44. Quicker Deficiency Corrections

Comment: A respondent stated that an auditor or functional analyst may identify a significant deficiency in one or more systems that may be corrected by relatively simple means, such as a change in policies, practices, or minor changes to the software of the system itself. Often the deficiency is identified and agreed to by the contractor and appropriate changes are made even before the deficiency report is received by the contracting officer, thus allowing the auditor or functional analyst to review the changes being made to the business system. According to the respondent, in such cases, the contracting officer should have the option not to withhold any amounts from billings; as it reads now, it is unclear that the contracting officer has this option. Furthermore, such language would encourage quicker resolution for correcting deficiencies that are not in dispute since it would encourage contractors to accelerate making changes even before the contracting officer issues an initial determination. The other remedies for significant deficiencies would continue as is. The respondent recommended adding optional language to the contracting officer's final determination that states "the contractor's business system is acceptable and approved based upon the corrective actions already taken by the contractor."

Response: The withholding of payments shall not be implemented until the contracting officer issues a final determination that significant deficiencies remain. If a significant deficiency is corrected by relatively simple means, and appropriate changes are made before the deficiency report is received by the contracting officer, DoD expects that the contracting officer would utilize sound business judgment in issuing initial and final determinations, and implementing payment withholds, if applicable.