Subcontractor Payment Protection Act

Summary: Subcontractor Payment Protection Act - Requires modification of the Federal Acquisition Regulation issued under the Office of Federal Procurement Policy Act to prescribe guidelines for contracts between a prime contractor and subcontractor with respect to timely payment.

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Subcontractor Payment Protection 
Act''.

SEC. 2. PAYMENT PROTECTIONS FOR SUBCONTRACTORS.

    (a) Modifications to FAR.--The Federal Acquisition Regulation 
issued under section 25(c)(1) of the Office of Federal Procurement 
Policy Act (41 U.S.C. 421(c)(1)) shall be modified to address the 
matters described in subsection (b).
    (b) Matters To Be Addressed.--The modifications required by 
subsection (a) shall, with respect to contracts entered into with the 
United States, require--
            (1) a prime contractor (other than a construction 
        contractor subject to the provisions of sections 3903(b) and 
        3905 of title 31, United States Code) to include in the 
        contractor's contractual agreement with each of the 
        contractor's subcontractors (including suppliers) a payment 
        provision which--
                    (A) specifies a payment term pursuant to which the 
                subcontractor may calculate a payment due date;
                    (B) requires the prime contractor to give written 
                notice to the subcontractor within 7 days of any event 
                which will delay payment to the subcontractor in 
                accordance with the subcontract payment term 
                established pursuant to subparagraph (A);
                    (C) requires the prime contractor to pay a 
                subcontractor an interest penalty on the amounts due in 
                the case of each payment not made in accordance with 
                the payment term established pursuant to subparagraph 
                (A)--
                            (i) for the period beginning on the day 
                        after the required payment date and ending on 
                        the date on which payment of the amount due is 
                        made; and
                            (ii) computed at the rate specified by 
                        section 3902(a) of title 31, United States 
                        Code;
            (2) a prime contractor (other than a construction 
        contractor subject to the provisions of sections 3903(b) and 
        3905 of title 31, United States Code) to submit, along with a 
        request to the United States for payment--
                    (A) in the case of a contractor which is a small 
                business concern, a certification that, to the best of 
                the contractor's knowledge and belief, payments will be 
                made to each subcontractor in accordance with the 
                subcontract agreement from the proceeds of the payment 
                covered by the certification and payments to 
                subcontractors have been made from previous payments 
                received from the United States; and
                    (B) in the case of a contractor which is not a 
                small business concern, a certification that, to the 
                best of the contractor's knowledge and belief, payments 
                have been made to each subcontractor in accordance with 
                the subcontract agreement prior to the submission of 
                the contractor's payment request to the United States 
                which includes an amount for such subcontractor;
            (3) information to be furnished to a subcontractor, upon a 
        written or oral request of the subcontractor, regarding 
        payments made to the prime contractor by the United States, 
        subject to the limitation of section 552(b)(1) of title 5, 
        United States Code;
            (4) a contracting officer, upon receipt of a credible 
        allegation, to make inquiries--
                    (A) with respect to a construction contract, 
                regarding whether the contractor has made payments to 
                the subcontractor in conformity with chapter 39 of 
                title 31, United States Code;
                    (B) with respect to a contract other than a 
                construction contract, regarding whether the contractor 
                has made payments to the subcontractor in compliance 
                with the terms of their subcontract; and
                    (C) regarding the validity of the required 
                certification regarding subcontractor payment 
                accompanying the contractor's payment request to the 
                United States;
            (5) the contracting officer, upon determining that the 
        prime contractor is not in compliance with a requirement 
        referred to in subparagraph (A) or (B) of paragraph (4), to 
        take action to--
                    (A) encourage the contractor to make timely payment 
                to the subcontractor;
                    (B) provide for the disbursement of amounts which 
                the contractor has certified as being due to such 
                subcontractor directly to the United States or through 
                a federally insured bank acting as an escrow agent;
                    (C) reduce or suspend progress payments with 
                respect to amounts due the prime contractor; or
                    (D) any combination of the measures described in 
                subparagraphs (A), (B), and (C), and such other 
                remedial measures as the contracting officer deems 
                appropriate to encourage the contractor to comply with 
                the contractor's obligations regarding timely payment 
                of subcontractors; and
            (6) the contracting officer, upon determining that the 
        contractor is not in compliance with certification requirement 
        referred to in paragraph (2), to initiate appropriate 
        administrative remedial action (including suspension procedures 
        pursuant to section 9.4 of the Federal Acquisition Regulation).
    (c) Deadline.--Proposed regulations containing the modifications to 
the Federal Acquisition Regulation required under this Act shall be 
issued not later than 180 days after the date of the enactment of this 
Act. Final regulations containing the modifications to the Federal 
Acquisition Regulation required under this Act shall be issued not 
later than 270 days after the date of the enactment of this Act.