{"id":42030,"date":"2018-12-19T14:30:40","date_gmt":"2018-12-19T14:30:40","guid":{"rendered":"https:\/\/one.sightlinemg.com\/defensenews\/uncategorized\/2018\/12\/19\/round-two-pentagon-tries-again-on-progress-payments-for-industry\/"},"modified":"2026-08-07T23:46:33","modified_gmt":"2026-08-07T23:46:33","slug":"round-two-pentagon-tries-again-on-progress-payments-for-industry","status":"publish","type":"post","link":"https:\/\/one.sightlinemg.com\/defensenews\/pentagon\/2018\/12\/19\/round-two-pentagon-tries-again-on-progress-payments-for-industry\/","title":{"rendered":"Round two: Pentagon tries again on progress payments for industry"},"content":{"rendered":"<figure class=\"wp-block-smg-jwplayer-video\"><atype-video-jwplayer nostick=\"true\" playlisturl=\"https:\/\/cdn.jwplayer.com\/v2\/playlists\/fCzRqMW8?tags=a0c2a845-7a7e-4069-b05d-d7efca75eb08\" poster=\"\/wp-content\/uploads\/2026\/08\/video-poster-a0c2a845-7a7e-4069-b05d-d7efca75eb08.jpg\" aspectratio=\"16 \/ 9\" mute autostart=\"false\"><\/atype-video-jwplayer><figcaption class=\"wp-element-caption\">In an interview with deputy editor Aaron Mehta, Undersecretary of Defense for Acquisition and Sustainment Ellen Lord provides an update on her office&#8217;s reorganization and the path ahead for acquisition reform.<\/figcaption><\/figure>\n\n\n<p class=\"wp-block-paragraph\">WASHINGTON \u2014 After an attempt <a href=\"https:\/\/www.defensenews.com\/pentagon\/2018\/10\/02\/facing-industry-pressure-pentagon-backs-off-contract-payment-changes\/\" target=\"_blank\">failed in October<\/a> to change how the Pentagon awards payments to industry, the department\u2019s top acquisition official is ready to try again.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Ellen Lord, undersecretary of defense for acquisition and logistics, told reporters Monday she intends to push forward with a revamped version of the <a href=\"https:\/\/www.defensenews.com\/pentagon\/2018\/09\/14\/pentagon-prepared-to-offer-industry-better-cash-flow-if-they-deserve-it\/\" target=_blank>progress and performance payments plan<\/a>, but this time will seek greater input from industry than the proposed rule that emerged over the summer.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">\u201cI think we went out with some ideas we had, perhaps a little prematurely, and we had not done the series of meetings that many of us wanted to do,\u201d Lord said of the now-scuttled proposed rule, which would have changed how companies receive their cash flow based on performance measurements.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">\u201cSo what we\u2019re trying to do is be very thoughtful and get all stakeholder input before we come up with a proposed rule and go into the formal rule-making process,\u201d she added.<\/p>\n\n\n\t<aside class=\"smg-interstitial-link wp-block-smg-interstitial-link\">\n\t\t<a href=\"https:\/\/one.sightlinemg.com\/defensenews\/industry\/2018\/09\/24\/defense-industry-fighting-dod-proposal-to-change-performance-payments\/\" class=\"smg-interstitial-link__inner\">\n\t\t\t\t\t\t\t<div class=\"smg-interstitial-link__media\">\n\t\t\t\t\t<img loading=\"lazy\" decoding=\"async\" width=\"300\" height=\"200\" src=\"https:\/\/one.sightlinemg.com\/wp-content\/uploads\/2026\/08\/LordResize.jpg.jpg?w=300\" class=\"smg-interstitial-link__image wp-post-image\" alt=\"\" \/>\t\t\t\t<\/div>\n\t\t\t\t\t\t<div class=\"smg-interstitial-link__content\">\n\t\t\t\t<span class=\"smg-interstitial-link__kicker\">Related<\/span>\n\t\t\t\t<h3 class=\"smg-interstitial-link__title\">Defense industry fighting DoD proposal to change performance payments<\/h3>\n\t\t\t\t\t\t\t\t\t<p class=\"smg-interstitial-link__excerpt\">DoD&#039;s Ellen Lord has a way to incentivize better contract performance, but industry is rebelling.<\/p>\n\t\t\t\t\t\t\t<\/div>\n\t\t<\/a>\n\t<\/aside>\n\t\n\n\n<p class=\"wp-block-paragraph\">The proposed rule from Lord first emerged late in the summer, and in a Sept. 5 interview with Defense News, she laid out the rationale, saying: \u201cI believe the lifeblood of most industry is cash flow, so what we will do is regulate the percentage of payments or the amount of profit that can be achieved through what type of performance they demonstrate by the numbers.\u201d<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">However, three major trade groups \u2014 the National Defense Industrial Association, the Professional Services Council and the Aerospace Industries Association \u2014 objected to the proposal. And on Sept. 21, Rep. Mac Thornberry, R-Texas, and Sen. Jim Inhofe, R-Okla., the chairs of the House and Senate Armed Services committees, <a href=\"https:\/\/www.defensenews.com\/congress\/2018\/09\/25\/lead-lawmakers-urge-dod-to-halt-new-payment-rule\/\" target=_blank>sent a letter<\/a> to Deputy Secretary of Defense Patrick Shanahan, calling the proposal \u201cfundamentally flawed&#8221; and asking that it be rescinded and revisited.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">On Oct. 1, Shanahan withdrew the proposed rule, later indicating to reporters that the A&amp;S office should never have put forth the rule in the first place.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">\u201cThey had an escape,\u201d Shanahan said Oct. 4. \u201cWe encourage employees to go as fast as possible and make as many changes as feasible. So when there\u2019s a failure in the process, we correct it.