Numerous industry groups have issued favorable comments on the recent proposal to remove the requirement under FAR 52.232-7 that a contractor withhold five percent (up to a maximum of $50,000) of payments due under a time-and-materials or labor-hour contract.  The proposed rule permits COs to use their judgment regarding whether to withhold payments so the withhold will be applied only when necessary to protect the government’s interest. The DOD’s Office of Inspector General requested the rule should clarify whether the $50,000 withhold ceiling should apply per task order or for the entire contract, recommending it apply per task order.  

In a separate action related to T&M and labor-hour contracts, the FAR Council September 20th  has issued a proposed rule to expressly authorize the use of T&M and LH contracts for procurement of commercial services (Fed. Reg. 56315).

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