On February 14, 2023, the Department of Defense (DoD), the General Services Administration (GSA), and the National Aeronautics and Space Administration (NASA) issued a final rule to amend the Federal Acquisition Regulation (FAR) to provide for accelerated payments to small business prime contractors and small business subcontractors.

This change aims to ensure that small business contractors and subcontractors are paid on time, which can help improve their cash flow and financial stability. Small businesses are likely to have lower cash reserves and less access to inexpensive credit when compared to large businesses.

Under the new rule, FAR 52.232-40, Providing Accelerated Payments to Small Business Subcontractors, will be amended to place this responsibility on the prime contractor. This means that if you are a prime contractor who has subcontracted with a small business, you must include this clause in your subcontract and make accelerated payments to your small business subcontractors if you receive accelerated payments from the government for the corresponding work. Read more here.

We recommend reviewing your contracts and making any necessary changes to ensure compliance with the new requirements. If you have any questions or concerns, please don’t hesitate to reach out to us! We can provide guidance and assistance to ensure your adherence to the updated rules.