22. Time Limit for Withholdings

Comment: The interim rule provides that if the contracting officer does not make a timely determination within 90 days as to whether a significant deficiency has been remediated, the withholding percentage of monies due will be reduced by 50 percent. A number of respondents expressed concern that if the contracting officer continues to not render a decision, withholding at this reduced level could continue indefinitely. The respondents suggested that the final rule should be revised to remove the withholdings in their entirety after 90 days of inaction by the Government.

Response: Contracting officers will make timely decisions and promptly discontinue payment withholding when they determine that there are no remaining significant deficiencies. The rule requires contracting officers to reduce withholding directly related to the significant deficiencies by at least 50 percent if, within 90 days of receipt of the contractor notification that the contractor has corrected the significant deficiencies, the contracting officer has not made a determination. This language is sufficient to mitigate a contractor's risk due to inaction by the Government.