Small Business Payment for Performance

Summary#

This bill amends section 15 of the Small Business Act to require interim partial payments for small businesses that hold federal construction contracts and request an equitable adjustment when a contracting officer directs a change in contract performance. A small business must timely submit a request and estimate the additional costs. After receiving that request, the agency must pay at least 50% of the estimated additional costs as an interim partial payment. The bill says the interim payment does not finalize or definitize the equitable adjustment request. It also requires recipients to pass the appropriate portions of interim payments down to first-tier subcontractors and for those subcontractors to pass amounts to lower-tier subcontractors. The Small Business Administration Administrator must put the new rule into effect by the earlier of the first day of the first full fiscal year after enactment or October 1, 2027.

What it means for you#

  • If you are a small business construction contractor on a federal contract: you can submit a timely request for an equitable adjustment when the contracting officer changes contract terms, and you can receive at least 50% of your estimated additional costs up front as an interim payment. That payment does not settle the full claim.
  • If you are a first-tier subcontractor: you must be paid the portion of any interim payment that covers the increased costs you incurred because of the change. Subcontractors at lower tiers should also be paid their appropriate portions.
  • If you work for a federal contracting agency: you must provide the interim partial payment after receiving a qualifying request and follow the flow-down payment rules.

Expenses#

The bill requires agencies to make interim partial payments equal to at least 50% of the estimated additional costs a contractor reports. No publicly available information on the total budgetary impact, overall federal costs, or administrative costs to implement these requirements is provided in the bill text or metadata.

Proponents' View#

The bill’s text and title show its purpose: to provide interim partial payments to small business construction contractors that request equitable adjustments when contracting officers direct changes to contract performance. Sponsors introduced the bill to add these payment and flow-down requirements to the Small Business Act.

Opponents' View#

No publicly available information on opponents' views or formal opposition is provided in the bill text or metadata.