32.009
Providing accelerated payments to small business contractors and to prime contractors that subcontract with a small business concern
FAR 32.009 requires agencies to provide accelerated payments to small businesses and to prime contractors with small business subcontractors, typically within 15 days, to improve small business cash flow.
Overview
FAR 32.009 establishes requirements for providing accelerated payments to small business contractors and to prime contractors that subcontract with small business concerns. The regulation aims to improve cash flow for small businesses by ensuring that payments are made as quickly as possible, typically within 15 days of receipt of a proper invoice, provided all other payment terms are met. This section also requires the inclusion of a specific contract clause to enforce these accelerated payment terms. The rule applies to both direct contracts with small businesses and to prime contractors who have small business subcontractors, encouraging prompt payment throughout the supply chain.
Key Rules
- Accelerated Payments to Small Businesses
- Agencies must provide accelerated payments to small business contractors, generally within 15 days of receiving a proper invoice, if all other payment conditions are satisfied.
- Accelerated Payments to Prime Contractors with Small Business Subcontractors
- Prime contractors who subcontract with small businesses are also eligible for accelerated payments, provided the prime agrees to pass on the accelerated payment to the small business subcontractor.
- Contract Clause Requirement
- Contracts must include a clause mandating compliance with these accelerated payment provisions.
Responsibilities
- Contracting Officers: Ensure the appropriate contract clause is included and that payment processes support accelerated timelines.
- Contractors: Submit proper invoices and, if a prime, ensure accelerated payments are passed on to small business subcontractors.
- Agencies: Oversee compliance and facilitate prompt payment processing.
Practical Implications
- This section exists to support small business cash flow and encourage their participation in federal contracting.
- It impacts daily operations by requiring faster invoice processing and payment.
- Common pitfalls include failing to include the required clause or not passing on accelerated payments to small business subcontractors.