Difference between revisions of "Contract Closeout - Procedures"

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DFAS Defense Finance and Accounting Service
 
DFAS Defense Finance and Accounting Service
  
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FAD Final Acceptance Date
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FAD Final Acceptance Date
 
 
 
 
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FDD Final Delivery Date
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FDD Final Delivery Date
  
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FFP Firm-Fixed-Price
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GFE Government Furnished Equipment
  
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F&A Finance and Accounting
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GFM Government Furnished Material
  
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FY Fiscal Year
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GFP Government Furnished Property
  
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GFE Government Furnished Equipment
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IDIQ Indefinite Delivery Indefinite Quantity
  
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GFM Government Furnished Material
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MOCAS Mechanization of Contract Administration Services
  
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GFP Government Furnished Property
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MOD Modification
  
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IDIQ Indefinite Delivery Indefinite Quantity
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PCO Procuring Contracting Officer
  
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MOCAS         Mechanization of Contract Administration Services
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POP Period of Performance
  
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MOD Modification
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ULO Unliquidated Obligation
  
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PCO Procuring Contracting Officer
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===Overview===
  
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PO Purchase Order
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It is GovC’s policy to comply with Federal Acquisition Regulation requirements regarding contract closeout.  Closeout timeframes are specified as follows:
  
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POC Point of Contact
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:a.  Fixed-price contracts, GSA Schedules requiring no settlement of applied G&A, and other contracts requiring no settlement of indirect rates should be closed within six months of contract completion. 
  
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POP Period of Performance
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:b.  For cost type contracts containing the FAR 52.216-7: Allowable Cost and Payment clause, the final invoice (completion invoice) will be submitted within 120 days of final indirect rate settlement.
  
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T&M Time and Material
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:c.  Contracts that are not of a fixed price type, or do not require an indirect rate settlement, must have a submission of a closeout invoice within twenty months of the completion of the contract.  Quick closeout procedures at FAR 42.708 (noted below) will be applied to the maximum extent practicable.
  
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ULO Unliquidated Obligation
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There are a number of requirements necessary regarding the closeout of government contracts.  It is important for GovC employees involved in the closeout process to be familiar with those requirements to ensure compliance with contractual responsibilities.  Contracts can generally be categorized into three types:
  
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===Overview===
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1) fixed price/no rate settlements,
  
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Prior to start the closeout process is imperative to determine which projects represent a high audit risk and need to be closed.
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2) cost type contracts, and  
  
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The universe of contracts to be closed will be determined by the Contract Closeout Specialist or any appointed person to perform this task.  In addition, the Contract Closeout Specialist will assign the projects to be closed among the members of the Closeout team.
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3) contracts that are not of a fixed price type, or do not require an indirect rate settlement
  
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As part of the closeout procedures we will close five types of contracts:
 
  
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• CPFF;
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==Checklist==
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• CPAF;
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• CPIF;
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• T&M; and
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• FFP
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The following provides a description of the types of contracts:
 
  
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===Cost-Plus-Fixed-Fee (CPFF) Contracts (FAR 16.306)===
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*  Issue an interim contract completion statement
  
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The CPFF contract is a cost-reimbursement contract that provides for a payment of allowable costs plus a fixed fee. A CPFF may take one of two basic forms - completion or term.
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* Ensure disposition of classified material is completed
  
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:*The completion form describes the scope of work by stating a definite goal or target and specifying an end product. This form of contract normally requires the contractor to complete and deliver the specified end product (e.g., a final report of research accomplishing the goal or target) within the estimated cost, if possible, as a condition for payment of the entire fixed fee.
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* Final patent report submitted
  
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:* The term form describes the scope of work in general terms and obligates the contractor to devote a specified level of effort for a stated time period. Under the term form, if the performance is considered satisfactory by the Government, the fixed fee is payable at the expiration of the agreed-upon period upon contractor certification that the level of effort specified in the contract has been expended in performing the contract work. Renewal for further periods of performance is a new acquisition that involves new cost and fee arrangements.
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* Final patent report is cleared
  
