Pentagon to Accounts Payable: Slow Down

Photograph by USAF

The Pentagon in Arlington, Virginia.

With just a week to go before the scheduled start of automatic budget cuts, the Pentagon is worried about not having enough cash.

What’s the biggest federal agency to do? Tell the folks in accounts payable to slow down.

The Defense Department yesterday revoked a policy to provide faster payments to contractors in a move that’s expected to shore up “several” billion dollars, Maureen Schumann, a Pentagon spokesperson, said in an e-mail.

The change comes in preparation for the possible March 1 start of across-the-board budget cuts known as sequestration, said Larry Allen, president of Allen Federal Business Partners, a consulting firm in McLean, Virginia. The military “needs to stretch out its money as long as it can if they know it’s going to be tight,” he said in an e-mail.

Companies aren’t pleased. The policy was designed to help small businesses, which don’t generally have the finances to support a major government project for a month or longer, according to Molly Brogan, a National Small Business Association spokesperson.

“This memo is exactly the problem with sequestration and Congress’s failure to do anything about it to this point,” she said in an e-mail.

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