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The Department of Defense (DoD), the General Services Administration (GSA), and the National Aeronautics and Space Administration (NASA) issued a final rule on February 14, 2023, to provide for accelerated payments to small business government contractors and subcontractors. The rule, which will be effective from March 16, 2023, requires federal agencies to establish an accelerated payment date to pay small business contractors within 15 days after receiving a proper invoice if the contract does not include a specific payment date or term. In addition, contractors who subcontract with small businesses must make accelerated payments to subcontractors within 15 days after receipt of a proper invoice and (1) a specific payment date is not established by contract; and (2) the contractor agrees to make accelerated payments without further consideration from or fees charged to the subcontractor.

Expected results of this rule include improving the cash flow and access to the Federal marketplace for small businesses. In order to benefit the greatest number of small businesses, the Federal Acquisition Regulatory Council (FAR Council) has determined that the rule will apply to contracts including those at or below the Simplified Acquisition Threshold (SAT) and Commercial Products or Commercial Services, including Commercially Available Off-the-Shelf (COTS) items.

The rule also aligns FAR with Small Businesses Administration (SBA) regulations in several areas  including (i) the timing of determination of size status for multiple award contracts; (ii) the implementation of the “ostensible subcontractor rule” as grounds for socioeconomic status protest; (iii) prevention of exercise of options by contracting officers past the fifth year of long term 8(a) contracts if the contractor no longer qualifies for the 8(a) program; and (iv) defining the small business size standard for information technology value added resellers (VARs) under NAICS code 541519 as 150 employees, down from the previous 500 employee standard.

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