Determining how to enter the Federal government marketplace for the first time is a challenging process for any company. As such, many companies find subcontracting to a government prime contractor to be the most effective method, as well as the path of least resistance. While this method can be an excellent option for companies new to the Federal marketplace, it can also come with difficulties. One of the most common complaints among government prime subcontractors revolves around late payments.
While not being paid on time is a grievance for any company, it can be especially troubling for a small business where reserves are limited. Delayed payments by government primes has proven such a significant problem, that the Office of Management and Budget (OMB) and the Federal Acquisition Regulatory Council have recommended official wording be added to the FAR clauses to cover prompt payment policies. The DOD has already added a clause to their contracts requiring contractors make accelerated payments to small business subcontractors after they have receipt of invoice. The goal is to have payments in the hands of small businesses within 15 days of receiving the invoice. The OMB has warned that timely payment of subcontractors will be a factor in future contract awards.
