals and bids, as well as representing their interests related to pre and post award bid protests.

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  • Posted in:
    Government Contracts
  • Blog:
    Federal Construction Contracting Blog
  • Organization:
    Cohen Seglias Pallas Greenhall & Furman
  • Article: View Original Source

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