Department of State's Support of Accelerated Payments
The Administration is strongly committed to supporting small business growth and prosperity, as a catalyst to drive economic activity and job creation throughout the country. As part of this commitment, the Administration has taken steps to enhance small businesses' opportunities to contract with the Federal Government, as well as to ensure that the government promptly pays small businesses when they contract to provide goods and services to the government. Specifically, OMB issued Memorandum 11-32 in September 2011 accelerating payments to small business for goods and services. That memorandum established the Executive Branch policy that, to the full extent permitted by law, agencies should make their payments to small business contractors as soon as practicable, with the goal of making payments within 15 days of receipt of proper documents. Such acceleration helps to improve cash flow for small businesses, increases liquidity, unlocks capital for the purposes of investment and growth, and increases small business participation in Federal contracting.
In furtherance of this policy, and to sustain and increase small business participation in all levels of Federal contracting by improving cash flow, OMB recently established the policy that, to the full extent permitted by law, agencies should take the steps necessary to ensure that prime contractors are able to pay their small business subcontractors in a prompt fashion. In particular, to the full extent permitted by law, agencies should temporarily accelerate payments to all contractors, in order to allow them to provide prompt payments to small business subcontractors. Also, agencies should take steps to the full extent permitted by law, to ensure that prime contractors disburse the funds that they receive from the Federal Government to their small business subcontractors in a prompt manner. Full details can be found at:
In order to meet this goal we need to expedite the accurate approval and payment of all vendor invoices under this accelerated schedule. Centrally, The Bureau of the Comptroller and Global Financial Services (CGFS) will ensure invoices are received, entered in the system and forwarded to the appropriate bureau within 1 to 2 days of receipt. To meet the Administration’s accelerated payment goal, each bureau will need refocus its efforts and reduce its current 17 to 20 day review and approval period to 7 days. The implementation of the accelerated review and approval process must continue to ensure that payments are accurate and proper. Bureau Assistant Secretaries and Executive Directors have been notified of this change.
We are committed to work with you to meet this Administration mandate and realize that this is an enormous challenge for everyone involved in the Department’s payments process, particularly as we balance other priorities and work to ensure accurate payments across global operations. As we do all we can to accelerate payments, bureaus should in no way lessen or forego the required internal controls necessary to ensure that we only make proper payments. Also, this policy does not change the application of the Prompt Payment Act’s (PPA) requirement for late-payment interest penalty provisions if we do not make payment within 30 days from when we receive proper documentation.
In six months and again in a year, OMB will evaluate the progress agencies have made in ensuring payments on an accelerated schedule to all businesses. We are required to report to OMB our progress in making accelerated payments to all prime contractors; the progress of the agency's twenty-five largest prime contractors in incorporating prompt payment clause in their subcontracts with small businesses, and the progress of any other steps that we have taken to ensure that small business subcontractors are paid in a prompt manner.
For questions on accelerated commercial payments or any assistance in these matters, please contact Mike Washington, Director of Claims, at 843-202-3755.