May 22, 2020
DoD to deliver $3B in accelerated contractor payments over coming weeks
Federal News Network, Jared Serbu and Scott Maucione, May 4, 2020
Pentagon says it’s made $1.2B in accelerated contract payments so far
Just over a month ago, the Pentagon told its contracting officers and contract administrators to boost the amount of money it pays vendors in the form of progress payments as one way to increase their cash flow amidst a sagging economy. And the dollars have indeed started flowing.
As of last week, DoD had made $1.2 billion in additional progress payments because of the higher rates — which rose from 80% to 90% of the total contract value for large companies, and from 90% to 95% in the case of small firms. Ellen Lord, the undersecretary of Defense for acquisition and sustainment told reporters she expected the figure to rise to $3 billion in “the next week or two.”
For context, the department’s outlays for contracts are about $25 billion in total during an average month, making the $3 billion in accelerated payments a not-insubstantial sum. Lord said the added progress payments happened across 1,400 separate contracts, mostly because of a mass-modification the Defense Contract Management Agency processed to boost payment rates.
However, one open question — in the case of large contracts — is how quickly bigger firms are passing the advance payments down through their supply chains. Those figures, Lord said, are more difficult to track.
“I believe that the major primes are flowing down. They’ve committed, but I always like to trust yet verify,” she said. “I encourage all of those companies to be as transparent and forthcoming as they can be because we have a responsibility to the taxpayer, as well as to the mid-tiers and the small companies, to make sure actions we take at the prime level do go down all the way through the chain. However, I need to rely on CEOs of major primes to come forth with that data.” READ MORE….
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