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  • Question

    Are incentive payments subject to the prompt payment act? Specifically, after the contracting officer certifies the invoice package and provides it to DoD OSBP for payment, is the authorized payment amount subject to an interest penalty? What is the governing statutory or regulatory authority?


    The Prompt Payment Act does not apply to the Indian Incentive Program per DoD Office of Small Business Programs

    The Indian Incentive Program (IIP), managed by the DoD Office of Small Business Programs, is a congressionally sponsored program that provides a 5% rebate back to the prime contractor on the total amount subcontracted to an Indian-Owned Economic Enterprise or Indian Organization, in accordance with DFARS Clause 252.226-7001 . Through the generation of subcontracts to the above mentioned entities, the IIP fulfills its purpose as an economic multiplier for Native American communities. Department of Defense (DoD) prime contractors, regardless of size of contract, that contain the above referenced clause(s) are eligible for incentive payments.

    When reviewing the DoD Office of Small Business Program’s website (, I opened their frequently asked questions and found the following.

    Q: When the receipt of payment (fee-funds) takes longer than 14 days, is this subject to the Prompt Payment Act?
    A: No, incentive program is not subject to the Prompt Payment Act. 

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