Sec. 4. Progress payment incentive pilot

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The Secretary of Defense, acting through the Under Secretary of Defense for Acquisition and Sustainment, shall establish and implement a pilot program, to be known as the Progress Payment Incentive Pilot Program , to make accelerated progress payments contingent upon responsiveness to Department of Defense goals for effectiveness, efficiency, and increasing small business contract opportunities. The purpose of the pilot program is to reward Department of Defense contractors who meet contract delivery dates, respond to Department solicitations for required certified cost or pricing data, meet small business contracting goals, and provide subcontracting opportunities for AbilityOne contracts.

Except as provided under paragraph (2), under the pilot program, the Department of Defense may not award to large business contractors progress payments in excess of 50 percent. The Department of Defense may increase the rate of progress payments, up to a total of 95 percent, by the following percentages: 10 percent if the relevant division of the contractor met contract delivery dates for contract end items and contract data requirement lists or performance milestone schedule, as the case may be, at least 95 percent of the time during the preceding Government fiscal year. 10 percent if the division does not have open level III or IV corrective action requests. 7.5 percent if all applicable contractor business systems are acceptable, without significant deficiencies. 10 percent if at least 95 percent of the time during the preceding Government fiscal year, when responding to solicitations that required submission of certified cost or pricing data, the division met the due date in the request for proposal. 5 percent if the contractor discloses first tier subcontractor data, the prime contractor’s beneficial owners, and total compensation for recipient executives. 5 percent if the contractor has met its small business subcontracting goals during the preceding Government fiscal year. 3 percent if the contractor has provided subcontracting opportunities for the blind and severely disabled.

In this section: The term beneficial owner has the meaning given the term in section 847 of the National Defense Authorization Act for Fiscal Year 2020 ( Public Law 116–92 ; 133 Stat. 1505; 10 U.S.C. 2509 note). The term compensation for recipient executives refers to the names and total compensation of the five most highly compensated officers of the entity pursuant to section 2(b)(1) of the Federal Funding Accountability and Transparency Act of 2006 ( Public Law 109–282 ; 31 U.S.C. 6101 note).

The term first tier subcontractor means a subcontractor who has a subcontract directly with the prime contractor. The term large defense contractor means a contractor (other than an institute of higher education or a federally funded research and development center) that received more than $10,000,000 in annual revenue from the Department of Defense contracts or licenses in any of the previous three years. The term progress payments means payments provided for under section 3804 of title 10, United States Code.

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