We're contemplating a contract that invokes FAR 52.216-8 - fee withholding.

I understand that we will withhold invoicing fee up to $100,000 or 15% of the whole fee (whichever is less). Once we pass that threshold we will invoice fee as appropriate. That much makes sense. 

However, when I read the clause as written in the FAR, I don't see how 100% of the fee is eventually paid to the contractor - am I missing something? The clause says that the CO shall release 75% of fee withholds, and up to 90% of fee withholds based on past performance. So is it implied that the best you can hope is that the government keeps 10% of the fee withholds? It's certainly small potatoes compared to the overall contract value, but I want to clearly comprehend this clause.

Thank you as always!

You'll get any remaining fee with the final payment.  See para. (h)(1) of the contract clause at FAR 52.216-7, Allowable Cost and Payment.

1 hour ago, DE13151719 said:

We're contemplating a contract that invokes FAR 52.216-8 - fee withholding...

However, when I read the clause as written in the FAR, I don't see how 100% of the fee is eventually paid to the contractor - am I missing something?

Yes. The first paragraph of the clause: 

Quote

(a) The Government shall pay the Contractor for performing this contract the fixed fee specified in the Schedule.

You have to read paragraphs (a) and (b) together.

3 hours ago, Vern Edwards said:

You have to read paragraphs (a) and (b) together.

And don't forget to specify how fee will be paid in the schedule.  There is no standard FAR clause that does that.  Therefore, that is something that (theoretically) is up for negotiation.