252.242-7005 Contractor business systems.

12. Amend section 252.242-7005 as follows:

a. Remove the clause date "(MAY 2011)" and add "(FEB 2012)" in its place.

b. Redesignate paragraphs (a) through (e) as (b) through (f) and add new paragraph (a).

c. In newly redesignated paragraph (e)(1), remove "cost vouchers on cost, labor-hour, and time-and-materials contracts" and add "cost vouchers on cost-reimbursement, labor-hour, and time-and-materials contracts" in its place and remove "as directed by the contracting officer's final determination" and add "as directed by the Contracting Officer's final determination" in its place.

d. In newly redesignated paragraph (e)(3)(ii), remove "percentage limits in paragraph (d)(3)(i) of this clause" and add "percentage limits in paragraph (e)(3)(i) of this clause" in its place.

e. In newly redesignated paragraph (f)(2)(ii), remove "in accordance with paragraph (d) of this clause" and add "in accordance with paragraph (e) of this clause" in its place.

f. Further redesignate newly redesignated paragraphs (f)(2)(iii) and (f)(2)(iv) as paragraphs (f)(2)(iv) and (f)(2)(v), add new paragraph (f)(2)(iii), and revise newly redesignated paragraph (f)(2)(iv).

The additions and revisions read as follows:

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(a) This clause only applies to covered contracts that are subject to the Cost Accounting Standards under 41 U.S.C. chapter 15, as implemented in regulations found at 48 CFR 9903.201-1 (see the FAR Appendix).

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(f) * * *

(2) * * *

(iii) If the Contracting Officer determines, based on the evidence submitted by the Contractor, that there is a reasonable expectation that the corrective actions have been implemented and are expected to correct the significant deficiencies, the Contracting Officer will discontinue withholding payments, and release any payments previously withheld directly related to the significant deficiencies identified in the Contractor notification, and direct the Contractor, in writing, to discontinue the payment withholding from billings on interim cost vouchers associated with the Contracting Officer's final determination, and authorize the Contractor to bill for any monies previously withheld.

(iv) 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 in accordance with paragraphs (f)(2)(i), (ii), or (iii) of this clause, the Contracting Officer will reduce withholding directly related to the significant deficiencies identified in the Contractor notification by at least 50 percent of the amount being withheld from progress payments and performance-based payments, and direct the Contractor, in writing, to reduce the payment withholding from billings on interim cost vouchers directly related to the significant deficiencies identified in the Contractor notification by a specified percentage that is at least 50 percent, but not authorize the Contractor to bill for any monies previously withheld until the Contracting Officer makes a determination in accordance with paragraphs (f)(2)(i), (ii), or (iii) of this clause.

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