DFARS 252.242-7005 Contractor Business System - Withholding

After Final Written Determination of System Deficiencies

• The Contracting Officer will identify contracts containing DFAR 252.242-7005 from which payment will be withheld.

Withhold Amounts

• DOD may withhold 5% for each disapproved system, up to 10%

• If the Contracting Officer determines that the contractors corrective action plan is acceptable, the amount can be reduced to 2%.

• • If the corrective action plan is not followed, withholding will increase to the original amount.

• • If the corrective action plan is not evaluated within 90 days, the Contracting Officer is required to reduce remaining withholds by 50%

Withhold Release

Amounts withheld will be released once all deficiencies have been corrected and systems have been deemed approved.