Pentagon Reinstates Pre-Pandemic Progress Payment Rate for Large Businesses

The Department of Defense has moved to update the rates of progress payments meant to help defense contractors mitigate the impacts of the COVID-19 pandemic.

In March 2020, DOD issued a memo that increases the progress payment rates for large businesses from 80 percent to 90 percent and from 90 percent to 95 percent for small businesses as part of efforts to ensure cash flow into the industrial base during the health crisis.

The principal director of defense pricing and contracting issued the update saying DOD will retain the 95 percent accelerated payment rate for small enterprises and implement the pre-pandemic rate of 80 percent for large contractors, the department said Monday.

According to the Pentagon, the 80 progress payment rate for large businesses will apply to solicitations issued on or after July 7, and to new contracts as part of efforts to reduce disruption to the defense industrial base.

DOD said the 90 percent rate will be retained for existing contracts, delivery and task orders with large companies.