DOD issues interim rule authorizing withholding of a percentage of contract billings upon finding one or more significant deficiencies in a contractor's business systems

Following the publication of two proposed rules, 18 May 2011 the Defense Department (DOD) issued its long-awaited and controversial contractor business systems rule implementing Section 893 of the Ike Skelton National Defense Authorization Act for Fiscal Year 2011 (FY 2011 NDAA). See 76 Fed. Reg. 28856 (18 May 2011). Section 893 of the FY 2011 NDAA sets forth a series of specific requirements regarding the adoption of an "Improvement Program" for DOD contractor business systems.

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