CONTRACT CLOSEOUT GUIDE · 2018-08-29 · A. Introduction This Contract Closeout Guide is designed...

FEMA CONTRACT CLOSEOUT GUIDE Version 1.1

Page 1

CONTRACT CLOSEOUT GUIDE

FEMA OCPO

August 2012


Page 2

TABLE OF CONTENTS PAGE

PART I – GENERAL CONTRACT CLOSEOUT INFORMATION ...................................................... 4 PART II – BASIC PROCEDURES FOR ALL CLOSEOUT ACTIONS ................................................ 7 PART III – CLOSEOUT OF COST TYPE CONTRACTS ..................................................................... 9 PART IV – CLOSEOUT OF FIXED PRICE CONTRACTS ................................................................ 16 PART V – CLOSEOUT OF SIMPLIFIED ACQUISITIONS ............................................................... 18 PART VI – CLOSEOUT OF BLANKET PURCHASE AGREEMENTs (BPAs) AND BASIC ORDERING AGREEMENTs (BOAs) .................................................................................................. 18 PART VII – CLOSEOUT OF TASK/DELIVERY ORDERS ............................................................... 19 PART VIII – CLOSEOUT OF INTERAGENCY AGREEMENTS ...................................................... 19 PART IX – PROBLEM CONTRACT CLOSEOUTS ........................................................................... 19 PART X – CONTRACT STORAGE, HANDLING AND DISPOSAL ................................................ 24


Page 3

LIST OF EXHIBITS

Exhibit 1 – FEMA Contract Closeout SOP

Exhibit 2 – Contract Completion Statement

Exhibit 3 – DHS Class Deviation from FAR 42.1502

Exhibit 4 –Closeout Check-Lists

Exhibit 5 – Closeout Status Sheet

Exhibit 6 – Instructions for Running IFMIS Reports

Exhibit 7 – Contract Security Classification Specification (DD Form 254)

Exhibit 8 – Sample Closeout Letter to the Contractor

Exhibit 9 – Contractor Release Statement (DHS Form 700-3)

Exhibit 10 – Assignment of Refunds, Rebates, Credits and Other Amounts (DHS Form 700-2)

Exhibit 11 – Sample Closeout Memo to COR/TPOC

Exhibit 12 – Cumulative Claim and Reconciliation Statement (DHS Form 700-1)

Exhibit 13 – Inventory Disposal Schedule (SF 1428)

Exhibit 14 – Contractor Report of Government Property (DHS Form 700-5)

Exhibit 15 – Memo to File for Use of Quick Closeout Procedures

Exhibit 16 – AAMS Closeout Procedures and Frequently Asked Questions

Exhibit 17 – Transferring Records to a Federal Records Center

Exhibit 18 – Report of Inventions and Subcontracts (DD Form 882)


Page 4

PART I - GENERAL CONTRACT CLOSEOUT INFORMATION

A. Introduction This Contract Closeout Guide is designed to acquaint you with the procedures required to closeout contract files in accordance with the FEMA’s Standard Operating Procedures for Contract Closeout (Exhibit 1). Parts I and II contain general information pertaining to the closeout process, Parts III through IX provide closeout instructions specific to contract type, and Part X provides guidance on the handling and destruction of closed files.

B. Time Standards The Federal Acquisition Regulation (FAR) allows for specific time periods after physical completion in which a contract should be closed in accordance with FAR 4.804-1. 1. Files for contracts using Simplified Acquisition Procedures (SAP) should be considered closed when the Contracting Officer (CO) receives evidence of receipt of goods/services and final payment. 2. Files for FFP contracts, other than those using simplified acquisition procedures, should be closed within 6 months after the date on which the CO receives evidence of physical completion. 3. Files for contracts requiring settlement of indirect cost rates should be closed within 36 months of the month in which the CO receives evidence of physical completion. 4. Files for all other contracts (including Time and Materials (T&M) and Labor Hour (LH)), should be closed within 20 months of the month in which the CO receives evidence of physical completion. 5. Contract files should not be closed if: (1) the contract is in litigation or under appeal, or (2) in the case of termination, all termination actions have not been completed. The FAR does not establish a timeframe for closeout of Interagency Agreements; however, these should be closed out within 12 months of the month in which the CO receives evidence of physical completion. Contract files shall be closed as soon as practical after the CO receives a Contract Completion Statement (Exhibit 2) from the Contract Administration Office (ACO) if DCMA or another office is assigned administration. The CO shall ensure that all required contractual actions have been completed and shall prepare a Contract Completion Statement to that effect. This statement is the authority to close the contract file and shall be made a part of the official contract file. (see FAR 4.804-2(b)). Time standards established in FAR 4.804-1, shown below, are based upon the time required for closing the majority of contract files. It recognizes that delays beyond the standards may occur (such as termination and bankruptcies). Contracts that exceed the specified time limits are considered “over-aged”.


