Understanding Withholding

In many government contracts, the government withholds certain amounts to create a reserve to protect their interests. These amounts are used as an incentive to the contractor performing the contract to complete the contracted items within a specified time frame. After the conditions specified by the government have been met, the contractor is allowed to bill for the withheld amount. To manage the withheld amount, the contractor must reduce or increase the amount of their invoices respectively to record any amounts withheld or subsequently released.

PeopleSoft Contracts supports the management of amounts that are withheld and released by enabling you to:

• Define the withholding and release terms and conditions on the contract.

• Generate invoices that include identifiers for the amount withheld.

• Generate invoices that include identifiers for amounts released from withholding.

• Write off withholding amounts that are eligible for release.

• Manage rate adjustments for withheld amounts.

• Create additional transactions to incorporate any rate changes that occur during the life of the contract.

Note:

A contract may contain multiple rate-based and amount-based contract lines, but withholding terms and criteria can only be defined for rate-based contract lines that are assigned to an as-incurred billing plan and are not associated with any prepaid amounts.