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Patrick Shanahan: DoD Rescinds Contractor Payment Proposal

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The Defense Department has decided to withdraw its proposed rule to regulate payments to contractors based on performance, Defense News reported Monday.

“Recently, proposed amendments to the Defense Federal Acquisition Regulation Supplement (DFARS) were prematurely released, absent full coordination,” Deputy Defense Secretary Patrick Shanahan wrote in a statement obtained by the publication.

Shanahan said DoD will work with industry to draft an updated rule to enforce section 831 of the fiscal 2017 National Defense Authorization Act.

Ellen Lord, defense undersecretary for acquisition and sustainment, said in a recent interview that the Pentagon plans to use performance payments as an incentive to contractors that meet the requirements under the proposed rule.

The report said the Professional Services Council, Aerospace Industries Association and the National Defense Industrial Association raised objections to the proposed policy.

DoD’s move came a week after Rep. Mac Thornberry (R-Texas) and Sen. Jim Inhofe (R-Okla.) wrote a letter to Shanahan expressing concerns over the proposed rule.