10 U.S.C. § 4601 — Electronic submission and processing of

Page 2806 TITLE 10—ARMED FORCES § 4601 ‘‘(d) ASSISTANCE TO SMALL BUSINESS CONCERNS.— [Amended section 15(k)(5) of the Small Business Act (15 U.S.C. 644(k)(5)).] ‘‘(e) GAO REPORT.—(1) The Comptroller General of the United States shall conduct an assessment of the matters described in paragraph (2) and submit a report pursuant to paragraph (3). ‘‘(2) In addition to such other related matters as the Comptroller General considers appropriate, the matters to be assessed pursuant to paragraph (1) are the fol- lowing: ‘‘(A) Timely payment of progress or other periodic payments to subcontractors and suppliers by prime contractors on Federal contracts by— ‘‘(i) identifying all existing statutory and regu- latory provisions, categorized by types of contracts covered by such provisions; ‘‘(ii) evaluating the feasibility and desirability of requiring that a prime contractor (other than a construction prime contractor subject to the provi- sions of sections 3903(b) and 3905 of title 31, United States Code) be required to— ‘‘(I) include in its subcontracts a payment term requiring payment within 7 days (or some other fixed term) after receiving payment from the Government; and ‘‘(II) submit with its payment request to the Government a certification that it has timely paid its subcontractors in accordance with their subcontracts from funds previously received as progress payments and will timely make required payments to such subcontractors from the pro- ceeds of the progress payment covered by the cer- tification; ‘‘(iii) evaluating the feasibility and desirability of requiring that all prime contractors (other than a construction prime contractor subject to the provi- sions of sections 3903(b) and 3905 of title 31, United States Code) furnish with its payment request to the Government proof of payment of the amounts included in such payment request for payments made to subcontractors and suppliers; ‘‘(iv) evaluating the feasibility and desirability of requiring a prime contractor to establish an escrow account at a federally insured financial institution and requiring direct disbursements to subcontrac- tors and suppliers of amounts certified by the prime contractor in its payment request to the Govern- ment as being payable to such subcontractors and suppliers in accordance with their subcontracts; and ‘‘(v) evaluating the feasibility and desirability of requiring direct disbursement of amounts certified by a prime contractor as being payable to its sub- contractors and suppliers in accordance with their subcontracts (using techniques such as joint payee checks, escrow accounts, or direct payment by the Government), if the contracting officer has deter- mined that the prime contractor is failing to make timely payments to its subcontractors and sup- pliers. ‘‘(B) Payment protection of subcontractors and sup- pliers through the use of payment bonds or alter- natives methods by— ‘‘(i) evaluating the effectiveness of the modifica- tions to part 28.2 of the Federal Acquisition Regula- tion Part 28.2 (48 C.F.R. 28.200) relating to the use of individual sureties, which became effective Feb- ruary 26, 1990; ‘‘(ii) evaluating the effectiveness of requiring payment bonds pursuant to the Miller Act as a means of affording protection to construction sub- contractors and suppliers relating to receiving— ‘‘(I) timely payment of progress payments due in accordance with their subcontracts; and ‘‘(II) ultimate payment of such amounts due; ‘‘(iii) evaluating the feasibility and desirability of increasing the payment bond amounts required under the Miller Act from the current maximum amounts to an amount equal to 100 percent of the amount of the contract; ‘‘(iv) evaluating the feasibility and desirability of requiring payment bonds for supply and services contracts (other than construction), and, if feasible and desirable, the amounts of such bonds; and ‘‘(v) evaluating the feasibility and desirability of using letters of credit issued by federally insured fi- nancial institutions (or other alternatives) as sub- stitutes for payment bonds in providing payment protection to subcontractors and suppliers on con- struction contracts (and other contracts). ‘‘(C) Any evaluation of feasibility and desirability carried out pursuant to subparagraph (A) or (B) shall include the appropriateness of— ‘‘(i) any differential treatment of, or impact on, small business concerns as opposed to concerns other than small business concerns; ‘‘(ii) any