Pentagon Begins Implementation of Increased Progress Payment Rates for Vendors

Lt. Col. Mike Andrews, a spokesman for the Department of Defense, said DoD has started implementing the increased progress payment rates for contractors and that the Defense Contract Management Agency has modified about 1,400 contracts to reflect the increased rates, Federal News Network reported Tuesday.

“We estimate this will result in over $3 billion in cash being flowed into industry,” said Andrews. “The department has high expectations that prime companies are ensuring cash flow is moving to small businesses in their respective supply chains who need it most.”

DoD issued a memo in March that increases the progress payment rates to 90 percent for large businesses and to 95 percent for small businesses in an effort to ensure cash flow into the industrial base.

Andrews noted that the Defense Finance and Accounting Services and DCMA are collaborating to ensure the Pentagon is preventing delays when it comes to paying contractor invoices.

Ellen Lord, defense undersecretary for acquisition and sustainment and a 2020 Wash100 award winner, also released a memo to broaden the use of other transaction authorities for prototype agreements and follow-on production contracts related to COVID-19 response programs.

DoD also issued a memo about equitable adjustments for vendors to help manage the potential impact of the COVID-19 pandemic on the performance, cost and schedule of defense contracts.

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