House Bill Would Provide Interim Payments for Federal Change Orders

The House Small Business Committee voted 23-0 on Sept. 16 to advance the legislation. The committee reported an amended version of the bill to the House on Oct. 9. The measure had not received a floor vote as of Oct. 16.

A Longstanding Problem for Federal Contractors

During a February 2024 congressional hearing, Andrew V. Christ, then chief operating officer of Compass Constructors in Kansas City, Missouri, described how the company had already spent approximately $250,000 on additional work but could not yet bill the federal government.

“We have expended the monies, but we have no contract vehicle to actually bill for the funding,” Christ testified.

Christ told lawmakers that change orders and contract modifications could take months to process, even though contractors were obligated to begin performing the additional work.

The exchange occurred during questioning by Rep. Pete Stauber, R-Minn., who introduced the Small Business Payment for Performance Act.

A 2019 Government Accountability Office review found that most U.S. Army Corps of Engineers construction contract changes were finalized within 60 days. About 28% of the changes reviewed from 2013 through 2018 took more than 90 days, though, and 3% took longer than a year.

GAO also found that contractors often experienced the effects of a change before agencies formally began tracking the modification, creating different views of how long resolution took.

At the time, neither the Army Corps nor the General Services Administration routinely monitored the time required to finalize construction changes. Both agencies later acted on GAO recommendations, including the Army Corps’ implementation of a change-order tracking dashboard in 2020.

How the Proposed Payments Would Work

The Small Business Payment for Performance Act would amend the Small Business Act to establish an interim-payment requirement for qualifying federal construction contracts.

An REA is a contractor’s request to adjust contract terms, potentially including price or schedule, to account for the effects of a change.

Under the proposal, a small business awarded a federal construction contract could submit an REA when a contracting officer directs a change in contract performance without the company’s agreement. The request would have to meet the applicable contractual deadline and specify the estimated amount needed to cover the additional costs.

Upon receiving a qualifying request, the federal agency would be required to provide an interim payment of at least 50% of that estimate.

The payment would not constitute final agreement on the contract adjustment. The agency and contractor could continue negotiating the value of the additional work while the interim payment provides partial compensation.

When Stauber reintroduced the measure in July 2025, he said it was intended to protect smaller businesses from the financial consequences of federal contract changes.

“This important legislation will protect small businesses from unexpected financial burdens,” Stauber said.

The bill does not establish a payment deadline measured in days. Although it directs agencies to pay upon receipt of a qualifying request, the administrative procedures would remain an important implementation issue.

If enacted, the measure would require the Small Business Administration to issue implementing rules within 90 days.

Protections for Subcontractors

The bill would also require contractors to pass applicable shares of interim payments to affected subcontractors.

A qualifying small-business contractor receiving an interim payment would have to distribute the portion attributable to increased costs incurred by affected first-tier subcontractors. The legislation would extend that requirement through the contracting chain to affected lower-tier firms.

The American Subcontractors Association supported the provision in a Sept. 15 statement, emphasizing that funds must reach the businesses performing the work.

“A payment solution should not simply move the cash-flow problem one step down the construction chain,” ASA said.

The provision would not give every subcontractor a direct claim against the federal agency. Payments would still move through the contractor or subcontractor above the affected firm, making documentation and proper distribution important.

Its application would also depend on a qualifying small-business federal contractor receiving an interim payment. The proposal would not create a direct payment entitlement for every specialty contractor working on a federal project.

For qualifying sheet metal subcontractors, though, the provision could reduce the financial burden of performing government-directed changes while the final adjustment remains unresolved.

SMACNA Makes Payment Reform a Priority

The Sheet Metal and Air Conditioning Contractors’ National Association has advocated for federal change-order payment reform for several years.

In a recent statement, SMACNA urged House leaders to bring H.R. 4615 to the floor, pointing to the House Small Business Committee’s unanimous 23-0 vote and calling the bill a strong candidate for expedited consideration.

SMACNA said contractors can be directed to perform work outside the original scope of a federal contract while waiting months for the corresponding payment adjustment. During that time, small businesses still have to meet payroll and pay suppliers and subcontractors.

“SMACNA strongly supports this practical reform, which will help small contractors, their skilled workers, and the federal projects they serve,” Stanley E. Kolbe Jr., SMACNA’s executive director of government and political affairs, wrote in the Oct. 15 letter.

The association asked House leadership to schedule the bill for consideration under suspension of the rules during the lame-duck session.

Implementation Questions Remain

The legislation could reduce the amount of capital qualifying small contractors must carry while certain REAs remain unresolved, but it would not settle the final price or schedule adjustment. Contractors would still need to document their costs and negotiate the final value of the additional work.

The bill also would not cover every disputed cost, delay or change. Its interim-payment requirement would apply when a contracting officer directs a change without the contractor’s agreement and the contractor submits a timely, qualifying request.

Agencies would need procedures for reviewing requests, calculating payments and reconciling interim amounts with final adjustments. Contractors would also need to determine how much of each payment should move down the contracting chain.

Those details could determine how much cash-flow relief the legislation provides in practice.

Next Steps

H.R. 4615 had not received a House floor vote as of Oct. 16. If approved by the House, it would also need to pass the Senate before being sent to the president.

The committee’s unanimous vote signals bipartisan support but does not guarantee further action.

For sheet metal contractors, the issue is straightforward: Government-directed changes can require businesses to pay for additional labor, materials and equipment before the final price is settled.

H.R. 4615 would not end those negotiations. It would change who finances the work while they continue.