Page 5

CONTRACT TYPE MONTHS AFTER COMPLETION SAP UPON RECEIPT OF GOODS/SERVICES AND NOTICE OF FINAL PAYMENT FIXED PRICE 6 CONTRACTS REQUIRING SETTLEMENT OF INDIRECT COST RATES 36 TIME AND MATERIAL LABOR HOUR AND ALL OTHER CONTRACT TYPES 20

C. Contractor Performance Information Past performance information is relevant information, for future source selection purposes, regarding a contractor’s actions under previously awarded contracts. It includes for example, the contractor’s record of conforming to contract requirements and to standards for good workmanship; the contractor’s record of controlling costs; contractor’s adherence to contract schedules, including the administrative aspects of performance and generally the contractor’s business-like concern for the interest of the customer. In accordance with FAR 42.1502, at the physical completion of a contract or the end of an interim period in a contract with option years, an evaluation of contractor performance is required. In accordance with the requirements of the Contractor Performance Assessment Rating System (CPARS) and the DHS Class Deviation from FAR 42.1502 (Exhibit 3), an evaluation is required for each contract in excess of the following thresholds

Business Sector Dollar Threshold Supplies $150,000 * $500,000 ** Services $150,000 * $1,000,000 ** Construction $650,000 A&E $30,000 * Awards made prior to 08/11/2011 ** Awards made on or after 08/11/2011


Page 6

Past performance evaluations are not required for contract values less than the thresholds cited above; however, if it is in the best interest of the Government, a report may be processed in CPARS at any dollar threshold. The past performance evaluation should include input from the Contracting Officer’s Representative (COR), Contracting Office, DCAA, and DCMA, as applicable. Evaluations used in determining award or incentive fee payments may also be used in this evaluation. D. Excess Funds The ACO is responsible for initiating a funds status review and identification of excess (unliquidated) funds. If there are excess funds remaining on the contract, it is the responsibility of the ACO to investigate and resolve this issue. The excess funding may result from some undelivered item or a service that was not performed, a change in the contractor’s price on the invoice but not reflected in the contract schedule, the contractor’s failure to invoice properly, or an error in the billing/ paying records. Discounts taken are not reported as excess funds. If necessary, the CO must negotiate a modification to the contract deobligating the excess funding or advise the contractor to bill for the excess funding as appropriate.


Page 7

PART II – BASIC PROCEDURES FOR ALL CLOSEOUT ACTIONS A. Building a Closeout File

1. Use the appropriate FEMA Closeout Check-List (Exhibit 4) based on the action type as a tool for ensuring all necessary steps in the closeout process are completed. Begin filling in as much information on the Closeout Check-List and the Closeout Status Sheet (Exhibit 5) as you can. As events occur relative to the closeout file, document them on the status sheet in chronological order and update the Check-List appropriately.

2. If for any reason the file must be passed on to another individual for closeout, they can use this chronological record and the Check-List to determine what actions remain to be taken and where the contract is in the closeout process.

3. The file/documents maintained by the COR or other technical point of contact (TPOC) must be obtained and included/merged with the official contract file for closeout.

4. If the physical contract file cannot be located a post-award file will need to be created. Copies of required documents may be obtained from the Automated Acquisition Management System (AAMS), COR, FEMA Finance Center (FFC) or the contractor.

B. Desk Audit 1. Read the contract and modifications thoroughly in order to determine if the contract is

physically complete. Contact the contractor or your government customer if you need additional information or documentation in helping you make this determination.

2. Review the contract clauses and special provisions to determine if any terms and conditions relative to closeout are in the contract. Observe how the clauses and provisions apply to the contract in order to ensure that the rights and obligations of both the government and the contractor are satisfied. For example, if property clauses are in the contract check the Statement of Work (SOW)/Performance Work Statement (PWS) and any attachments to identify if Government Furnished Property (GFP) or Government-Furnished Equipment (GFE) was provided to the contractor; validate compliance with any technical data or patent right clauses that are in the contract, etc. Completion of this step will help you in determining what information/documentation is required from the program office as well as the contractor.

C. Payment Histories and Funding Resolution 1. Determine if there are funds that must be obligated or de-obligated. If the contract file does not

contain a complete invoice liquidation record, prepare a spreadsheet populated with all obligations/de-obligations made and all invoices paid against the contract.

2. Keep in mind that for Firm Fixed Price (FFP) contracts, there should be no excess funds to de-obligate. The contractor is entitled to bill for the total amount. (Take note that many FFP contracts may have cost reimbursable line items that contain excess funds).

3. Concurrently with the process above, request a payment history for the contract from the FFC. If you have read rights in the Integrated Financial Management Information System (IFMIS) you can obtain this information yourself by running various reports on the commitment and obligation numbers. See Exhibit 6 for instructions on how to run these reports in IFMIS.


Page 8

4. Request a listing from the contractor of all invoices submitted and payments received. Thislisting should include Invoice/Voucher numbers, amount of each voucher and payment, and submittal and payment dates.

5. Compare your spreadsheet (from subparagraph C.1 above) with the IFMIS records and thecontractor records to ensure there are no discrepancies that need to be resolved. Information from all sources should reflect the same history of obligations, de-obligations and expenditures. Any disparities must be resolved.

D. Determining Security ClassificationYou should find a DD Form 254 – Department of Defense Contract Security Classification Specification (Exhibit 7) in the contract if the contract contains classified material. You should be able to determine this by examining the contract attachments in Section J of the contract. If there is a DD Form 254 the FEMA Security Office should be notified that the contract is complete and classified material should be disposed of properly. Be sure the prime contractor has cleared all subcontracting DD Forms 254. The ACO does not need confirmation or certification of completed actions from the security office to proceed with closeout. A final DD Form 254 can be accomplished by the COR/TPOC during the closeout process. It should reflect the disposition of the classified materials.