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===Cost-Plus-Incentive-Fee (CPIF) Contracts (FAR 16.304; FAR 16.405-1)===
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* Final royalty report submitted
  
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The cost-plus-incentive-fee contract is a cost-reimbursement contract which provides for a fee which is adjusted by formula according to the relationship of total allowable costs to target costs. A target cost, target fee, minimum and maximum fee, and fee adjustment formula are negotiated at the outset. The fee is adjusted after contract performance, using the formula and the maximum and minimum fee limitations.
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* Final royalty report is cleared
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This contract type is appropriate when a cost-reimbursement contract is permissible and a target cost and a fee adjustment formula likely to motivate effective contract performance can be negotiated. (See FAR 16.404-1(b))
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===Cost-Plus-Award-Fee (CPAF) Contracts (FAR 16.305; FAR 16.405-2))===
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* Ensure there are no outstanding value engineering change proposals
  
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The cost-plus-award-fee contract is a cost-reimbursement contract with special fee provisions. The fee has two parts: (1) a fixed portion; and (2) an amount to be awarded for excellence in specific contract areas, such as quality, timeliness, ingenuity, and cost effectiveness, as determined by the Government.
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* Property clearance is received
  
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This contract type is appropriate when achievement is measurable only by subjective evaluation rather than objective data.
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* Plant clearance report is received
  
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===Time and Materials/Labor Hour Contracts (FAR 16.601)===
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* All interim or disallowed costs are settled
  
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The Time and Materials/Labor Hour contracts provides for payment based on (1) direct and indirect labor, paid at specified labor rates; and (2) materials paid at cost. Material handling costs may be included, if appropriate.  These contracts must include a ceiling price.
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* Price revision is completed
  
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This contract type may be used only if no other contract type is suitable. It would typically be used for service rather than product procurements. It may be appropriate when the extent of labor required or the costs cannot be anticipated at the outset.
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* Subcontracts are settled by the prime contractor
  
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===Firm-Fixed-Price (FFP) Contracts (FAR 16.202)===
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* Prior year indirect cost rates are settled
  
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The firm-fixed-price contract provides for a price which cannot be adjusted because of the cost experience of the contractor in performing the contract.
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* Final subcontracting plan report is submitted
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Firm-fixed-price contracts are suitable for acquiring commercial items (see FAR Parts 2 and 12) or for acquiring other supplies or services on the basis of reasonably definite functional or detailed specifications (see FAR Part 11) and when the contracting officer can establish fair and reasonable prices at the outset.
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* Termination docket is completed
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==Procedures==
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* Contract audit is completed
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* Contractor's closing statement (release) is completed
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* Contractor's final invoice/voucher has been submitted
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* Evidence of final voucher paid
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* Contract funds review is completed and excess funds deobligated
  
 
===Quick Closeout Procedures===
 
===Quick Closeout Procedures===
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===Contract Closeout Procedures for Firm-Fixed Price (FFP)===
 
===Contract Closeout Procedures for Firm-Fixed Price (FFP)===
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==References==
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US Air Force Mocas Contract Closeout Guide
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'''[[File:MOCAS Contract Closeout Guide.pdf|thumbnail]]'''
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Defense Contract Management Agency Guide
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'''[[File:DCMA Contract Closeout Guidebook.pdf|thumbnail]]'''
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[[Category: Policies and Procedures]]
 
[[Category: Policies and Procedures]]
  
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[[Category: Policies and Procedures - Contracts]]
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[[Category:Contract Closeout]]

Latest revision as of 16:29, 4 October 2022

Contents

Introduction

As required by the Federal Acquisition Regulation (FAR) 4.804 and/or 42.708, all contracts must be closed if a contract has been completed.

Contract closeout procedures may be straightforward or complicated depending on the contract type. Contract closeout requires coordination between Finance and Accounting Group (F&A), Contracts Group, and respective management and the government entity that administers the contract.

The overall contract closeout process consists of six areas as described in the contract closeout document. These are listed below along with the responsible departments/organizations.

