I

103D CONGRESS

2D SESSION H. R. 4171

To require modification of the Federal Acquisition Regulation to provide

for timely payment of subcontractors and suppliers performing on contracts awarded by the United States, and for other purposes.

IN THE HOUSE OF REPRESENTATIVES

APRIL 12, 1994

Mr. MACHTLEY (for himself and Mrs. MEYERS of Kansas) introduced the

following bill; which was referred to the Committee on Government Operations

A BILL

To require modification of the Federal Acquisition Regulation

to provide for timely payment of subcontractors and suppliers performing on contracts awarded by the United

States, and for other purposes.

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled,

3 SECTION 1. SHORT TITLE.

4 This Act may be cited as the ‘‘Subcontractor Pay5 ment Protection Act’’.

6 SEC. 2. PAYMENT PROTECTIONS FOR SUBCONTRACTORS.

7 (a) MODIFICATIONS TO FAR.—The Federal Acquisi8 tion Regulation issued under section 25(c)(1) of the Office
2

•HR 4171 IH

1 of Federal Procurement Policy Act (41 U.S.C. 421(c)(1))

2 shall be modified to address the matters described in sub3 section (b).

4 (b) MATTERS TO BE ADDRESSED.—The modifica5 tions required by subsection (a) shall, with respect to con6 tracts entered into with the United States, require—

7 (1) a prime contractor (other than a construc8 tion contractor subject to the provisions of sections

9 3903(b) and 3905 of title 31, United States Code)

10 to include in the contractor’s contractual agreement

11 with each of the contractor’s subcontractors (includ12 ing suppliers) a payment provision which—

13 (A) specifies a payment term pursuant to

14 which the subcontractor may calculate a pay15 ment due date;

16 (B) requires the prime contractor to give

17 written notice to the subcontractor within 7

18 days of any event which will delay payment to

19 the subcontractor in accordance with the sub20 contract payment term established pursuant to

21 subparagraph (A);

22 (C) requires the prime contractor to pay a

23 subcontractor an interest penalty on the

24 amounts due in the case of each payment not
3

•HR 4171 IH

1 made in accordance with the payment term es2 tablished pursuant to subparagraph (A)—

3 (i) for the period beginning on the day

4 after the required payment date and end5 ing on the date on which payment of the

6 amount due is made; and

7 (ii) computed at the rate specified by

8 section 3902(a) of title 31, United States

9 Code;

10 (2) a prime contractor (other than a construc11 tion contractor subject to the provisions of sections

12 3903(b) and 3905 of title 31, United States Code)

13 to submit, along with a request to the United States

14 for payment—

15 (A) in the case of a contractor which is a

16 small business concern, a certification that, to

17 the best of the contractor’s knowledge and be18 lief, payments will be made to each subcontrac19 tor in accordance with the subcontract agree20 ment from the proceeds of the payment covered

21 by the certification and payments to sub22 contractors have been made from previous pay23 ments received from the United States; and

24 (B) in the case of a contractor which is not

25 a small business concern, a certification that, to
4

•HR 4171 IH

1 the best of the contractor’s knowledge and be2 lief, payments have been made to each sub3 contractor in accordance with the subcontract

4 agreement prior to the submission of the con5 tractor’s payment request to the United States

6 which includes an amount for such subcontrac7 tor;

8 (3) information to be furnished to a subcontrac9 tor, upon a written or oral request of the sub10 contractor, regarding payments made to the prime

11 contractor by the United States, subject to the limi12 tation of section 552(b)(1) of title 5, United States

13 Code;

14 (4) a contracting officer, upon receipt of a cred15 ible allegation, to make inquiries—

16 (A) with respect to a construction contract,

17 regarding whether the contractor has made pay18 ments to the subcontractor in conformity with

19 chapter 39 of title 31, United States Code;

20 (B) with respect to a contract other than

21 a construction contract, regarding whether the

22 contractor has made payments to the sub23 contractor in compliance with the terms of their

24 subcontract; and
5

•HR 4171 IH

1 (C) regarding the validity of the required

2 certification regarding subcontractor payment

3 accompanying the contractor’s payment request

4 to the United States;

5 (5) the contracting officer, upon determining

6 that the prime contractor is not in compliance with

7 a requirement referred to in subparagraph (A) or

8 (B) of paragraph (4), to take action to—

9 (A) encourage the contractor to make

10 timely payment to the subcontractor;

11 (B) provide for the disbursement of

12 amounts which the contractor has certified as

13 being due to such subcontractor directly to the

14 United States or through a federally insured

15 bank acting as an escrow agent;

16 (C) reduce or suspend progress payments

17 with respect to amounts due the prime contrac18 tor; or

19 (D) any combination of the measures de20 scribed in subparagraphs (A), (B), and (C), and

21 such other remedial measures as the contract22 ing officer deems appropriate to encourage the

23 contractor to comply with the contractor’s obli24 gations regarding timely payment of sub25 contractors; and
6

•HR 4171 IH

1 (6) the contracting officer, upon determining

2 that the contractor is not in compliance with certifi3 cation requirement referred to in paragraph (2), to

4 initiate appropriate administrative remedial action

5 (including suspension procedures pursuant to section

6 9.4 of the Federal Acquisition Regulation).

7 (c) DEADLINE.—Proposed regulations containing the

8 modifications to the Federal Acquisition Regulation re9 quired under this Act shall be issued not later than 180

10 days after the date of the enactment of this Act. Final

11 regulations containing the modifications to the Federal

12 Acquisition Regulation required under this Act shall be is13 sued not later than 270 days after the date of the enact14 ment of this Act.

Æ