E. Letter/Email to the ContractorSee Exhibit 8 for a sample closeout letter to the contractor. A simple email may be used in lieu of a formal letter for simplified acquisitions and most FFP type contracts that do not include issues such as GFP, Patents and Royalties, etc. At a minimum the email should state that the order/contract is being closed out and the total amount of payments made according to our records then provide a deadline for the contractor to respond as to whether their records agree as to total amount paid and if there are any outstanding invoices. If you have identified excess funds on the contract, identify these amounts by fiscal year and ask the contractor to confirm. Make sure to address all closeout actions and clauses that pertain to the contract. Also, use this letter/email to request any documents missing in your own files that the contractor is required to provide, such as any missing deliverables, documentation, invoice copies, etc.

F. Memo to the Program OfficeAfter receipt of the contractor’s package, request a memo from the COR/TPOC assigned to the contract (see Exhibit 11 for a sample memo). The COR/TPOC is required to confirm that all required documentation and deliverables have been received and that the contract is ready for closeout. (e.g.: Has GFP been accounted for? Have all deliverables been received? Has classified documentation been properly handled? Has the Contractor returned all FEMA badges? Has the Office of the Chief Information Officers (OCIO) been notified of any employees who had access to IT systems?).

G. Completion of Closeout Actions1. Prepare a final closeout modification.

2. Prepare the Contract Completion Statement (see Exhibit 2)

3. Take the necessary steps to close the contract in AAMS (see Exhibit 16).

4. Prepare the contract for staging and refer to PART X for staging instructions.


Page 9

PART III – CLOSEOUT OF COST TYPE CONTRACTS

The closeout of cost reimbursement contracts is generally viewed as the most complex of acquisition vehicles to closeout due to the need for the final determination of indirect cost rates. The below steps outline the process for closing out cost reimbursement contracts.

A. Technical Acceptance and Performance Evaluation

Upon completion of all technical performance requirements or when the period of performance has expired, a contract is rendered inactive and the Contract Specialist (CS) should immediately begin the closeout process.

To verify the completion of all technical requirements and to document the contractor’s performance, the following items must be completed:

1. In cooperation with the COR, document the contract file as to the satisfactory completion of all technical performance requirements outlined in the contract. Specialists shall use the standard memo to COR/TPOC (Exhibit 11) to document the contract file as to the satisfactory completion of all technical requirements.

2. In cooperation with the contractor and the Assessing Official, the COR shall initiate the past performance assessment through the CPARS. The completed past performance assessment shall be printed and filed in the contract file.

B. Request Contractor Closeout Documents

Upon final acceptance of all contract deliverables, notify the contractor of technical acceptance of all deliverables and request completion and submission of contract closeout documents. When notifying the contractor use the sample closeout letter, Exhibit 8.

Initial Contractor Closeout Documents Include:

1. A copy of any final indirect cost rate agreements for those fiscal years previously audited and settled.

2. The contractor’s final indirect cost rate proposal for those fiscal years that are unaudited and unsettled, the proposal should include the certification required at FAR 52.242-4.

3. A cost element breakdown, by fiscal year, using previously audited and settled indirect cost rates and proposed (unsettled) indirect costs rates. The breakdown should clearly indicate rates that represent provisional indirect cost billing rates, audited and settled indirect cost rates, and those indirect cost rates that are proposed.

4. Summary list of all vouchers presented for payment (include voucher number, date, amount claimed, and amount paid).


Page 10

5. DHS Form 700-5, Contractor Report of Government Property.

6. Standard Form 1428, Inventory Disposal Schedule.

7. DD 882, Report of Inventions and Subcontracts.

8. SF-294, Subcontracting Report for Individual Contracts (completed using the Electronic Subcontract Reporting System (ESRS))

NOTE: If quick closeout procedures are not being utilized, items 1 and 3 above are not required from the contractor.

The contractor may be able to provide some of the final closeout documents sooner than others. For example, the final indirect cost rate proposal may take more time to prepare than the summary list of invoices. Be sure to follow up with the contractor to secure appropriate closeout documents in a timely manner.

C. Financial Reconciliation

1. Determine if there are any funds that must be obligated or de-obligated. If the contract file does not contain a complete invoice liquidation record, prepare a spreadsheet populated with all obligations/de-obligations made and all invoices paid against the award.

2. Concurrently with the process above, request a payment history for the contract from the FFC. If you have read rights in IFMIS you can obtain this information yourself by running various reports on the commitment and obligation numbers.

3. Compare your spreadsheet (from subparagraph C.1 above) with the IFMIS records and the contractor’s reconciliation (B.4 above) to ensure there are no discrepancies that need to be resolved. All documents should reflect the same history of obligations, de-obligations and expenditures. Any disparities must be resolved.

4. Document the file as to the resolution of differences between financial records.


Page 11

D. Determination of Final Indirect Cost Rates

The determination of final indirect costs is central to the closeout of cost type contracts. This determination seeks to resolve the differences between any provisional billing rates in the contract and the contractor’s actual cost experience. The resulting determination may require an adjustment to the final amount of the contract (either up or down), depending on the variance between provisional billing rates and actual cost experience.

Specialists should carefully review any limitation of costs/funds clauses in the contract. Any adjustments to the final indirect cost rates do not allow the final amount of the contract to exceed the governments stated funding/cost limitations.

