Sen. Elizabeth Warren (D-Mass.) has asked the Department of Defense (DoD) to answer some questions about the increased progress payment rates for contractors.
DoD released a memo in March that increases the progress payment rates to 90 percent for large businesses and to 95 percent for small businesses in an effort to ensure cash flow into the industrial base during the coronavirus pandemic.
“I am concerned that the change to the progress payments policy may be a cash subsidy that largely benefits big defense companies that can better withstand the economic shock caused by coronavirus … while leaving smaller, less financially resilient companies in the supply chain behind,” she wrote.
“Furthermore, I am skeptical as to whether large defense contractors will share these extra funds with their smaller supply chain partners in a timely fashion, and whether the Department will hold these industry giants accountable if they fail to do so.”
The lawmaker wants DoD to provide information on analyses conducted to determine if the increased progress payments are needed for national security purposes, metrics and reporting the department is requiring to assess how much funds are flowing from prime contractors to subcontractors and measures being implemented to ensure that large contractors support small vendors using the progress payments.
Warren asked Lord’s office to submit responses by May 15.