1. Closeout initiation – Contracts

2. Document collection and Verification – F&A Closeout

3. Financial Analysis – F&A Closeout

4. Subcontractor Release – Contracts/Subcontracts

5. Closeout package creation - Contracts

6. US Government Certification and Archiving – US Government

Definitions/Acronyms

ACO Administrative Contracting Officer

ACRN Accounting Classification Reference Number

CA Contract Administrator

CACS Contract Audit Closing Statement

CLIN Contract Line Item Number

CPAF Cost-Plus-Award-Fee

CPFF Cost-Plus-Fixed-Fee

CPIF Cost-Plus-Incentive-Fee

DCAA Defense Contract Audit Agency

DCMA Defense Contract Management Agency

DFAS Defense Finance and Accounting Service

FAD Final Acceptance Date   FDD Final Delivery Date

GFE Government Furnished Equipment

GFM Government Furnished Material

GFP Government Furnished Property

IDIQ Indefinite Delivery Indefinite Quantity

MOCAS Mechanization of Contract Administration Services

MOD Modification

PCO Procuring Contracting Officer

POP Period of Performance

ULO Unliquidated Obligation

Overview

It is GovC’s policy to comply with Federal Acquisition Regulation requirements regarding contract closeout. Closeout timeframes are specified as follows:

a. Fixed-price contracts, GSA Schedules requiring no settlement of applied G&A, and other contracts requiring no settlement of indirect rates should be closed within six months of contract completion.
b. For cost type contracts containing the FAR 52.216-7: Allowable Cost and Payment clause, the final invoice (completion invoice) will be submitted within 120 days of final indirect rate settlement.
c. Contracts that are not of a fixed price type, or do not require an indirect rate settlement, must have a submission of a closeout invoice within twenty months of the completion of the contract. Quick closeout procedures at FAR 42.708 (noted below) will be applied to the maximum extent practicable.

There are a number of requirements necessary regarding the closeout of government contracts. It is important for GovC employees involved in the closeout process to be familiar with those requirements to ensure compliance with contractual responsibilities. Contracts can generally be categorized into three types:

1) fixed price/no rate settlements,

2) cost type contracts, and

3) contracts that are not of a fixed price type, or do not require an indirect rate settlement


Checklist

  • Issue an interim contract completion statement
  •  Ensure disposition of classified material is completed
  •  Final patent report submitted
  •  Final patent report is cleared
  •  Final royalty report submitted
  •  Final royalty report is cleared
  •  Ensure there are no outstanding value engineering change proposals
  •  Property clearance is received
  •  Plant clearance report is received
  •  All interim or disallowed costs are settled
  •  Price revision is completed
  •  Subcontracts are settled by the prime contractor
  •  Prior year indirect cost rates are settled
  •  Final subcontracting plan report is submitted
  •  Termination docket is completed
  •  Contract audit is completed
  •  Contractor's closing statement (release) is completed
  •  Contractor's final invoice/voucher has been submitted
  •  Evidence of final voucher paid
  •  Contract funds review is completed and excess funds deobligated

Quick Closeout Procedures

The first step is to determine whether a particular contract is subject to quick closeout. FAR 42.708 prescribes when contracts are eligible as follows:

1. The contract is physically complete,

2. The amount of unsettled indirect cost to be allocated to the contract is relatively insignificant

(i) The total unsettled indirect costs to be allocated to any one contract does not exceed $1,000,000
(ii) Unless otherwise provided in agency procedures, the cumulative unsettled indirect costs to be allocated to one or more contracts in a single fiscal year do not exceed 10 percent of the estimated.

Full Closeout Procedures

The overall contract closeout process consists of six areas.


Contract Closeout Procedures for Cost-Plus-Fixed Fee (CPFF)

Contract Closeout Procedures for Time and Material (T&M)

Contract Closeout Procedures for Firm-Fixed Price (FFP)

References

US Air Force Mocas Contract Closeout Guide

File:MOCAS Contract Closeout Guide.pdf

Defense Contract Management Agency Guide

File:DCMA Contract Closeout Guidebook.pdf

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