\u201d<\/p>\n\n\n\t<aside class=\"smg-interstitial-link wp-block-smg-interstitial-link\">\n\t\t<a href=\"https:\/\/one.sightlinemg.com\/defensenews\/pentagon\/2018\/10\/04\/pentagon-breakdown-led-to-industry-payments-rule-being-published-shanahan-says\/\" class=\"smg-interstitial-link__inner\">\n\t\t\t\t\t\t\t<div class=\"smg-interstitial-link__media\">\n\t\t\t\t\t<img loading=\"lazy\" decoding=\"async\" width=\"300\" height=\"188\" src=\"https:\/\/one.sightlinemg.com\/wp-content\/uploads\/2026\/08\/4754385.jpg.jpg?w=300\" class=\"smg-interstitial-link__image wp-post-image\" alt=\"\" \/>\t\t\t\t<\/div>\n\t\t\t\t\t\t<div class=\"smg-interstitial-link__content\">\n\t\t\t\t<span class=\"smg-interstitial-link__kicker\">Related<\/span>\n\t\t\t\t<h3 class=\"smg-interstitial-link__title\">Pentagon breakdown led to industry payments rule being published, Shanahan says<\/h3>\n\t\t\t\t\t\t\t\t\t<p class=\"smg-interstitial-link__excerpt\">The Pentagon killed a proposed change in how industry gets its cash. So what comes next?<\/p>\n\t\t\t\t\t\t\t<\/div>\n\t\t<\/a>\n\t<\/aside>\n\t\n\n\n<p class=\"wp-block-paragraph\">Speaking to reporters this week, Lord took the blame for the incident, saying: \u201cI take responsibility for any failure in A&amp;S, and I don\u2019t think we had done all of our homework before we went into the rule-making process. I hold myself accountable, and I\u2019m very involved with a wider team to make sure that we take everything into account.\u201d<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">This time around, she is launching a \u201clistening tour,\u201d including a recent meeting with NDIA on the issue.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">\u201cWe have multiple stakeholders. It\u2019s not just industry \u2014 from my point of view, I\u2019m interested in hearing what the investment community wants as well. There\u2019s also a [Government Accountability Office] report coming out. We want to be informed by that as well,\u201d Lord said. \u201cWe are looking and making sure we have checks and balances before anything goes into a rule-making process, and that we at the A&amp;S staff level discuss that in detail.\u201d<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Lord did not go into detail about what the new rule could look like, but reiterated a long-standing belief of hers \u2014 that the Pentagon needs to gather as much data as possible on its programs, including making sure industry and the department are using the same terminology when tracking data, in order to create a set of metrics showing how program are progressing.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Having those metrics, Lord says, would allow the Pentagon to create scorecards for each program through which planners can see where each stage of the process should be, both on time and cost, and adjust accordingly. But there, again, the A&amp;S team intends to have a dialogue with industry about how to make that work.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">\u201cWe have a whole series of levers right now we use with industry, and we want to make sure we\u2019re using those to our best mutual advantage, and we don\u2019t want to overexercise industry on reporting if it doesn\u2019t make sense and create value for both of us together,\u201d Lord said.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>After a failed attempt to change how the Pentagon pays contractors, Ellen Lord is retooling her approach.<\/p>\n","protected":false},"author":7,"featured_media":72321,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_yoast_wpseo_meta-robots-noindex":"","_yoast_wpseo_meta-robots-nofollow":"","_yoast_wpseo_canonical":"","_acf":"","_yoast_wpseo_primary_category":19,"_jetpack_feature_clip_id":0,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","_smg_distribution_targets":[]},"categories":[160,12,36,19],"tags":[],"coauthors":[3378],"class_list":["post-42030","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-daily-news-roundup","category-industry","category-newsletters","category-pentagon"],"acf":{"subheadline":"","legacy_arc_id":"WAT6QJOXNJEN3EWPKNNX5YN6EA","arc_canonical_url":"\/pentagon\/2018\/12\/19\/round-two-pentagon-tries-again-on-progress-payments-for-industry\/","remove_feature_photo":true,"is_sponsored":false,"subtype":"","redirect_url":"","disable_inline_ads":false,"native_logo_pretext":"Presented By:"},"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v26.0 (Yoast SEO v28.1) - https:\/\/yoast.com\/product\/yoast-seo-premium-wordpress\/ -->\n<title>Round two: Pentagon tries again on progress payments for industry - Defense News<\/title>\n<meta name=\"description\" content=\"After a failed attempt to change how the Pentagon pays contractors, Ellen Lord is retooling her approach.\" \/>\n<meta name=\"robots\" content=\"noindex, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Round two: Pentagon tries again on progress payments for industry\" \/>\n<meta property=\"og:description\" content=\"After a failed attempt to change how the Pentagon pays contractors, Ellen Lord is retooling her approach.\" \/>\n<meta property=\"og:url\" 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