Fanning says AIA is 'working closely' with Pentagon on progress payments plan

By Marjorie Censer / February 14, 2019 at 2:09 PM

The Aerospace Industries Association has been 'working closely' with the Defense Department as DOD weighs how to revamp its approach to progress payments and performance-based payments.

At a media event today in Arlington, VA, Eric Fanning, AIA's chief executive, said his organization didn't understand what problem the Pentagon was trying to fix with its original proposal.

The now-withdrawn rule, published last year, sought to reduce customary progress payments for large businesses and offer opportunities for performance-based payments. DOD said the rule was implementing Section 831 of the Fiscal Year 2017 National Defense Authorization Act, which called for a preference for performance-based payments.

However, AIA and other industry groups argued the proposed change would disrupt contractors' cash flow plans and force them to reduce investments in research and development. Congressional authorizers also came out against the rule, and DOD rescinded the proposal.

At today's event, Fanning said AIA supported the performance-based concept passed by Capitol Hill.

But the Pentagon's "last attempt didn't really hit the mark," he said.

Fanning said he's seen no indication the Pentagon is dropping the issue, noting that instead DOD is "thinking through how they want to approach this next."

Meanwhile, Fanning laid out top priorities for AIA in the coming year, including seeking a budget deal that covers the final years of the Budget Control Act and encouraging a return to normal order to avoid continuing resolutions and government shutdowns.

AIA is calling for continued defense export reform and regulatory reform, including an approach to intellectual property "that encourages companies to invest in [research and development]" and performance-based standards, rather than "prescriptive regulation," according to a fact sheet.

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