contractor business system clause applicability

[joan]

252.242-7005 Contractor business systems refers to covered contracts that are subject to the cost accounting standards.

In plain language reading of the clause would seem to me if you aren't a contract receipt point this requirement is inapplicable. (IHO, Corporate HQ for example)

Or am i wrong? Thanks

[InNeedofWisdom]

If I understand correctly, you are asking if certain parts of a company are subject to DFARS 252.242-7005 versus specific contracts. Like you say, DFARS 252.242-7005 only applies to CAS-covered contracts.

9903.201-1 CAS Applicability says in (a) "...Negotiated contracts not exempt in accordance with 9903.201–1( b ) shall be subject to CAS..."

DFARS 252.242-7005 should have an impact on the business systems of a company which deal with its CAS-covered contracts that have this clause incorporated into them. IF IHO or Corporate HQ play a role in a business system that impacts a contract with DFARS 252.242-7005, then IHO or Corporate HQ should be affected by this clause.

[Retreadfed]

Joan, you have to go back further to determine what is a covered contract. That is a contract that has one or more of the business systems clauses in it, such as accounting or property, and which is also CAS covered. The systems clauses apply only to the contracting entity that received the contract. What clause 252.242-7005 does is give the government the right to withhold funds from the contractor because of deficiencies in one of its systems that is covered by another clause. It does not directly relate to withholding because of a CAS non-compliance.

[here_2_help]

Joan,

No. The clause is applicable regardless of organizational location. For example, the clause would apply to a enterprise accounting system deficiency at an IHO. The clause enables the government to (partially) withhold payments on CAS-covered contracts when a system is deemed to be inadequate because of a significant deficiency. The deficiency can occur anywhere in the system.

Hope this helps.