differential treatment of subcontracts relating to commercial products entered into by the contractor in furtherance of its non-Govern- ment business, especially those subcontracts en- tered into prior to the award of a contract by the Government; and ‘‘(iii) extending the protections regarding pay- ment to all tiers of subcontractors or restricting them to first-tier subcontractors and direct sup- pliers. ‘‘(3) The report required by paragraph (1) shall in- clude a description of the results of the assessment car- ried out pursuant to paragraph (2) and may include rec- ommendations pertaining to any of the following: ‘‘(A) Statutory and regulatory changes providing payment protections for subcontractors and suppliers (other than a construction prime contractor subject to the provisions of sections 3903(b) and 3905 of title 31, United States Code) that the Comptroller General believes to be desirable and feasible. ‘‘(B) Proposals to assess the desirability and utility of a specific payment protection on a test basis. ‘‘(C) Such other recommendations as the Comp- troller General considers appropriate in light of the matters assessed pursuant to paragraph (2). ‘‘(4) The report required by paragraph (1) shall be sub- mitted not later than by February 1, 1993, to the Com- mittees on Armed Services and on Small Business [now the Committee on Small Business and Entrepreneur- ship of the Senate] of the Senate and House of Rep- resentatives. ‘‘(f) INSPECTOR GENERAL REPORT.—(1) The Inspector General of the Department of Defense shall submit to the Secretary of Defense a report on payment protec- tions for subcontractors and suppliers under contracts entered into with the Department of Defense. The re- port shall include an assessment of the extent to which available judicial and administrative remedies, as well as suspension and debarment procedures, have been used (or recommended for use) by officials of the De- partment to deter false statements relating to (A) pay- ment bonds provided by individuals pursuant to the Miller Act, and (B) certifications pertaining to pay- ment requests by construction contractors pursuant to section 3903(b) of title 31, United States Code. The as- sessment shall cover actions taken during the period beginning on October 1, 1989, and ending on September 30, 1992. ‘‘(2) The report required by paragraph (1) shall be sub- mitted to the Secretary of Defense not later than March 1, 1993. The report may include recommenda- tions by the Inspector General on ways to improve the effectiveness of existing methods of preventing false statements. ‘‘(g) MILLER ACT DEFINED.—For purposes of this sec- tion, the term ‘Miller Act’ means the Act of August 24, 1935 (40 U.S.C. 270a–270d) [now 40 U.S.C. 3131, 3133].’’ § 4601. Electronic submission and processing of claims for contract payments (a) SUBMISSION OF CLAIMS.—The Secretary of Defense shall require that any claim for pay- ment under a Department of Defense contract Page 2807 TITLE 10—ARMED FORCES § 4602 shall be submitted to the Department of Defense in electronic form. (b) PROCESSING.—A contracting officer, con- tract administrator, certifying official, or other officer or employee of the Department of De- fense who receives a claim for payment in elec- tronic form in accordance with subsection (a) and is required to transmit the claim to any other officer or employee of the Department of Defense for processing under procedures of the department shall transmit the claim and any additional documentation necessary to support the determination and payment of the claim to such other officer or employee electronically. (c) WAIVER AUTHORITY.—If the Secretary of Defense determines that the requirement for using electronic means for submitting claims under subsection (a), or for transmitting claims and supporting documentation under subsection (b), is unduly burdensome in any category of cases, the Secretary may exempt the cases in that category from the application of the re- quirement. (d) IMPLEMENTATION OF REQUIREMENTS.—In im- plementing subsections (a) and (b), the Sec- retary of Defense shall provide for the following: (1) Policies, requirements, and procedures for using electronic means for the submission of claims for payment to the Department of Defense and for the transmission, between De- partment of Defense officials, of claims for payment received in electronic form, together with supporting documentation (such as re- ceiving reports, contracts and contract modi- fications, and required certifications). (2) The format in which information can be accepted by the corporate database of the De- fense Finance and Accounting Service. (3) The requirements to be included in con- tracts regarding the electronic submission of claims for payment by contractors. (e) CLAIM FOR PAYMENT DEFINED.