3.  Contractor Appeals

Comment: DoD needs a contractor appeals process for implementing the payment withholding. The rule should be modified to require discussion with the PEO and/or SAE before any payment withholding action is taken. Due to the vague nature of the system criteria and subjective nature of the audit assessments, it will be difficult for contractors to challenge payment withholding determinations under the Contract Disputes Act.

Response: The final deficiency determination is at the sole discretion of the contracting officer. However, prior to making a final deficiency determination, contractors are afforded an opportunity to respond in writing within 30 days to an initial determination of deficiencies from the contracting officer that identifies significant deficiencies in any of the contractor's business systems. It is not necessary or appropriate to develop a dispute resolution process beyond that which is already available by statute and regulation. Additionally, other avenues of dispute resolution outside of the Contract Disputes Act are available for resolving disputes that may arise over determinations of system deficiencies. The policy set forth in FAR 33.204 still applies, so that informal negotiation and alternate dispute resolution remain available, and, in fact, are encouraged as alternative methods of resolving disputes.