Bill would increase oversight of prime-subcontractor relations

The bill would pressure companies to keep a clean performance record by paying subcontractors on time

A prime contractor’s reputation could be tarnished if it fails to pay its subcontractors on time under a newly introduced bill.

Prime contractors would have to notify an agency’s contracting officer whenever they reduce payment to subcontractors or when they are three months late in paying them even though the government has paid for the services, according to the Small Business Revitalization Act (S. 2989), which was introduced Feb. 4.

If the payment delays happen, contracting officers would be required to consider the company’s failure to pay the subcontractors on time when evaluating the company's past performances as a government contractor, the bill states.


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Furthermore, contracting officers may require a company with a history of slow payments to subcontractors to enter into a funds control agreement so subcontractors would be paid, according to the bill.

An underlying reason for the bill is aiding small business in today’s economy. The bill's sponsor, Sen. Mary Landrieu (D-La.), chairwoman of the Senate Small Business and Entrepreneurship Committee, said government contracting is one of the easiest ways to increase sales for small businesses.

The legislation also makes sure small businesses are actually small. The bill would irrefutably presume that a company stole money from the United States if it lied about its size in order to be awarded a small-business set-aside contract. And a company is saying it is indeed a small business when a company bids or submits a proposal for a set-aside contract, the bill states.

The bill also would require annual certifications of a small business' size or status in the Small Business Administration’s Central Contractor Registration database or a similar database.

About the Author

Matthew Weigelt is a freelance journalist who writes about acquisition and procurement.

Reader Comments

Sun, Feb 14, 2010 Jaime Gracia Washington, DC

This is an important step in holding prime contractors accountable for the way they operate with their subcontractors. Getting paid on time is probably the most important issue for small businesses, as cash flow is king. However, primes often find excuses to not pay on time, usually claiming submission errors with invoices to reset the clock on when payment is due. Furthermore, the culture amongst government COTRs is one of indifference, and no legislation will change that. The current attitude is one of laissez faire, where subcontractors seemingly have no recourse as COTRs are indifferent and do not want to be bothered with issues in the prime-sub relationship. Of course, preventing large businesses from actually being awarded small business contracts is probably the biggest issue, as billions in contracts are improperly awarded every year. Changing culture and creating one of accountability are going to be success factors that will ultimately help legislation like this be successful.

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