In the past week, there were several important updates made to the Federal Acquisition Regulations (FAR) by the Department of Defense (DoD), General Services Administration (GSA), and the National Aeronautics and Space Administration (NASA).

Accelerated Payments Applicable to Contracts with Certain Small Business Concerns

On February 14, 2023, DoD, GSA, and NASA issued a final rule implementing Section 873 of the National Defense Authorization Act for Fiscal Year 2020 to provide for accelerated payments to small business contractors and subcontractors.

The final rule amends FAR 52.212-5, FAR 52.232-40, and FAR 52.244-6 to provide for accelerated payments to small businesses, defined as a “goal” of payment within 15 days of submission of a proper invoice.

The revised regulations say DoD will provide the following:

accelerated payments, to the fullest extent permitted by law, with a goal of 15 days after receipt of a proper invoice and all other required documentation, if a specific payment date is not established by contract, to—

(i)        Small business contractors; and

(ii)       Prime contractors that subcontract with a small business concern, if the prime contractor agrees to make payments to the small business subcontractor within 15 days of receiving the accelerated payment from the Government, after receipt of a proper invoice and all other required documentation from the small business subcontractor, to the maximum extent practicable, without any further consideration from or fees charged to the subcontractor.

These revisions might result in faster payment to small businesses that are either prime contractors on DoD contracts or subcontractors to prime contractors on DoD contracts.

Federal Acquisition Regulation: Small Business Program Amendments

On February 14, 2023, DoD, GSA, and NASA also issued a final rule amending the FARs to implement several changes made to Small Business Administration (SBA) regulations.

The final rule amends several solicitation provisions and contract clauses at FAR 52.204-8, 52.212-1, 52.212-5, 52.219-1, 52.219-18, and 52.219-28.

The changes include:

• Clarify that SBA will determine the size status of a small business, including its affiliates, as of the date the small business represents that it is small as part of its initial offer, which includes price;
• Clarify that when an agency uses a solicitation for a multiple-award contract that does not require offers for the contract to include price, SBA will determine the size of a small business as of the date of initial offer for the multiple-award contract, whether or not the offer includes price or the price is evaluated;
• Add new grounds for size protests on HUBZone, WOSB or EDWOSB, and SDVOSB awards based on an allegation that a contractor is unduly reliant on a small, non-similarly situated entity subcontractor or if such subcontractor performs the primary and vital requirements of the contract (the “ostensible subcontractor rule”);
• Clarify that, if a multiple-award contract was totally set aside for small business, contracting officers may also set aside orders under that contract for any of the small business socioeconomic programs; and
• For contracts longer than five years, require 8(a) participants to be an SBA-certified 8(a) participant prior to exercise of the sixth or subsequent option year of the contract.

These revisions conform the FARs to the revisions made to SBA’s regulations in SBA’s final rule published on November 29, 2019. These changes will hopefully clarify any inconsistencies between the FARs and SBA’s regulations, and reduce confusion for contracting officers and 8(a) entities.

This article summarizes aspects of the law and does not constitute legal advice. For legal advice for ‎your situation, you should contact an attorney.