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 con-
tracts 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 sup-
pliers performing on contracts awarded by the United
States, and for other purposes.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ‘‘Subcontractor Pay-
ment Protection Act’’.
SEC. 2. PAYMENT PROTECTIONS FOR SUBCONTRACTORS.
(a) MODIFICATIONS TO FAR.—The Federal Acquisi-
tion 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 sub-
section (b).
(b) MATTERS TO BE ADDRESSED.—The modifica-
tions required by subsection (a) shall, with respect to con-
tracts entered into with the United States, require—
(1) a prime contractor (other than a construc-
tion 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 (includ-
ing suppliers) a payment provision which—
(A) specifies a payment term pursuant to
which the subcontractor may calculate a pay-
ment 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 sub-
contract 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 es-
tablished pursuant to subparagraph (A)—
(i) for the period beginning on the day
after the required payment date and end-
ing 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 construc-
tion 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 be-
lief, payments will be made to each subcontrac-
tor in accordance with the subcontract agree-
ment from the proceeds of the payment covered
by the certification and payments to sub-
contractors have been made from previous pay-
ments 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 be-
lief, payments have been made to each sub-
contractor in accordance with the subcontract
agreement prior to the submission of the con-
tractor’s payment request to the United States
which includes an amount for such subcontrac-
tor;
(3) information to be furnished to a subcontrac-
tor, upon a written or oral request of the sub-
contractor, regarding payments made to the prime
contractor by the United States, subject to the limi-
tation of section 552(b)(1) of title 5, United States
Code;
(4) a contracting officer, upon receipt of a cred-
ible allegation, to make inquiries—
(A) with respect to a construction contract,
regarding whether the contractor has made pay-
ments 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 sub-
contractor 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 contrac-
tor; or
(D) any combination of the measures de-
scribed in subparagraphs (A), (B), and (C), and
such other remedial measures as the contract-
ing officer deems appropriate to encourage the
contractor to comply with the contractor’s obli-
gations regarding timely payment of sub-
contractors; and
(6) the contracting officer, upon determining
that the contractor is not in compliance with certifi-
cation 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 re-
quired 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 is-
sued not later than 270 days after the date of the enact-
ment of this Act.
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