Shapiro Administration Implements Prompt Pay Policy

Non-construction prime contractors must pay their small diverse business and veteran-owned business enterprise subcontractors within 10 days of receipt of payment from the Commonwealth.

Harrisburg, PA – Today, Pennsylvania Department of General Services (DGS) Secretary Reggie McNeil announced the Commonwealth has implemented a prompt pay policy that requires prime contractors to pay small diverse business (SDB) and veteran-owned business (VBE) subcontractors faster for goods and services provided to the Commonwealth under state contracts.

"Governor Shapiro has made clear that state government's top priority should be serving the people of our Commonwealth, and I am pleased to announce the implementation of our new prompt pay policy that will ensure small diverse businesses and veteran-owned businesses providing goods and services to the Commonwealth are paid quickly and efficiently as we continue our efforts to improve their experience in the state contracting system," Secretary McNeil said. "We all know the important role access to capital plays in the sustainability of our small business community, and the sooner these businesses are paid for their goods and services, the sooner they can invest it in the next opportunity that will strengthen and grow their business. By helping our small diverse and veteran-owned businesses succeed, we're growing our economy and supporting good-paying jobs across Pennsylvania."

The policy, which was initiated by the DGS Bureau of Diversity, Inclusion and Small Business Opportunities (BDISBO), requires prime contractors providing the Commonwealth with non-construction goods and services to pay their SDB/VBE subcontractors for their completed and accepted deliverables within 10 days of receipt of their payment from the Commonwealth. The policy will not affect the payment rate for construction programs which is statutorily mandated at 14 days.

The prompt pay policy is being implemented through the goal setting program requirements of qualifying solicitations for goods and services. Through the Letter of Commitment (LOC), both the prime and SDB/VBE subcontractors acknowledge and agree to the compliance requirements, including payment within 10 days following the submission of proper invoicing documentation for their completed and accepted deliverables. The LOC also requires execution for a proposer to successfully be awarded a state contract.

Several other improvements, in addition to the prompt pay policy, have been implemented by the BDISBO team in 2023, including:

reducing the time it takes to certify a small business with DGS by 33%;
conducting frequent Supplier Search workshops aimed at educating small minority-, women- and veteran-owned businesses on the available contracting opportunities within DGS's construction and commodities bureaus; and
monthly notifications of upcoming contracting opportunities to allow for better resource planning and statewide outreach efforts to grow the pool of registered SBs/SDBs/VBEs.

To learn more about BDISBO or to certify your SB/SDB/VBE visit BDISBO online.

MEDIA CONTACT: Madeline Williams, DGS, madewillia@pa.gov