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Pheniece Jones 
Director, Media Relations 

PSC Applauds Final Rule on Accelerated Payments to Small Business Contractors

Arlington, Va. (Feb. 14, 2023) The Professional Services Council (PSC) welcomed FAR Council action to finalize a rule that provides accelerated payments to small business government contractors. The final rule, published in the Federal Register, requires agencies to establish an accelerated payment date for small business prime and subcontractors with a goal of 15 days after receipt of a proper invoice, when certain conditions are met.  

“Timely payments are a critical lifeline for small businesses working in the federal marketplace,” said Stephanie Sanok Kostro, PSC Executive Vice President for 
PSC Applauds Final Rule on Accelerated Payments to Small Business ContractorsPolicy. “Implementation of this rule will help small businesses with access to capital and the payment predictability needed to finance daily operations and invest in growth.”

This Congressional action aimed to ensure that small businesses who work as prime and sub-tier contractors are paid in a timely manner for the goods and services provided. PSC proposed legislative language that led to the provision (section 852) in the John S. McCain National Defense Authorization Act for Fiscal Year 2019 (FY19 NDAA; Public Law 115-232) to accelerate payments for small businesses who support the department of Defense. PSC officials then worked to expand this provision government-wide in section 873 of the FY20 NDAA. 

In its comments on the FAR Council’s 2021 proposed rule on this topic, PSC highlighted this policy’s widespread, positive impacts on the government and the contractor community: 

First, small business primes and subcontractors often rely on a predictable, steady cash flow to finance their day-to-day operations, while concurrently investing in growth and job creation. Second, large primes depend on the small business subcontractors’ participation in the marketplace to maintain a healthy supply chain and meet the government’s small business goals. Finally, the government relies on a diverse business base to foster greater competition and drive down prices.

“Today’s final rule ensures that a small business who contracts with any federal agency can receive accelerated payments,” Kostro stated. “At the same time that the government and industry take necessary steps to encourage greater diversity within our nation’s business base, these policies help to promote a more effective, streamlined, and competitive federal contracting system for companies of all sizes.”