Congress Takes on Change Orders Delays

On June 15, the House Small Business Committee passed, by a bipartisan vote of 21-0, the AGC-supported “Small Business Payment for Performance Act of 2017.” The bill will ensure small business federal contractors get paid sooner for change orders. Specifically, the legislation requires a federal agency that receives a request for equitable adjustment (REA) to pay 50% of the billed change order work amount in a timely manner to offset extra costs. This practice is common in the private industry, including in ConsensusDocs Contract Documents, but absent in federal contracts. Last month, AGC members Ed DeLisle and Andy Brown testified before the House Small Business Committee on change order delays and the impacts these have on federal construction contractors. Many House Small Business Committee members referenced the hearing as a motivating factor for their support of H.R. 2594 and accompanying amendments.

“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. 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,” said Rep. Brian Fitzpatrick (R-PA).

AGC is at the forefront in advocating for greater accountability of the change order process among the different federal agencies. In March, the House of Representative’s Small Business Committee requested that the Government Accountability Office (GAO) conduct a review of the use of change orders on federal construction contracts. This bipartisan request was a direct result of AGC’s efforts with both parties in Congress to address the many issues associated with change orders. AGC previously called on the Federal Acquisition Regulation Council to improve the data federal agencies collect regarding the administration of change orders in response to the Council’s information request. AGC’s recommendations would require federal agencies to collect a range of data regarding the timeliness of action by the contracting officer (CO) to encourage greater CO accountability.

For more information, contact Jordan Howard at jordan.howard@agc.org or (703) 837-5368.