Publication:
Do Accelerated Payments for DoD Contractors Help Small Businesses?

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Authors
Cunha, Jesse
Marion, Justin
Subjects
Advisors
Date of Issue
2021-02
Date
02/09/21
Publisher
Monterey, California. Naval Postgraduate School
Language
Abstract
In 2011, the Department of Defense (DoD) set a goal of paying small business contractors within 15 days of invoice receipt rather than the standard 30 days. In 2012, other federal agencies also set a goal of accelerated payments to small businesses, and all agencies later expanded this goal to include all contractors regardless of size. We study whether small businesses benefited from these accelerated payment goals. Using a difference-in-difference design, we find that small business participation in government contracts rose following the setting of accelerated payments goals. Importantly, contracts for perishable foods and construction services, which were unaffected by the new accelerated payments policies, do not see an increase in small business participation. We also find that the benefits of accelerated payments are concentrated among small businesses with a backlog of ongoing projects. This is consistent with the hypothesis that accelerated payments alleviate the liquidity constraints that may be particularly acute for small businesses.
Type
Report
Description
Acquisition Research Program Sponsored Report Series
Sponsored Acquisition Research & Technical Reports
Department
Identifiers
NPS Report Number
NPS-AM-21-030
Sponsors
Funder
Format
Citation
Distribution Statement
Approved for public release; distribution is unlimited.
Approved for public release; distribution is unlimited.
Rights
This publication is a work of the U.S. Government as defined in Title 17, United States Code, Section 101. Copyright protection is not available for this work in the United States.