A $10 million contract for technical support services was awarded to BOOTS, Inc. It is a cost-plus-fixed-fee contract that requires a small business subcontracting plan, and it also includes small business participation requirements. Government property is provided for both the contractor and subcontractors. Defense Contract Management Agency's (DCMA's) Contractor Purchasing System Review (CPSR) Team reviewed BOOTS' purchasing system. A few of the Team's findings include: 1) BOOTS has procedures to ensure flow-down of applicable flow-down clauses; 2) BOOTS uses competitive sourcing to the maximum extent practicable; and 3) BOOTS checks that potential subcontractors are not debarred or suspended when offers are initially received; however, BOOTS; process does not include checking again immediately prior to award. The administrative contracting officer (ACO) determines that BOOTS' failure to check subcontractors for debarment or suspension immediately before award is a significant deficiency. No other deficiencies were found in BOOTS' purchasing system. The DCMA property administrator reviewed BOOTS' property system. Just a few of the property administrator's findings include: 1) BOOTS is not reviewing its subcontractors' property management systems to make sure they are adequate; 2) There were two subcontracts that had been issued government property but did not include the applicable, mandatory flow-down clauses. The ACO determines that both of these findings represent significant deficiencies in BOOTS' property system. No other deficiencies were found in BOOTS' property management system. Which are actions the ACO may take in this situation to incentivize BOOTS to correct the deficiencies in its business system? (Select two that apply.)

Solution Options:

1) If BOOTS submits an acceptable corrective action plan within 45 days, then the withholding may reduce to 1%, until all significant deficiencies have been corrected.

2) Notify BOOTS of the initial findings of significant deficiencies and give it 30 days to respond before issuing a final determination.

3) If the final determination is that significant deficiencies exist in two of BOOTS' business systems, then begin withholding a maximum of 10% from payments to BOOTS until the deficiencies are corrected.

4) If the final determination is that significant deficiencies exist in two of BOOTS' business systems, then begin withholding a maximum of 5% from payments to BOOTS until the deficiencies are corrected.