Small Business Payment for Performance Act of 2025
The Small Business Payment for Performance Act of 2025 would add a new provision to the Small Business Act allowing small-business contractors who win federal construction contracts to request an interim partial payment if the agency directs a change in contract terms without the contractor’s agreement. If a contractor submits a timely request detailing estimated extra costs, the federal agency must provide an interim payment of at least 50% of those estimated costs. This interim payment would not finalize (definitize) the equitable adjustment. The act also requires the contractor to pass through the appropriate portion of such interim payments to its first-tier subcontractors, who in turn must pass the funds to their own subcontractors as applicable. The Small Business Administration would implement these requirements by the earlier of the first full fiscal year after enactment or October 1, 2027.
Key Points
- 1Creates interim partial payments for equitable adjustments in construction contracts when an agency changes terms without the contractor’s agreement.
- 2Affected small-business contractors may request an equitable adjustment and specify the estimated additional costs; agencies must respond with an interim payment of at least 50% of that estimate.
- 3Interim payments are expressly not considered a final action to definitize the equitable adjustment.
- 4Flow-down requirement: primes must pass the portion of interim payments attributable to increased costs to first-tier subcontractors, who must further pass along amounts to lower-tier subcontractors as appropriate.
- 5Implementation deadline: SBA must implement the rule by the earlier of the first day of the first full fiscal year after enactment or October 1, 2027.