Published 2026 | TIKC NewsWire
When you win a prime contract and use subcontractors, the money that comes in is not all yours to sit on. Federal rules expect you to pay your subcontractors promptly after you are paid, and on many contracts you actually certify that you have. Hold a sub’s money too long, or certify that you paid when you did not, and a cash-flow decision turns into a compliance problem, and sometimes a false claim. Treating your subs fairly is not just good business. On government work, it is a rule.
What prompt payment requires
The Prompt Payment Act sets timeframes for the government to pay contractors, and related rules flow down to how you pay your subcontractors. In general, once you receive payment from the government for work a subcontractor performed, you are expected to pay that subcontractor within a set window, and to pass along any interest if you are late in certain cases. The idea is that money is supposed to move down the chain, not pool at the top while small subs wait.
The certification you may be signing
On many contracts, especially where you receive progress or interim payments, you certify things about paying your subcontractors as a condition of getting paid yourself. If you certify that you have paid your subs, or will, and you are really holding their money, that certification is a false statement. This connects directly to how progress payments work: the government advances money on the understanding it is flowing to the people doing the work, and a false payment certification undercuts that whole arrangement.
Why subs are the ones who report it
Here is what makes this risky: your subcontractors know exactly when they were paid. A small sub squeezed by a prime holding its money has every reason to complain, to the agency, to the small-business advocates, or through a whistleblower claim. The gap between what you certified about paying subs and when they actually got paid is visible to the very people most motivated to raise it. There is no hiding a late payment from the business still waiting for the check.
Build the habit of paying down the chain
Staying clean here is mostly cash-flow discipline and honest paperwork. Track when the government pays you for subcontractor work, pay your subs within the required window, and never certify a payment you have not made. If you hit a real cash crunch, talk to your subs and your contracting officer rather than quietly sitting on money and signing anyway. And if you discover you certified wrongly, getting ahead of it with a disclosure beats waiting for a shorted sub to report you.
What to do now
- Know the timeframes. Understand how quickly you must pay subcontractors after the government pays you.
- Pay down the chain. Pass subcontractor payments along promptly instead of holding the money.
- Certify only the truth. Never sign a payment certification for subs you have not actually paid.
- Communicate in a crunch. If cash is tight, talk to your subs and contracting officer rather than certifying falsely.
- Fix mistakes fast. If you certified wrongly, correct it and consider disclosing before a sub reports it.
Your subcontractors are the people helping you deliver, and the government expects the money to reach them. Pay them on time, certify only what is true, and the trust that keeps good subs working with you stays intact, which is worth far more than a few extra days of float. Brick by brick.
FAQ
What does prompt payment require?
The Prompt Payment Act sets timeframes for paying contractors, with rules flowing down so that after the government pays you for a subcontractor’s work, you pay that sub within a set window.
What am I certifying?
On many contracts, especially with progress or interim payments, you certify things about having paid or planning to pay your subcontractors as a condition of your own payment.
Why is a false payment certification serious?
Certifying you paid subs when you are holding their money is a false statement, and it undercuts the progress-payment system that advances money on the understanding it flows to the workers.
How do I stay compliant?
Track government payments for subcontractor work, pay subs within the required window, never certify a payment you have not made, and communicate if cash is tight.
Sources
Prompt Payment Act, 31 U.S.C. 3901 et seq., and Federal Acquisition Regulation Subpart 32.9. (2026).
Federal Acquisition Regulation. (2026). Subcontractor payment clauses and flow-down requirements.
This article is general information, not legal advice.
About the Author
Melanie Patterson
Founder and CEO of Team Integrity Knowledge Center and creator of GovCon iSource. Former nurse turned entrepreneur with over 10 years guiding small, women-owned, and minority-owned businesses to over $10 million in government awards. Build, grow, scale, brick by brick. Contact
