{"id":32785,"date":"2018-10-02T01:49:39","date_gmt":"2018-10-02T01:49:39","guid":{"rendered":"https:\/\/one.sightlinemg.com\/federaltimes\/uncategorized\/2018\/10\/02\/facing-industry-pressure-pentagon-backs-off-contract-payment-changes\/"},"modified":"2026-08-08T00:02:44","modified_gmt":"2026-08-08T00:02:44","slug":"facing-industry-pressure-pentagon-backs-off-contract-payment-changes","status":"publish","type":"post","link":"https:\/\/one.sightlinemg.com\/federaltimes\/govcon\/2018\/10\/02\/facing-industry-pressure-pentagon-backs-off-contract-payment-changes\/","title":{"rendered":"Facing industry pressure, Pentagon backs off contract payment changes"},"content":{"rendered":"\n<p class=\"wp-block-paragraph\">WASHINGTON \u2013 Following a <a href=\"https:\/\/www.defensenews.com\/industry\/2018\/09\/24\/defense-industry-fighting-dod-proposal-to-change-performance-payments\/\" target=\"_blank\">wave of criticism<\/a> from the defense industry and <a href=\"https:\/\/www.defensenews.com\/congress\/2018\/09\/25\/lead-lawmakers-urge-dod-to-halt-new-payment-rule\/\" target=\"_blank\">members of Congress<\/a>, the Pentagon on Monday backed off proposed changes to how companies receive cash flow on their contracts.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">In a statement released at the unusual time of 7:19 PM, Deputy Secretary of Defense Patrick Shanahan said the decision to withdraw the proposed acquisition changes stemmed from a lack of \u201ccoordination\u201d inside the department.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">\u201cRecently, proposed amendments to the Defense Federal Acquisition Regulation Supplement (DFARS) were prematurely released, absent full coordination,\u201d Shanahan\u2019s statement read. \u201cAs a result, the Department will rescind the proposed amendments. In coordination with industry, the Department will create a revised rule to implement section 831 of the FY2017 NDAA.\u201d<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">&#8220;The department will continue to partner closely with Congress and industry to examine all reform opportunities, ensuring we provide the best value to taxpayers and critical capabilities to military personnel who defend this great Nation,\u201d Shanahan said.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Unsaid in the statement: that since word of the proposed changes got out, the defense industry has been loud and unanimous in its opposition, and has enlisted its supporters on the Hill to help fight against the plan, put forth by Undersecretary of Defense for Acquisition and Sustainment Ellen Lord.<\/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\/09\/14\/pentagon-prepared-to-offer-industry-better-cash-flow-if-they-deserve-it\/\" 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\">Pentagon prepared to offer industry better cash flow \u2013 if they deserve it<\/h3>\n\t\t\t\t\t\t\t\t\t<p class=\"smg-interstitial-link__excerpt\">How do you get the defense industry to work smarter? Ellen Lord has an idea.<\/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\">As part of a broader set of changes to the acquisition rules, Lord hoped to change how companies receive their cash flow based on performance measurements, to act as an incentive for good behavior.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">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, Professional Services Council and the Aerospace Industries Association \u2014 objected to the proposal, which would slash the payments on work to be performed from 80 percent to 50 percent, with incremental increases for maintaining quality or on-time delivery \u2014 and decreases for companies that have committed fraud.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Rep. Mac Thornberry, R-Texas, and Sen. Jim Inhofe, R-Okla., the chairs of the House and Senate Armed Services Committees, sent a Sept. 21 letter to 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\">\u201cWe should not make it <a href=\"https:\/\/www.defensenews.com\/pentagon\/2018\/10\/01\/dod-hands-out-754-billion-in-year-end-contract-bonanza\/\" target=_blank>harder to do business<\/a> with the Department of Defense than it is to do business with other parts of government \u2014 and that\u2019s exactly what this regulation does,\u201d Thornberry told reporters last Tuesday. \u201cWe try to streamline acquisition, we try to make it easier to do business with these small companies; and then something like this comes out.\u201d<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">The Pentagon had hoped to implement the rule changes by the end of the year and had planned to hold a public meeting on Oct. 10, before the public comment period ended on Oct. 23. Whether that event will still happen is unclear.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>The Pentagon had proposed changing how industry receives its cash flow.<\/p>\n","protected":false},"author":7,"featured_media":69354,"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":12,"_jetpack_feature_clip_id":0,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","_smg_distribution_targets":[]},"categories":[104,106,12,31,33],"tags":[],"coauthors":[3277,3334],"class_list":["post-32785","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-acquisition-update","category-daily-brief","category-govcon","category-home","category-newsletters"],"acf":{"subheadline":"","legacy_arc_id":"NPVRR63LL5GKHIE2Q5AY7S4EMU","arc_canonical_url":"\/pentagon\/2018\/10\/02\/facing-industry-pressure-pentagon-backs-off-contract-payment-changes\/","remove_feature_photo":false,"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>Facing industry pressure, Pentagon backs off contract payment changes - Federal Times<\/title>\n<meta name=\"description\" content=\"The Pentagon had proposed changing how industry receives its cash flow.\" \/>\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=\"Facing industry pressure, Pentagon backs off contract payment changes\" \/>\n<meta property=\"og:description\" content=\"The Pentagon had proposed changing how industry receives its cash flow.\" \/>\n<meta property=\"og:url\" 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