The Defense Department (DoD) is taking action to speed the pace of payments to its contractors amid the COVID-19 coronavirus pandemic, the Pentagon said on March 22.
According to DoD, the agency’s Under Secretary for Acquisition and Sustainment issued a memo stating that “once in contracts, the progress payment rate that contracts can get paid for will increase” from 80 percent to 90 percent for large businesses, and from 90 percent to 95 percent for small businesses.
“This is an important avenue where industry cash flow can be improved,” DoD said. In addition, the agency said it is accelerating payments through several means to prime contracts and directing prime contracts to expedite payments to subcontractors.”
“The Department continues to aggressively partner with the defense industry to mitigate impacts from COVID-19,” said DoD spokesman Lt. Col. Mike Andrews. In addition to the contract payment action, DoD issued a memo that defines the essentiality of the defense industrial base (DIB) workforce, which he said ensures that DIB critical employees can keep working.
He said DoD “is fully engaged with the interagency to leverage the Defense Production Act to help reinforce critical elements of the DIB. It is especially important to understand that during this crisis the DIB is vulnerable to adversarial capital, we need to ensure companies stay in business without losing their technology.”
He said DoD would be discussing that point in more detail this week.