U.S. Rep. Brian Fitzpatrick (R-PA) recently introduced legislation that ensures federal contractors get paid in a timely manner for change orders on government jobs
The Small Business Payment for Performance Act would allow contractors to submit a request for equitable adjustment (REA) – or an increase in fee – to the agency. The contractor may then bill the agency for any actual change order work completed, while the REA is pending. Once the agency receives the REA, it must pay 50 percent of the billed amount immediately to offset extra costs. Currently, small businesses complete change orders without this protection.
“For small businesses, federal contracts can lead to good jobs, but can also result in many headaches,” Fitzpatrick said. “While businesses regularly deal with change orders in the private sector, contractors and subcontractors on federal construction projects are often forced to bear a financial burden by the slow process of approval. Some federal agencies routinely delay the approval process until the end of the project. That isn’t fair.”
Requiring federal agencies to make interim partial payments to contractors allows them to pay their bills without being delayed until the end of the project.
“When federal agencies request unexpected work, it often puts the burden of financing the change orders on the small business – including paying their employees, buying supplies and even paying taxes,” House Small Business Committee Chairman Steve Chabot said. “We need to ensure small business owners won’t be shackled with extra financial burdens while completing a project.”
Reps. Steve Knight (R-CA) and Stephanie Murphy (D-FL) are cosponsors on the bill.