PGI 242.7000 Contractor business system

deficiencies.

(b) Determination to withhold payments. The following are sample formats for written notifications

of contracting officer determinations to initiate payment withholding, reduce payment withholding,

and discontinue payment withholding in accordance with the clause at DFARS 252.242-7005,

Contractor Business Systems:

(1) Use this sample format for written final determinations to implement payment withholding:

Payment Withholding

(i) The purpose of this final determination is to disapprove your [identify the contractor business

system(s)] and implement payment withholding per the terms of the DFARS clause at 252.242-7005,

Contractor Business Systems.

(ii) It is my final determination that XXX System(s) contains the following significant deficiencies:

—[list all significant deficiencies]

(iii) Effective immediately, five percent (or a lesser percentage if five percent will exceed the

withhold limitations in the DFARS clause at 252.242-7005) of each request for payment under the

contracts in Attachment A will be withheld as described below for significant deficiencies in XXX

system. Upon receipt of an acceptable corrective action plan and my determination that this

corrective action plan is being effectively implemented, I will issue a notification with respect to

reducing the percentage being withheld to two percent until I determine that all significant

deficiencies, as identified in this final determination, have been corrected. Failure to follow the

accepted corrective action plan will result in an increase in the percentage withheld against each

payment under this contract to five percent (or a lesser percentage if five percent will exceed the

withhold limitations in DFARS 252.242-7005).[Repeat this paragraph, as necessary, if multiple

withholds are being applied to multiple systems in accordance with 252.242-7005( d)]

(iv) For payments under cost, labor-hour, or time-and-material contracts: The Contractor shall apply

a five percent (or a lesser percentage if five percent will exceed the withhold limitations in DFARS

252.242-7005) withhold to the amount being billed and prepare a cost voucher in Wide Area

WorkFlow (WAWF) for the net amount due. The Contractor shall show the amount withheld on the

current billing, as well as the cumulative amount withheld to date on this contract in accordance

with DFARS clause 252.242-7005, in the Comments block of the Miscellaneous Info Tab in WAWF.

(v) For progress payments: The Contractor shall prepare the request in WAWF without applying any

withhold percentage. The Contracting Officer will reduce the approved amount by five percent (or a

lesser percentage if five percent will exceed the withhold limitations in DFARS 252.242-7005) and

record the amount being withheld on the progress payment request, as well the cumulative amount

withheld on this contract in accordance with DFARS clause 252.242-7005, in the Comments block of

the Miscellaneous Info Tab in WAWF.

(vi) For performance-based payments: The Contractor shall prepare the request in WAWF without

applying any withhold percentage to the performance based payment event schedule amounts. The

Contracting Officer will reduce the amount approved by five percent (or a lesser percentage if five
percent will exceed the withhold limitations in DFARS 252.242-7005) and record the amount being

withheld on the performance based payment as well as the cumulative amount withheld on this

contract in accordance with the DFARS clause 252.242-7005 in the Comments block of the of the

Miscellaneous Info Tab in WAWF.

(2) Use this sample format for determinations to reduce payment withholding:

Reduction of Temporary Payment Withholding

(i) The purpose of this determination is to reduce the payment withholding percentage per the terms

of the DFARS clause at 252.242-7005, Contractor Business Systems, as a result of receiving an

acceptable corrective action plan from the contractor, dated YYYY/MM/DD, for resolving deficiencies

in its XXX system(s) as identified in the Contracting Officer’s determination, dated YYYY/MM/DD.

This reduction is prospective and previous amounts withheld will not be reduced or released at this

time.

(ii) Effective immediately, two percent of each request for payment under this contract will be

withheld as described below. The two percent being withheld will remain in effect until the

Contracting Officer determines that the Contractor has corrected all significant deficiencies as

directed by the Contracting Officer’s determination. Failure to follow the accepted corrective action

plan will result in an increase in the percentage withheld against each payment under this contract

to five percent (or a lesser percentage if five percent will exceed the withhold limitations in DFARS

252.242-7005).

(iii) For payments under cost, labor-hour, or time-and-material contracts: The Contractor shall apply

a two percent withhold to the amount being billed and prepare a cost voucher in Wide Area

WorkFlow (WAWF) for the net amount due. The Contractor shall show the amount withheld on the

current billing, as well as the cumulative amount withheld to date on this contract in accordance

with DFARS clause 252.242-7005, in the Comments block of the Miscellaneous Info Tab in WAWF.

(iv) For progress payments: The Contractor shall prepare the request in WAWF without applying any

withhold percentage. The Contracting Officer will reduce the approved amount by two percent and

record the amount being withheld on the progress payment request, as well the cumulative amount

withheld on this contract in accordance with DFARS clause 252.242-7005, in the Comments block of

the Miscellaneous Info Tab in WAWF.

(v) For performance-based payments: The Contractor shall prepare the request in WAWF without

applying any withhold percentage to the performance-based payment event schedule amounts. The

Contracting Officer will reduce the amount approved by two percent and record the amount being

withheld on the performance-based payment as well as the cumulative amount withheld on this

contract in accordance with the DFARS clause 252.242-7005 in the Comments block of the of the

Miscellaneous Info Tab in WAWF.

(3) Use the sample format below if payment withholding is discontinued pending receipt of auditor

or functional specialist verification and based on evidence that the Contractor has corrected all

significant deficiencies, in accordance with DFARS clause 252.242-7005, Contractor Business

Systems:

Discontinuation of Payment Withholding Pending Verification

(i) The purpose of this determination is to approve your [identify system(s)] pending verification,

discontinue the payment withhold as identified in the Contracting Officer’s determination dated

YYYY/MM/DD, and release previous amounts withheld on the contracts in Attachment A, in
accordance with DFARS clause 252.242-7005, Contractor Business Systems.

(ii) The discontinuation of the payment withhold is made pending receipt of verification and based on

my review of the evidence submitted by the Contractor that all the Contractor’s system(s)

deficiencies identified in the Contracting Officer’s determination dated YYYY/MM/DD have been

corrected.

(iii) The Contractor is authorized to submit a bill in the amount of $XXXXXXXX. The billed amount

should be submitted on the same type of invoice as the withhold was originally taken, as

appropriate.

(4) Use the sample format below if payment withholding is discontinued after auditor or functional

specialist verification that the Contractor has corrected all significant deficiencies, in accordance

with DFARS clause 252.242-7005, Contractor Business Systems:

Discontinuation of Payment Withholding

(i) The purpose of this determination is to approve your [identify system(s)], discontinue the payment

withhold as identified in the Contracting Officer’s determination dated YYYY/MM/DD, and release

previous amounts withheld on the contracts in Attachment A, in accordance with DFARS clause

252.242-7005, Contractor Business Systems.

(ii) The discontinuation of the payment withhold is made based on verification that all the

Contractor’s system(s) deficiencies identified in the Contracting Officer’s final determination dated

YYYY/MM/DD have been corrected.

(iii) The Contractor is authorized to submit a bill in the amount of $XXXXXXXX. The billed amount

should be submitted on the same type of invoice as the withhold was originally taken, as

appropriate.

Parent topic: PGI 242.70 - CONTRACTOR BUSINESS SYSTEMS