Generally, there are two ways to determine final indirect cost rates:

1. Quick Closeout Procedures

a. Applicability: Quick closeout procedures are used to establish final indirect cost rates for a specific contract, without an audit. The rates used under this procedure apply only to the contract being closed, and are not considered a binding precedent when establishing the final indirect cost rates for other contracts.

In accordance with FAR 42.708, the contracting officer may negotiate final indirect cost rates for a specific contract, in advance of the determination of final indirect cost rates, if:

i. The contract is physically complete and all services and commodities have been accepted.

ii. The amount of unsettled direct and indirect cost to be allocated to the contract is relatively insignificant. Unsettled amounts will be considered relatively insignificant when the total unsettled direct costs and indirect costs to be allocated to any one contract, task order, or delivery order does not exceed the lesser of: (a) $1M or (b) 10 percent of the total contract, task order, or delivery order amount

iii. The contracting officer performs a risk assessment and determines that the use of

the quick-closeout procedure is appropriate. The risk assessment shall include: (a) Consideration of the contractor’s accounting, estimating, and purchasing

systems (b) Other concerns of the cognizant contract auditors; and (c) Any other pertinent information, such as, documented history of Federal

Government approved indirect cost rate agreements, changes to contractor’s rate structure, volatility of rate fluctuations during affected periods, mergers or acquisitions, special contract provisions limiting contractor’s recovery of otherwise allowable indirect costs under cost reimbursement or time-and-


Page 12

materials contracts; and

iv. Agreement can be reached on a reasonable estimate of allocable dollars.

b. Process: Upon receipt of the contractor’s final indirect cost rate proposal and other associated closeout documents described in Section b. above: i. Contact the cognizant audit activity, either verbally or in writing, identify the

contract(s), and request: (1) the contractor’s indirect cost history covering a sufficient number of fiscal years to see the trend of claimed, audit questioned, and disallowed costs; and (2) any other information that could impact the decision to use quick closeout procedures. Indirect cost histories should be requested from the contractor only when the cognizant audit activity is unable to provide the information.

ii. Review the contract(s) for indirect cost rate ceilings and any other contract limitations, as well as the rate history information.

iii. Negotiate/settle final indirect cost rates for each fiscal year with the contractor. The final rates may be established using one or a combination of the following: (a) ceiling indirect cost rates established in the contract (if applicable),

consistent with FAR 42.707(c)(1) and (2);

(b) contractor’s claimed actual rates adjusted based on the contractor’s indirect cost history;

(c) recommended rates from the cognizant audit agency, the local pricing office, another installation pricing office, or other recognized knowledgeable source;

(d) billing rates established in the contract;

(e) previous years’ final rates in the contract, if established, and/or;

(f) established final rates (under same contract) for another fiscal year closest to the period for which quick closeout rates are being established.

iv. Document the file with the basis for using quick closeout procedures in determining final indirect cost rates using the memo to file template, Exhibit 15. If necessary, supplement the form with a more detailed summary of negotiations to explain any significant occurrences in making the final determination of indirect cost rates. If the Government and the contractor cannot agree on final indirect cost rates through the use of quick closeout procedures, the rates will be determined using a formal audit from DCAA or other contracted auditor.

http://farsite.hill.af.mil/VFFARA.HTM


Page 13

2. Determination of Final Indirect Rates Through DCAA Audit

a. Auditor Determination - When the use of quick closeout procedures is not appropriate, final indirect cost rates must be determined in accordance with FAR 42.705. In most cases, the procedures outlined in FAR 42.705-2, Auditor Determination Procedure, will be sufficient. This procedure primarily relies upon DCAA to conduct the audit, and makes a final indirect cost rate determination, in cooperation with the contractor. When using the auditor determination procedures, the specialist shall: i. Check with DCAA to determine if final indirect cost rates have been established

for the unsettled years, or if indirect cost rate audits are currently in progress.

ii. If final indirect cost rates have not yet been established for the unsettled years, request an audit for the unsettled years and negotiate a final indirect cost rate. This request shall be coordinated through the Chief, Acquisition Policy and Legislation Division. Prior to submitting a request for an audit, request a cost estimate from DCAA or one of the available vendors on GSA Schedule.

iii. Utilize the indirect cost rate agreement negotiated by the auditor to complete the closeout.

b. Contracting Officer Determination - If DCAA and the contractor are unable to agree upon final indirect cost rates, or it is determined that auditor determination is not appropriate, procedures under FAR 42.705-1, Contracting Officer Determination Procedure, will be used. These procedures rely on the contracting officer to lead a government negotiation team in making a final indirect cost determination. In coordination with the DCAA auditor, and in accordance with FAR 42.705-1(b)(5) the contracting officer shall: i. Conduct negotiations.

ii. Prepare a written indirect cost rate agreement conforming to the requirements of

the contract(s).

iii. Prepare, sign, and place in the contract file a negotiation memorandum covering -- (a) The disposition of significant matters in the advisory audit report.

(b) Reconciliation of all costs questioned, with identification of items and

amounts allowed or disallowed in the final settlement as well as the disposition of period costing or allocability issues.

(c) Reasons why any recommendations of the auditor or other Government advisors were not followed.



Page 14

(d) Identification of cost or pricing data submitted during the negotiations and relied upon in reaching a settlement.

(e) Distribution record of resulting documents in accordance with FAR 42.706.

(f) A statement that the contractor was notified of the individual costs which were considered unallowable and the respective amounts of the disallowance.

