Deficient Business Systems Can Hurt Contractor Pay

Law360, New York (May 23, 2011, 3:48 PM EDT) -- On May 18, the U.S. Department of Defense issued an interim rule (76 Fed. Reg. 28,856) for immediate implementation, defining contractor business systems and authorizing contracting officers (COs) to withhold a percentage of payments, under certain conditions, when a contractor’s business system contains a “significant deficiency.”

The interim rule responds to industry comments on two earlier proposed rules (see 75 Fed. Reg. 2,457 (Jan. 15, 2010); 75 Fed. Reg. 75,5550 (Dec. 3, 2010)) and addresses Section 893 of the 2011 National Defense Authorization Act (NDAA), which...
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