OMB waiver helps accelerate payments, helps small business

OMB’s July 11 memo temporarily waived some cash management requirements of the Prompt Payment Act in an effort to pay DoD prime contractors within 15 days. This will allow small business contractors and sub-contractors to receive payments earlier to help improve their cash flow, increase their business investment and growth, and encourage other small businesses to contract with the federal government.

DFAS is currently updating its systems to suspend the mandatory seven day restriction on payments. As each system is updated, payments will be accelerated as long as each invoice is accompanied by proper documentation.

Below are some frequently asked questions we’re receiving. Additional information will be added as it becomes available.

FAQs: Waiver of Cash Management Requirements 

Q1: What does the waiver mean to me?
A1: Many DoD contractors are small businesses or have sub-contractors who are small businesses. The Administration has temporarily waived some cash management requirements that delayed payments for goods and services. While these requirements were designed to ensure good stewardship of federal government funds, federal agencies such as DFAS have procedures to review documentation provided by contractors for accuracy and completeness. This means that invoices accompanied by proper documentation may be paid within 15 days. This will allow small business contractors and sub-contractors to receive payment promptly to improve their cash flow, increase investment and growth, and encourage small business to participate in contracting with the federal government.

Q2: What requirements have been waived?
A2:  The Prompt Payment Act requires DFAS and other federal agencies to  generally pay prime contractors no earlier than seven days in advance of the traditional 30-day deadline.  This ensures good stewardship necessary for  effective cash management practices as mandated by the PPA.  The OMB memo waives the PPA requirement that requires agencies to hold payment of an invoice, allowing for the acceleration of payments to all prime contractors. 

Q3: Why has this policy been waived temporarily?
A3:  This policy has been temporarily waived to provide for immediate assistance to small businesses, while affording agencies and prime contractors time to insert contract clauses.  Pursuant to the policy established in OMB Memorandum 11-32, federal agencies have already taken steps to accelerate payments to small business prime contractors.  To further this policy with respect to small businesses that are subcontractors, agencies are taking steps to ensure that prime contractors disburse the funds that they receive from the federal government to their small business subcontractors in a prompt manner. 

Q4: What is DFAS doing to implement this temporary waiver?
A4:  DFAS is taking immediate action within each system to begin sending invoice payments to be disbursed as soon as proper documentation is in place in which to make the payment.  

Q5: As a DoD contractor, what should I expect?
A5:  As a DoD contractor, you will continue to be able to view the status of any open invoices in myInvoice and WAWF.  If you are a prime contractor, you should anticipate earlier receipt of monies than had been scheduled in the past.  As stated above, if all of the necessary components are available to DFAS, payment will be made earlier than the PPA date.  Interest will continue to be disbursed per PPA guidelines.

Q6: As a DoD contractor, what should I do? Is there something I can do to get paid faster?
A6:  There is nothing additional that a vendor needs to do in order to facilitate this new process differently than was done in the past.  If an invoice has been submitted within WAWF and does not have a receiving report completed and accepted by the acceptor, the Receiving Report POC and/or the Contracting Officer on that contract may be contacted to ensure notification of an open invoice awaiting that critical document in order for DFAS to process the disbursement.

Q7: I am a small business sub-contractor. This accelerated payment effort is supposed to allow prime contractors to pay me faster as well. Is there any office or official I should contact if I am not paid promptly?
A7:  DFAS will expedite the invoice payments to the prime contractor.  If additional delays occur from the prime contractor, contact the Contracting Officer representative on the prime contract.

Q8: If DFAS does not issue payment within the 15 days, who do I call?
A8:  The DFAS goal will be to expedite all payments within 15 days if the necessary payment documents are available.  A first step towards ensuring that DFAS has the necessary documents to make a payment is to check that the receiving report POC has accepted the WAWF invoice.  If the invoice and receiving report are in WAWF, please contact the Customer Care Center identified within your contract.

Q9: Is more information on this waiver or DFAS’ procedures available?
A9: Content of the OMB memo and additional information in regards to the waiver can be found here.  If there are specific questions about payment due dates, receipt of proper documentation or DFAS’ efforts to implement this policy, please contact the Customer Care Center identified within your contract.    

Q10: What defines “proper documentation?” How do I make sure DFAS has everything necessary to pay me within their 15-day target?
A10:  The proper documentation for DFAS is a valid contract, invoice, receiving report and the necessary contract obligation (funding) posted within the proper accounting system.  The vendor can assist in providing valid invoices and following up with the correct POC identified in the contract for open receiving reports that have not been accepted.  DFAS must follow up with the proper budget office (Army, Navy, Air Force, Marines, Defense agency) when there is missing obligations (funding) within the accounting/entitlement system preventing the posting of open invoices and receiving reports.

Q11: Will the anticipated pay dates within myInvoice reflect your accelerated payment procedures? How accurate are those dates for DFAS actually issuing payments?
A11:  The anticipated pay dates within myInvoice will reflect the due dates based on the PPA relevant dates on the invoice.  DFAS will be working to accelerate those due dates, but the ‘due dates’ will not reflect differently within myInvoice.  

Q12: The OMB memo encourages federal agencies to pay invoices within 15 days. Will DFAS be able to comply with this goal? Are these 15 calendar days or business days?
A12:  The 15 day goal identified in the OMB memo refers to 15 calendar days from the receipt of proper documentation.  DFAS is developing an implementation plan by payment system in order to comply with the OMB mandate.  If proper documentation is provided in a timely manner, DFAS will be able to comply with the 15 day goal set forth by OMB.

Q13: Does this apply only to small businesses and how can I know if I’m classified as a small business?
A13: No, this memo applies to all business size classifications.   To determine if you are classified as a small business, the contractor should contact their Contracting Officer Representative (COR) to determine their business size classification.  

Q14: Does this apply only to current contracts or will it also apply to future contracts as well?
A14:  The OMB memo applies to payments on all contracts both current and future.

Q15: Will we be paid interest if not paid within 15 days?
A15:  No, interest will not be paid unless the payment goes beyond the contractual terms.