The final cost adjustments and the amount of fee should be mutually agreed to by the CO and the contractor. Generally, if mutual agreement on final indirect cost rates cannot be reached, the CO may make a unilateral determination, which may be challenged by the contractor under the Disputes clause.

c. Educational Institutions – The determination of indirect cost rates for educational institutions are governed by OMB Circular A-21. See FAR 42.705-3 for determining indirect cost rates for educational institutions.

d. State/local governments and other non-profit organizations (other than educational institutions) – The determination of indirect cost rates for state and local governments and other non-profit organizations (other than educational institutions) are governed by OMB Circulars A-87 and A-122.

E. Request Final Contract Closeout Documents

The CS shall request final closeout documents from the contractor in writing to include:

1. DHS Form 700-3, Contractor Release Statement, reflecting final contract cost and fee.

2. DHS Form 700-2, Contractor Assignment of Refunds, Rebates, Credits, and Other Amounts.

3. DHS Form 700-1, Cumulative Claim and Reconciliation Statement.

4. Final invoice - reflecting final indirect cost rates.



Page 15

F. Government Property

Inventory reported by the contractor on SF 1428, Inventory Disposal Schedule, should be forwarded to the COR for screening and recommendations for disposition. Disposition of government property shall be handled in accordance with FAR 45.6.

G. AAMS

Complete the closeout process for the action in AAMS.

H. Final Approval of Contract Closeout Documents

The following closeout documentation should be forwarded to the contracting officer for review/signature.

1. Contract modification stating that the contract is closed and obligating/deobligating any fundsas necessary.

2. Contractor’s closeout documents.

3. Evidence of closeout in AAMS and associated FPDS-NG entry.

4. COR/TPOC closeout memo, and copy of Final CPARS Evaluation of Contractor Performance.

5. Completed Closeout Checklist

6. Contract Completion Statement

The contracting officer shall ensure that the contract file contains all required documentation outlined in the Closeout Checklist, approve the contract modification, and sign the Contract Completion Statement.

I. Final Payment

After review and approval of the final closeout documents by the contracting officer transmit the final voucher and final contract modification to the FFC with the following comment on it, “This invoice is approved for payment. It is the final invoice under this contract and is NOT subject to interest payment. Upon payment of this invoice, this contract is officially closed.”

acato

Highlight


Page 16

PART IV – CLOSEOUT OF FIXED PRICE CONTRACTS

To closeout a FFP type contract, complete the following items:

A. Technical Acceptance and Performance Evaluation

Upon completion of all technical performance requirements or when the period of performance has expired, a contract is rendered inactive and the Contract Specialist (CS) should immediately begin the closeout process.

To verify the completion of all technical requirements and to document the contractor’s performance, the following items must be completed:

1. In cooperation with the COR, document the contract file as to the satisfactory completion of all technical performance requirements outlined in the contract. Specialists shall use the standard memo to COR/TPOC (Exhibit 11) to document the contract file as to the satisfactory completion of all technical requirements.

2. In cooperation with the contractor and the Assessing Official, the COR shall initiate the past performance assessment through the CPARS. The completed past performance assessment shall be printed and filed in the contract file.

B. Request Contractor Closeout Documents

Upon final acceptance of all contract deliverables, notify the contractor of technical acceptance of all deliverables and request completion and submission of contract closeout documents. When notifying the contractor use the sample closeout letter, Exhibit 8 or email, Exhibit 19.

1. Summary list of all vouchers presented for payment (include voucher number, date, amount claimed, and amount paid).

2. Final Invoice

3. DHS Form 700-5, Contractor Report of Government Property.

4. Standard Form 1428, Inventory Disposal Schedule.

5. DD 882, Report of Inventions and Subcontracts (see FAR 52.227-14).

6. SF-294, Subcontracting Report for Individual Contracts (completed using ESRS).

7. DHS Form 700-3, Contractor Release Statement, reflecting final price (only necessary if all funds were not disbursed and there is a balance of funding).


Page 17

C. Financial Reconciliation

1. Determine if there are any funds that must be obligated or de-obligated. If the contract file does not contain a complete invoice liquidation record, prepare a spreadsheet populated with all obligations/de-obligations made and all invoices paid against the award.

2. Concurrently with the process above, request a payment history for the contract from the FFC. If you have read rights in IFMIS you can obtain this information yourself by running various reports on the commitment and obligation numbers.

3. Compare your spreadsheet (from subparagraph C.1 above) with the IFMIS records and the contractor’s reconciliation (B.1 above) to ensure there are no discrepancies that need to be resolved. All documents should reflect the same history of obligations, de-obligations and expenditures. Any disparities must be resolved.

4. Document the file as to the resolution of differences between financial records.

D. Government Property

Inventory reported by the contractor on SF 1428, Inventory Disposal Schedule, should be forwarded to the COR for screening and recommendations for disposition. Disposition of government property shall be handled in accordance with FAR 45.6.

E. AAMS

Complete the closeout process for the action in AAMS.

F. Final Approval of Contract Closeout Documents

The following closeout documentation should be forwarded to the contracting officer for review/signature.

1. Contract modification stating that the contract is closed and obligating/deobligating funds as necessary.

2. Contractor’s closeout documents.

3. Evidence of closeout in AAMS and associated FPDS-NG entry.

4. COR/TPOC closeout memo, and copy of Final CPARS Evaluation of Contractor Performance.

5. Completed Closeout Checklist

6. Contract Completion Statement


Page 18

The contracting officer shall ensure that the contract file contains all required documentation outlined in the Closeout Checklist, approve the contract modification, and sign the Contract Completion Statement.

