DFARS 252.242-7005Contractor Business Systems
Overview
This clause requires contractors to maintain six DCMA-approved business systems: accounting, estimating, EVMS, MMAS, property management, and purchasing. Contractors with deficiencies face payment withholds of up to 5% per deficient system (10% maximum total). This is one of the most impactful DFARS clauses for large defense contractors.
When Does This Apply?
CAS-covered contracts (typically cost-reimbursement, incentive, and T&M contracts over $50 million) where DCMA oversight is required.
Key Requirements
- 1Maintain six approved business systems
- 2Obtain DCMA approval for each applicable system
- 3Correct significant deficiencies within specified timeline
- 4Accept withholds of up to 5% per deficient system (10% max)
- 5Provide DCMA access to all business system records
Flowdown to Subcontractors
Yes — DFARS 252.242-7005 flows down to subcontractors. All subcontractors in the supply chain must comply with this clause when applicable.
Frequently Asked Questions
What is DFARS 252.242-7005?
DFARS 252.242-7005 (Contractor Business Systems) This clause requires contractors to maintain six DCMA-approved business systems: accounting, estimating, EVMS, MMAS, property management, and purchasing. Contractors with deficiencies face payment wit
Does DFARS 252.242-7005 flow down to subcontractors?
Yes, DFARS 252.242-7005 flows down to subcontractors. All applicable subcontractors must comply with this clause.
When does DFARS 252.242-7005 apply?
CAS-covered contracts (typically cost-reimbursement, incentive, and T&M contracts over $50 million) where DCMA oversight is required.
Related Guides
Stay compliant with DFARS 252.242-7005
Cabrillo Club automates compliance tracking and alerts you when DFARS clauses are amended.
Join Free