21. Subcontractor Costs

Comment: A respondent suggested that the final rule should exempt subcontractor costs from withholding under a prime contractor's invoice. Unless the identified system deficiency of the prime contractor casts some doubt on the reliability of the subcontractor's costs in the prime's invoice, the subcontractor costs should be removed from the calculation of any withholding.

Response: Business system deficiencies affect all cost elements. Such deficiencies may impact accumulating and recording of subcontractor costs and increase the risk of unallowable and unreasonable costs on DoD contracts.