PART V – CLOSEOUT OF SIMPLIFIED ACQUISITIONS A. If possible, simplified actions should be closed out 14 days after final payment and delivery. Placea memorandum in the file if this is not attainable.

B. Ensure there is a final Material Inspection and Receiving report covering all deliverables requiredby the purchase order.

C. Validate through IFMIS or the FFC that a final invoice has been received and, if not, work with thecontractor to get their final invoice submitted.

D. If there is classified material involved with the purchase order, verify in writing with the customerthat all classified information generated or received by the contractor has received proper disposition.Prepare and process a final DD Form 254.

E. Validate with the customer that the Contractor has returned all FEMA badges and that the OCIOhas been notified of any contractor employees departing that had been given access to IT systems.

F. Prepare a Contract Completion Statement.

G. Prepare an appropriate modification to de-obligate any excess funds and/or formally close thepurchase order.

H. Ensure the action is properly closed in AAMS.

PART VI – CLOSEOUT OF BLANKET PURCHASE AGREEMENTs (BPA) AND BASIC ORDERING AGREEMENTs (BOA) A. BPAs and BOAs are not contracts. The “Call” or “Order” becomes the “Contract”. Agreementsshall not state or imply any agreement by the Government to place future contracts (Calls or Orders)with the contractor or be used in any manner to restrict competition. Read through the agreementcarefully, it should specify the point at which each call or order becomes a binding contract (e.g.,issuance of the call or order, acceptance of the call or order in a specified manner, or failure to rejectthe call or order within a specified number of days).

B. Procedures for closing out the “Contracts” (Calls or Orders) are the same as stated in PARTs IIthrough V as applicable. NOTE: IAW FAR 4.804-5 -- Procedures for Closing Out Contract FilesSubparagraph (b)(5), ensure that the Contract Completion Statement contains the last call or ordernumber as if the order were a contract awarded independently of the agreement.

C. The “Agreement” is considered closed once all Calls/Orders have been closed out. Uponverification of this no other actions are required to close out the agreement itself. The agreement filesare staged together with the Calls/Orders IAW PART X.


Page 19

PART VII – CLOSEOUT OF TASK/DELIVERY ORDERS Each task/delivery order under an Indefinite Delivery/Indefinite Quantity (IDIQ) contract must be closed out separately as if it were a stand-alone contract. Specialists should follow the procedures outlined above that correspond with a cost reimbursement task order or a fixed price task order. The language in the standard correspondence should be altered to reflect the closeout of a task order as opposed to the closeout of a contract.

Fixed price task orders should be closed out immediately upon completion of the period of performance of the task order and technical acceptance has been confirmed.

Whenever appropriate cost reimbursement task orders should be closed out via Quick Closeout Procedures as outlined in Part III above. If Quick Closeout Procedures are not appropriate, the CS should wait to close out the task order until the necessary indirect cost rate information is obtained.

PART VIII – CLOSEOUT OF INTERAGENCY AGREEMENTS A. Verify technical acceptance of requirements by sending an email or memo to the program office to confirm all technical requirements have been met by the contractor or partnering agency B. Verify with the partner agency that all invoices (IPAC transactions) have been submitted and paid and no additional invoice will be submitted. C. Ensure that any amount remaining on the interagency agreement is consistent with the amount shown in IFMIS and with the program office’s records. Perform any reconciliation, as necessary. D. Prepare a modification to officially closeout the interagency agreement. The modification should include the de-obligation of any unliquidated funds. E. Ensure the action is properly closed in AAMS.

PART IX – PROBLEM CONTRACT CLOSEOUTS A. Contractor No Longer in Business

1. It is not uncommon to have open contracts for companies that are no longer conducting business. In these instances, the Government shall take every reasonable measure to locate the company and/or its principals. Try the following:

a. Attempt to contact the company/company officials by using telephone “directory assistance” to verify that the company hasn’t simply relocated.

b. Attempt to locate the company in writing, via certified mail, return receipt requested.

c. Contact/inquire about the company’s status from other Government officials (another agency might have information you can use to find the vendor).

d. If the vendor’s address is close, you could visit their office to see if they have moved or gone out of business.


Page 20

e. Contact the Bankruptcy Court of the state in which the company is located to determine if the company has filed for bankruptcy.

f. Examine the Contractor Certification Registration (CCR) http://www.ccr.gov/ to see if the company is still registered.

2. Document the contract file with every attempt made to locate the company and its officials. If all of the above attempts prove unsuccessful, it is recommended that the ACO begin Administrative Unilateral Closeout. Administrate Unilateral Closeout begins with a thorough review of the official contract file(s). The following should be ascertained during that review:

a. Is the contract physically complete and has Government acceptance of goods/services been received? Contact the Government's TPOC to assist with this determination.

b. Was the contractor previously paid any funds? Review the Modification and Invoice Spreadsheet. Also contact the FFC, explain the circumstances and request a copy of their payment history for this contract.

c. Has the cognizant DCAA been involved on this contract or any other agency's contracts with this contractor? Check with the cognizant DCAA office to determine the status of any indirect cost rate settlement [if this contract is other than FFP or only has CLINs that are other than FFP].

d. Has the contract been terminated for convenience or default?

