NDIA applauds Pentagon rollback of progress payments rule

ARLINGTON, VA -- Hawk Carlise, president and chief executive officer of the National Defense Industrial Association, issued the following statement Tuesday, Oct. 2, following the Defense Department's rescinding of DFARS 2017-D019:

The Defense Department is right to want a better return on its contracting expenditures. However, as NDIA has expressed publicly, this proposed rule was the wrong way to achieve it.

NDIA believes the rule, as it was proposed, did more harm than good by incentivizing enterprise compliance vice contract performance ultimately discouraging risk taking and innovation. Instead of improving contractors’ compliance with cost and schedule expectations, the rule would undermine the financial health of both prime and subcontracting companies while adding to their bureaucratic burden and reducing their incentives to participate, innovate and deliver for the warfighter and the taxpayer.

Under the proposed progress payments rule, the Pentagon’s message to the contracting community on the preferred balance between seeking innovation and cutting costs contradicts Congress’ original intent. To reiterate Congress’s original purpose to defense regulators, House and Senate Armed Services Committee Chairmen delivered a joint letter to Deputy Secretary of Defense Patrick Shanahan expressing concern and requesting the Pentagon better align with congressional intent.

Given the numerous negative ramifications of this rule, the National Defense Industrial Association and our membership encouraged the Pentagon rescind it and pursue a rewrite to incentivize contract performance. We appreciate the Department of Defense’s willingness to pursue an alternative to this proposed rule and look forward to continuing to engage with the agency to ensure we get it right.

For more information, please contact Communications Director Evamarie Socha, esocha@ndia.org.