Change to Prompt Payment Act

Defense Procurement and Acquisition Policy (DPAP) February 21, 2013 memo  stopped previous guidance that temporarily waived some cash management requirements of the Prompt Payment Act in an effort to pay Department of Defense (DoD) prime contractors within 15 days.  This means that DoD prime contractors and vendors will no longer receive accelerated payments in advance of the payment terms on their contracts.  However, DoD will continue efforts to accelerate payments to small business contractors.  Here is more information pertaining to DoD efforts to accelerate small business payments.

DFAS is currently updating its systems to make payments based on contract terms.  As each system is updated, payments will made by the due dates specified within the contract payment terms as long as each invoice is accompanied by proper documentation.  Below are some frequently asked questions.  Additional information will be added as it becomes available.

FAQs: Cash Management Requirements

What does this mean to me?
If you are a non-small business DoD contractor, you will receive payments by the due dates specified in your contract as long as your invoice is accompanied by the proper documentation.  If you are a small business contractor, DoD will continue efforts to accelerate your payments as long as the invoice is accompanied by the proper documentation.  More information on DoD efforts to accelerate payments to small business.

What requirements have been reinstituted?
The Prompt Payment Act (PPA) requires DFAS and other DoD agencies to generally pay contractors no earlier than seven days in advance of the traditional 30-day deadline. In July 2012, a temporary waiver of these requirements was put in place resulting in payments frequently being made within 15 days of invoice receipt.  The (DPAP) February 21, 2013 memo has canceled the temporary waiver of these requirements put in place in July 2012 meaning payments will revert to the previous payment deadline of no later than 30 days.

As a DoD contractor, what should I expect?
As a DoD contractor, you will continue to be able to view the status of any open invoices in myInvoice and WAWF.  If a proper invoice is received with all required supporting documents, you can expect to receive payment by the traditional 30-day deadline or by the payment terms in your contract.  Interest will continue to be disbursed per PPA guidelines.

I am a small business prime contractor.  Will DoD continue to support small business by sending payments faster? 
Yes.  Although the temporary waiver to accelerate all DoD payments has stopped, there is an exception for small businesses.  DoD will continue efforts to accelerate small business payments. Click for additional information on the systems that have been modified to accelerate small businesses and additional policy.

Is more information on the DPAP memo?
Here is the DPAP memo.

What defines “proper documentation?” How do I make sure DFAS has everything necessary to pay me on time?
The proper documentation for DFAS is a valid contract, invoice, receiving report and the necessary contract obligation (funding) posted within the proper accounting system.  The vendor can assist in providing valid invoices and following up with the correct point of contact (POC) identified in the contract for open receiving reports that have not been accepted.  DFAS must follow up with the proper budget office (Army, Navy, Air Force, Marines, Defense agency) when there are missing obligations (funding) within the accounting/entitlement system preventing the posting of open invoices and receiving reports.

I run a small business.  How do I know if DoD has my business size classified properly?
 To determine if your business is classified as a small business, contact your Contracting Officer Representative (COR) to determine business size classification.

Does this apply only to current contracts or will it also apply to future contracts as well?
 The DPAP memo applies to payments on all contracts both current and future.  The only exception now and in the future is for small businesses.  As stated before, DoD will continue efforts to accelerate payments to small businesses.