3. Any other pertinent information relative to the contractor or performance of the contract (e.g., unsettled subcontract costs, litigation, etc.) should be considered. It is recommended that the ACO check with the FEMA Office of Chief Counsel (OCC) to ascertain if any actions are pending against this vendor/contractor.

4. The ACO should notify Leadership and any other FEMA COs, that might have done business with this contractor (ascertain through a search in AAMS or IFMIS), of any findings and initiate an Administrative Unilateral Closeout of the contract file.

5. Review all of the available data to determine the final contract price and if any excess funds can be deobligated from the contract.

6. Complete a unilateral modification to de-obligate any excess funds and formally closeout the contract. Coordinate the draft modification through Leadership and the OCC prior to execution.

B. Contractor in Bankruptcy 1. FAR Subpart 42.9 -- Bankruptcy establishes a requirement for the contractor to notify the CO

upon filing a petition for bankruptcy. It further establishes minimum requirements for agencies to follow in the event of a contractor bankruptcy.

2. The ACO shall take prompt action to determine the potential impact of a contractor bankruptcy on the Government in order to protect the interests of the Government.

3. When notified of bankruptcy proceedings, the ACO shall, at a minimum:

a. Furnish the notice of bankruptcy and all pertinent contract information to the OCC and other appropriate agency offices (e.g., any other affected buying activities who may be doing business with this contractor, the Technical POC for this contract, the FFC, DCAA and DCMA, if appropriate). The CO shall consult with Legal Counsel whenever possible prior to taking any action regarding the contractor’s bankruptcy proceedings;


Page 21

b. Determine the amount of the Government’s potential claim against the contractor (in assessing this impact, identify and review any contracts that have not been closed out, including those physically completed or terminated); and

c. Take actions necessary to protect the Government’s financial interests and safeguard Government property.

4. Once a bankruptcy petition is filed, an automatic stay goes into effect. This stay generally precludes any action to collect from the debtor or to interfere with the debtor’s property interests. Contract closeout actions could interfere with the property interest and violate the stay. Contracts can be considered property of the bankrupt estate. Consequently, contract closeout actions should generally not be done without relief from the stay. Violation of the stay can subject responsible parties to contempt citations. Immediately coordinate with the OCC. The government’s legal offices have been successful in getting relief from stays by working with bankruptcy trustees.

5. Any claim against the contractor must be filed with the court in the form of a Proof of Claim. With the filing of a bankruptcy petition, the court usually will set a date by which the Proof of Claim must be filed. Potential claims against the contractor must be compiled and analyzed to determine whether a Proof of Claim is in the best interests of the Government and, if so, that information must be provided to the FFC. FFC has the responsibility for preparing the Proof of Claim and providing it to the cognizant US Attorney for filing with the bankruptcy court.

6. An Administrative Unilateral Closeout and determination of final contract price may be in order.

C. Contractor Fails to Submit Indirect Cost Data 1. IAW FAR 52.216-7 – Allowable Cost and Payment and FAR 52.216-15 – Predetermined

Indirect Cost Rates the contractor is required to submit a final indirect cost proposal to the Government within the six (6)-month period following the expiration of each of its fiscal years. The ACO should work with DCAA to obtain overdue proposals.

2. It is recommended that the ACO issue a letter to the contractor 90-days before the end of a contractor’s fiscal year, requesting submission of the indirect cost proposal. If the contractor does not submit their proposal in a timely manner, measures shall be taken to protect the Governments financial interest. The ACO should issue a letter to the contractor and request a response within 30-days.

3. If a contractor remains non-responsive, the ACO may want to schedule a meeting with the contractor. During the meeting, the contractor could be presented with a letter informing them that continued non-responsiveness will result in a billing rate decrement.

4. More than likely, a contractor will respond to a billing rate decrement. However, continued non-receipt of incurred cost data dictates an aggressive approach by the ACO. Contracts are physically complete and the closeout time clock is ticking. Based on these factors, the ACO should proceed with unilateral determination of indirect cost rates (FAR 42.703-2 – Certificate of Indirect Costs, Paragraph (c) Failure to certify)) and/or unilateral determination of final contract cost.

D. Contractor is Unable to Submit Supporting Indirect Cost Data 1. On rare occasions, contractors are unable to provide final invoice because they have not

retained their financial records for a fiscal year. When this happens, the contractor does not have the ability to support a DCAA audit or the incurred cost previously billed on other contracts.


Page 22

2. In these instances, Administrative Unilateral Closeout is recommended. As with all Administrative Unilateral Closeout efforts, a thorough review of the contract file is essential. Risk assessment may be required to ensure the financial security of the contractor. Upon completion of ACO review, the ACO should have an understanding as to why the contractor is unable to provide the final invoice. If Administrative Unilateral Closeout is still deemed suitable under the circumstances, it is recommended that the ACO proceed with the closeout as follows:

a. Contact the appropriate DCAA office and obtain an opinion as to the propriety of an Administrative Unilateral Closeout of the contract.

b. Upon receipt of the DCAA recommendation, the ACO should send a notice to the PCO. Primary PCO concurrence is recommended prior to issuance of a contract modification. However, if after 30-days the PCO has not responded, the ACO should proceed with the closeout.

c. Calculate the final price based on previous amounts paid to date.

d. Issue a modification establishing the final price at the amount previously paid to date and deobligate any excess funds at the ACRN and CLIN level.