—In this sec- tion, the term ‘‘claim for payment’’ means an invoice or any other demand or request for pay- ment. (Added Pub. L. 106–398, § 1 [[div. A], title X, § 1008(a)(1)], Oct. 30, 2000, 114 Stat. 1654, 1654A–249, § 2227; renumbered § 4601, Pub. L. 116–283, div. A, title XVIII, § 1861(b), Jan. 1, 2021, 134 Stat. 4277.) Editorial Notes AMENDMENTS 2021—Pub. L. 116–283 renumbered section 2227 of this title as this section. Statutory Notes and Related Subsidiaries EFFECTIVE DATE OF 2021 AMENDMENT Amendment by Pub. L. 116–283 effective Jan. 1, 2022, with additional provisions for delayed implementation and applicability of existing law, see section 1801(d) of Pub. L. 116–283, set out as a note preceding section 3001 of this title. EFFECTIVE DATE Pub. L. 106–398, § 1 [[div. A], title X, § 1008(c)], Oct. 30, 2000, 114 Stat. 1654, 1654A–250, provided that: ‘‘(1) Subject to paragraph (2), the Secretary of De- fense shall apply section 2227 of title 10, United States Code [now 10 U.S.C. 4601] (as added by subsection (a)), with respect to contracts for which solicitations of of- fers are issued after June 30, 2001. ‘‘(2)(A) The Secretary may delay the implementation of section 2227 [now 4601] to a date after June 30, 2001, upon a finding that it is impracticable to implement that section until that later date. In no event, however, may the implementation be delayed to a date after Oc- tober 1, 2002. ‘‘(B) Upon determining to delay the implementation of such section 2227 [now 4601] to a later date under sub- paragraph (A), the Secretary shall promptly publish a notice of the delay in the Federal Register. The notice shall include a specification of the later date on which the implementation of that section is to begin. Not later than 30 days before the later implementation date, the Secretary shall publish in the Federal Reg- ister another notice that such section is being imple- mented beginning on that date.’’ [Notice by Department of Defense of delay in the im- plementation of this section from June 30, 2001, until Oct. 1, 2002, was published on Aug. 21, 2001, at 66 F.R. 43841.] § 4602. Contracted property and services: prompt payment of vouchers (a) REQUIREMENT.—Of the contract vouchers that are received by the Defense Finance and Accounting Service by means of the mechaniza- tion of contract administration services system, the number of such vouchers that remain unpaid for more than 30 days as of the last day of each month may not exceed 5 percent of the total number of the contract vouchers so received that remain unpaid on that day. (b) CONTRACT VOUCHER DEFINED.—In this sec- tion, the term ‘‘contract voucher’’ means a voucher or invoice for the payment to a con- tractor for services or deliverable items pro- vided by the contractor under a contract funded by the Department of Defense. (Added Pub. L. 106–398, § 1 [[div. A], title X, § 1006(a)(1)], Oct. 30, 2000, 114 Stat. 1654, 1654A–247, § 2226; amended Pub. L. 111–350, § 5(b)(7), Jan. 4, 2011, 124 Stat. 3842; Pub. L. 115–232, div. A, title VIII, § 836(e)(1), Aug. 13, 2018, 132 Stat. 1869; re- numbered § 4602, Pub. L. 116–283, div. A, title XVIII, § 1861(b), Jan. 1, 2021, 134 Stat. 4277.) Editorial Notes AMENDMENTS 2021—Pub. L. 116–283 renumbered section 2226 of this title as this section. 2018—Subsec. (b). Pub. L. 115–232 substituted ‘‘for services or deliverable items’’ for ‘‘for services, com- mercial items (as defined in section 103 of title 41), or other deliverable items’’. 2011—Subsec. (b). Pub. L. 111–350 substituted ‘‘section 103 of title 41’’ for ‘‘section 4(12) of the Office of Federal Procurement Policy Act (41 U.S.C. 403(12))’’. Statutory Notes and Related Subsidiaries EFFECTIVE DATE OF 2021 AMENDMENT Amendment by Pub. L. 116–283 effective Jan. 1, 2022, with additional provisions for delayed implementation and applicability of existing law, see section 1801(d) of Pub. L. 116–283, set out as a note preceding section 3001 of this title. EFFECTIVE DATE OF 2018 AMENDMENT Amendment by Pub. L. 115–232 effective Jan. 1, 2020, subject to a savings provision, see section 836(h) of Pub. L. 115–232, set out as an Effective Date of 2018 Amend- ment; Savings Provision note under section 453b of Title 6, Domestic Security.