WASHINGTON – House Small Business Committee Member Rep. Brian Fitzpatrick (R-PA) introduced H.R. 2594 the Small Business Payment for Performance Act to ensure small business federal contractors get paid in a timely manner for change orders.

Specifically, the legislation allows contractors to submit a request for equitable adjustment (REA) - or an increase in fee - to the agency. The contractor may then bill the agency for any actual change order work completed, while the REA is pending. Once the agency receives the REA, it must pay 50% of the billed amount immediately to offset extra costs. Currently, small businesses complete change orders without this protection. 

“For small businesses, federal contracts can lead to good jobs, but can also result in many headaches. While businesses regularly deal with change orders in the private sector, contractors and subcontractors on federal construction projects are often forced to bear a financial burden by the slow process of approval. Some federal agencies routinely delay the approval process until the end of the project. That isn’t fair,” said Fitzpatrick. “The Small Business Payment for Performance Act stands up for small businesses by requiring federal agencies to make interim partial payments to contractors, allowing them to pay their own bills without being delayed until the end of the project. It’s common sense.”

“When federal agencies request unexpected work, it often puts the burden of financing the change orders on the small business – including paying their employees, buying supplies and even paying taxes. We need to ensure small business owners won’t be shackled with extra financial burdens while completing a project, and I appreciate Rep. Fitzpatrick’s leadership on this very important legislation,” said House Small Business Committee Chairman Steve Chabot.

Joining Rep. Fitzpatrick as original cosponsors are Rep. Steve Knight (R-CA), Chairman of the Contracting and Workforce Subcommittee, and Rep. Stephanie Murphy (D-FL), Ranking Member of the Contracting and Workforce Subcommittee.

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