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By Nick Wakeman

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Nick Wakeman

DOD cancels payment meeting, plans more outreach

It is no surprise but that Defense Department has cancelled a planned meeting with industry to discuss a new payment policy.

Earlier this week, DOD backed away from the policy and now as expected has cancelled the Oct. 10 meeting to discuss the rule.

DOD released a policy in August that would cut progress-based payments to 50 percent from 80 percent. The rule would take effect Jan. 1.

DOD's proposal went over like a lead balloon with industry and many parts of Capitol Hill. The push back was fast and furious with congressional leaders writing to the Pentagon that policy didn’t align with the 2017 National Defense Authorization Act.

Industry groups such as the Professional Services Council and the National Defense Industry Association also were very vocal in their opposition.

DOD heard them loud and clear, but Deputy Secretary of Defense Patrick Shanahan said the department would continue to work on the policy.

Shanahan said the policy is intended to implement section 831 of the 2017 NDAA and while he says work on that will continue, nothing has been said on how the work will move forward.

Rest assured that if DOD just drops a draft policy for comment without first having meaningful engagement with industry, more howls of protest will come from the likes of PSC and NDIA.

The withdrawal also may have saved DOD from a massive headache. The policy was to take effect Jan. 1 and would apply to solicitations released after that date. Companies are required to submit their justifications for next year’s payment rates on contracts by Dec. 1.

It seems highly unlikely that DOD could have implemented the rule in 2019 under that kind of constraint.

The question now is how will DOD engage industry and where will they go from here.

Posted by Nick Wakeman on Oct 03, 2018 at 1:12 PM

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