E. Contractor Fails to Submit Final Invoice 1. For FFP Contracts, A reasonable number of requests for a final invoice should be made to the

contractor. If the contractor still does not submit a final invoice, then:

a. Verify that the government has accepted all shipments/performance.

b. Send the contractor a letter asking if payment is complete. Ask him for a specific date you can expect his final invoice if he indicates payment is not complete.

c. If the contractor fails to respond by the established suspense date, send a certified letter, return receipt requested, to the contractor advising them of the intent to administratively close the contract. Set a suspense date for his response.

d. If the contractor responds that payment is not complete but will not submit a final invoice or fails to respond by the suspense date in the certified letter, the contract should be closed via final payment.

2. For Cost Reimbursable Contracts:

a. The ACO has the responsibility of obtaining the final invoice and closing documents IAW the FAR and applicable supplements. The contractor is contractually required to submit a final voucher or invoice within 120-days after settlement of final indirect cost rates. As soon as the rates are settled and the contractor has signed an indirect cost rate agreement, the ACO should request that the final invoice be submitted IAW FAR 52.216-7 – Allowable Cost and Payment, Subparagraph (d)(5).

b. In situations where indirect cost rates have been settled and the contractor has failed to adhere to FAR 52.216-7(d)(5), it is recommended the ACO research and determine the reason for non-submission. Many times the contractor may not be able to submit a final invoice because:

i. They are awaiting final subcontractor costs.

ii. There is a lack of accounting staff to prepare final vouchers.

iii. There is a lack of sufficient final records needed to prepare cumulative cost sheets and ultimately the final invoice.

iv. The final invoice would result in a credit balance due to the Government.


Page 23

v. The final invoice would equal $0.00

c. When the contractor fails to submit a final invoice within 120-days after settlement of final indirect cost rates, the ACO should attempt to obtain from the contractor a reasonable explanation. Also, try to work with the contractor to develop an acceptable plan for submission of the final invoice, and grant a reasonable extension, if necessary. If the contractor still will not submit a final invoice, other remedies available to the ACO include:

i. Elevate to Leadership.

ii. Initiate non-contractual remedies such as inclusion of comments in requests for Past Performance information on other contracts.

iii. Suspend any interim financing payments.

iv. Recoup previously paid costs.

v. Decrement the contractor's previously settled indirect cost rates.

vi. Withhold any fees which may be due.

d. If the above remedies are unsuccessful or are not an option, the ACO should pursue a unilateral determination of final contract price. The ACO should:

i. Verify that the government has accepted all shipments and/or performance.

ii. Issue an "Initial Letter of Request for Final Voucher" and establish a reasonable suspense. This step may have already been completed when the research and determination of the reason for non-submission was performed. If so, there is no need to issue an additional letter.

iii. Coordinate with Leadership and the Legal Office and other advisors.

iv. Determine the total allowable cost IAW DCAA Audit of Indirect Cost Rates.

v. Determine the total previous payments made to the contractor according to the ACO’s and FFC’s official contract records.

vi. Issue a certified letter to the contractor, return receipt requested, which serves as a notice of intent to unilaterally determine the final contract prices if the final vouchers are not received within 30-days from date of the notice.

vii. Calculate the final contract price. If it is determined that the contractor has been underpaid, state the amount due in the final unilateral determination modification. If overpayment has occurred, request a refund from the contractor. If the contractor refuses to provide the refund within 30-days from the date of the request, forward the debt to the FFC for collection action.

viii. If it is determined that excess funds remain on the contract, accomplish de-obligation within the final unilateral determination modification.

ix. Notify the PCO that the ACO intends to issue a final unilateral determination modification accomplishing Administrative Unilateral Closeout and the calculation of the final contract price. Request that the PCO consider including appropriate comments in any future past performance questionnaires received on this contractor.

x. Coordinate the final package and the proposed modification through Management and the Legal Office.


Page 24

xi. Issue the final unilateral determination modification and proceed with approved procedures to prepare the contract for local staging.

PART X – CONTRACT STORAGE, HANDLING AND DISPOSAL A. The ACO shall follow the guidance in FAR 4.805 -- Storage, Handling, and Disposal of Contract Files and any other locally established agency procedures for retention and staging of contract files.

B. The Contracting Office shall hold completed contract files in the office responsible for maintaining them for a period of 12 months after closeout. After the initial 12-month period, send the record to the local records holding or staging area until they are eligible for destruction. If no space is available locally transfer the files to the GSA Federal Records Center that services the area. Destroy working files as soon as practical once they are no longer needed.

C. FAR 4.802(f) authorizes the contracting office to maintain files in any medium (paper, electronic, microfilm) or any combination as long as the requirements are met. It is recommended that the hard copy files be destroyed as soon as practical after they have been scanned as an electronic file. An exception to this action would be classified, proprietary, or litigation files that may have to be maintained and safeguarded in an alternate fashion.

D. FAR 4.805(b) allows entire contract files to be retained together if they cannot be economically segregated for documents with different retention periods providing that the entire files are kept for the longest period of time stipulated.

E. To prepare contract files for staging, fill out an SF 135 – Records Transmittal and Receipt, and place the records in staging boxes in an upright position, facing the front of the box, in the sequence listed on the SF 135. Once the records are ready to be transferred to the Federal Records Center, follow the instructions in Exhibit 17, Transferring Records to an FRC.

Date post:	31-Dec-2019
Category:	Documents
Upload:	others
View:	7 times
Download:	1 times