DOD Requires Faster Payments to Subcontractors

October 16, 2012

Defense procurement officials have added a clause to their contracts to get prime contractors to pay their small subcontractors faster, an effort the Obama administration is pushing.

The clause requires contractors to make accelerated payments to small subcontractors after they have receipt of a proper invoice. The goal is to put money into the small firms’ hands within 15 days of receiving the invoice.

“This can lead to a stronger supplier base that supports federal prime contractors in meeting the needs of their federal customers in a timely and cost-effective manner,” Defense Department officials wrote in the Federal Register notice.

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