• Proposed DFARS Rule: Withholding Payments to DoD Contractors
  • February 10, 2010 | Author: Terry L. Elling
  • Law Firm: Venable LLP - Washington Office
  • The Department of Defense (DoD) is accepting comments until March 16, 2010 on a proposed DFARS rule that, if implemented, will allow a Contracting Officer (CO) to withhold 10%, 50%, or even 100% of interim payments to contractors where the CO determines that a contractor’s “business systems” are deficient. The proposed rule poses a significant business risk to DoD contractors of all sizes and continues a trend of increasing compliance burdens throughout the government contracting community. In light of the palpable impact to contractors’ bottom line, now is an important time to reevaluate the costs of compliance and either establish or review current business systems for potential deficiencies so that any corrections may be made before being threatened with withholding of payments.