DoD recalls controversial contractor pay schedule change

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Eric Crusius, partner at Holland & Knight, discusses the Pentagon’s rollback of a debated contractor pay change, and the state of the defense industrial base.


The Department of Defense recently rolled back their support of a plan that would pay contractors based on the performance of their contracts. When the Pentagon’s plan was unveiled in August, it received immediate industry pushback. Eric Crusius, partner at Holland & Knight, said that the main source of the controversy came from unclear goals and metrics.

 

“When they put out these proposed regs, they were really hoping that this was going to be the final, depending on the feedback that they get. And I think what it was doing was leaving a lot of discretion with the contracting agency would do in a certain situation, and a contractor would submit something by December 1 to say these are the metrics and then by December 31 they would get feedback on it,” Crusius said. “It was not entirely clear what exactly those metrics would be aside from the very high level. So, contractors were a little worried. These things could be interpreted by different contracting officers in different ways and these payments that were expecting, which would be very substantial, they were not going to get.”