[Federal Register Volume 88, Number 134 (Friday, July 14, 2023)]
[Notices]
[Pages 45190-45191]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-14959]
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DEPARTMENT OF DEFENSE
Defense Acquisition Regulations System
[Docket Number DARS-2022-0012]
Department of Defense Contract Finance Study Follow-Up Activity
AGENCY: Defense Acquisition Regulations System, Department of Defense
(DoD).
ACTION: Request for information.
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SUMMARY: This notice requests input on improving the timeliness of
payments to defense subcontractors as a means of enhancing and securing
the financial health of these critical members of the Defense
Industrial Base, as well as attracting new entrants into the Defense
Industrial Base while retaining existing participants. Input is
solicited from the public, including companies currently participating
in the Defense Industrial Base as a prime contractor, subcontractor,
supplier, or vendor; as well as other interested parties.
DATES: Interested parties should submit written comments to the address
shown in the ADDRESSES section on or before September 12, 2023.
ADDRESSES: Submit comments in response to the questions provided below,
using either of the following methods:
[cir] Federal eRulemaking Portal: https://www.regulations.gov.
Search for ``Docket Number DARS-2022-0012.'' Select ``Comment'' and
follow the instructions to submit a comment. Please include your name,
company name (if any), and ``Docket Number DARS-2022-0012'' on any
attached document(s).
[cir] Email: [email protected]. Include
``DoD Contract Finance Study Follow-up Activity'' in the subject line
of the message.
Comments received generally will be posted without change to
https://www.regulations.gov, including any personal information
provided. To confirm receipt of your comment(s), please check https://www.regulations.gov, approximately two to three days after submission,
to verify posting.
FOR FURTHER INFORMATION CONTACT: Ms. Regina Bova, telephone 937-200-
4020.
SUPPLEMENTARY INFORMATION:
A. Background
The DoD Contract Finance Study, published in April 2023 and
available at https://www.acq.osd.mil/asda/dpc/pcf/finance-study.html,
was the first comprehensive contract finance study since publication of
the Defense Financial and Investment Review in June 1985. The DoD
Contract Finance Study concluded that, in the aggregate, the defense
industry is financially healthy, and that its financial health has
improved over time. However, the findings were not as auspicious when
specifically considering the supply base (the members of the Defense
Industrial Base operating as first-tier or lower-tier subcontractors
and suppliers). The DoD Contract Finance Study found that defense
subcontractors and suppliers generally do not receive favorable cash
flow benefits as consistently or to the same extent enjoyed by defense
prime contractors. This is a crucial finding, as the Government
Accountability Office (GAO) has noted estimates of 60 to 70% of defense
work being performed by subcontractors (GAO-11-61r). In response to the
findings of the DoD Contract Finance Study, the Department is
investigating ways to improve cash flow and payment timeliness for the
supplier base. Enhancements in this area would not only improve the
financial health of defense subcontractors and suppliers, but could
potentially assist in attracting new entrants into the Defense
Industrial Base, including at the supply chain level.
B. Areas of Interest
The Department is seeking input on the following questions, all of
which but one relate to Tenet 2 in the DoD Contract Finance Study
Report (see page 6 of the Report for the Summary Table identifying all
tenets). The Department anticipates requesting public comments on other
areas of the DoD Contract Finance Study in subsequent Federal Register
notices (e.g., responses to question 6.c. may inform further
exploration of Tenet 4).
1. What are your thoughts about extending the protections provided
by the Prompt Payment Act to subcontractors? Generally, the Prompt
Payment Act establishes payment due dates (in most cases, 30 days after
receipt of a proper invoice or after acceptance of the product or
service, whichever is later); establishes constructive acceptance
criteria for purposes of starting the ``interest clock''; and requires
payment of interest from the payment due date to the actual payment
date when payment is not made timely. (Reference: Tenet 2, Action 2a;
details available in the Study Report, Section 3, under the headings of
``Favorable Payment Terms and the Prompt Payment Act'' and ``Payment
Timeliness''; see pages 56-62.)
2. What are your ideas about how to improve the timeliness of
payments to subcontractors? (Reference: Tenet 2, Action 2b; details
available in the Study Report, Section 3, under the heading of
``Payment Timeliness''; see pages 60-62.)
3. Do you think it is necessary to improve the ability of
subcontractors to bring payment issues to the attention of the
Government contracting officer? If so, how can the Department
facilitate subcontractor reporting of nonpayment issues to the
cognizant contracting officer? (Reference: Tenet 2, Action 2d; details
available in the Study Report, Section 3, under the heading ``Oversight
[[Page 45191]]
Concerns and Recourse for Non-payment''; see pages 64-66.)
4. Please share your thoughts about how to improve the
implementation of the Executive Branch policy on accelerating payments
to small business subcontractors, which was originally laid out by
Office of Management and Budget memorandum M-12-16. (This policy is
currently implemented through Federal Acquisition Regulation (FAR)
clause 52.232-40, Providing Accelerated Payments to Small Business
Subcontractors.) What are your thoughts about the concerns laid out in
Section 4 of the Defense Contract Finance Study Report regarding
providing accelerated payments to small business contractors? For
example, on the potential effectiveness of expanding the flowdown of
52.232-40 to all subcontractors, rather than only small business
subcontractors? (Reference: Tenet 2, Action 2e; details available in
the Study Report, Section 4, under the heading ``FAR 52.232-40,
Providing Accelerated Payments to Small Business Subcontractors''; see
pages 76-78.)
5. Do you have any other ideas for improving payments to
subcontractors on DoD contracts? (Reference: Tenet 2.)
6. Please tell us about your business relationship to the areas of
interest enumerated above:
a. In what capacity are you commenting? If you are commenting on
behalf of a professional association or a company, what is the size
status (see FAR part 19) of your company (or for associations, member
companies) for the majority of your contracts and subcontracts? What is
your company's (or for associations, member companies') usual role or
position in the DoD supply chain? (For context, please see page 53 of
the Study Report, Section 3, ``Financing and Payment Policy Impacts to
Subcontractors,'' first paragraph.)
b. If you have experienced payment timeliness issues as a member of
the DoD supply chain, please provide insights into these experiences,
including your role or position in the DoD supply chain at the time,
the timeframe (when this occurred and how long it continued), and how
frequently such experiences occurred.
c. If you have experienced an inability to obtain financing as a
member of the DoD supply chain, please provide insights into these
experiences, including your role or position in the DoD supply chain at
the time, the timeframe, and how frequently such experiences occurred.
Authority: DoD Instruction 5000.35, Defense Acquisition Regulations
(DAR) System.
Jennifer D. Johnson,
Editor/Publisher, Defense Acquisition Regulations System.
[FR Doc. 2023-14959 Filed 7-13-23; 8:45 am]
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