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  • Question

    Does the June 30, 2011 revised FAR 42.708 Quick-Closeout Procedure apply to contracts, task orders and delivery orders completed before June 30, 2011?


    Answer

    1. The FAR references quoted below in pertinent part are applicable to this response.

    FAR 2.101 – Definitions
    “Should” means an expected course of action or policy that is to be followed unless inappropriate for a particular circumstance.

    FAR 4.804-1 -- Closeout by the Office Administering the Contract
    (b) When closing out the contract files at 4.804-1(a)(2), (3), and (4), the Contracting Officer shall use the closeout procedures at 4.804-5. However, these closeout actions may be modified to reflect the extent of administration that has been performed. Quick closeout procedures (see 42.708) should be used, when appropriate, to reduce administrative costs and to enable deobligation of excess funds.

    FAR 42.708 -- Quick-Closeout Procedure
    (a)(2) The amount of unsettled direct costs and indirect costs to be allocated to the contract, task order, or delivery order is relatively insignificant. Cost 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— (i) $1,000,000; or (ii) 10 percent of the total contract, task order, or delivery order amount;

    FAR 52.216-7 -- Allowable Cost and Payment [both the (Jun 2011) and the (Dec 2002) versions]
    (a) Invoicing. (1) The Government will make payments to the Contractor when requested as work progresses, but (except for small business concerns) not more often than once every 2 weeks, in amounts determined to be allowable by the Contracting Officer in accordance with Federal Acquisition Regulation (FAR) Subpart 31.2 in effect on the date of this contract and the terms of this contract.

    (f) Quick-closeout procedures. Quick-closeout procedures are applicable when the conditions in FAR 42.708(a) are satisfied.

    2. As indicated in FAR 4.804-1(b), Quick closeout procedures should be used when appropriate. However, based on the definition of “should” as set forth in FAR 2.101, the use of this procedure is completely discretionary on the part of the Contracting Officer, and there is no requirement that this procedure must even be used. Furthermore, as stated in FAR 52.216-7(f), Quick-closeout procedures are applicable when the conditions in FAR 42.708(a) are satisfied. Unlike the provisions of FAR 52.216-7(a) concerning “invoicing” wherein this clause expressly states that the use of FAR Subpart 31.2 shall be the version in effect on the date of the contract, there is no such language in this clause regarding the use of Quick closeout procedures. Consequently, we believe that the current Quick closeout procedure applies to contracts, task orders and delivery orders completed before June 30, 2011.

    3. However, please note that an updated DCMA Quick Closeout Class Deviation signed by the Director of DCMA on October 25, 2011 can found in the DCMA Contract Closeout Guidebook at the following web link: http://guidebook.dcma.mil/17/Signed_Class_Deviation.pdf. This Class Deviation authorizes ACOs to close specific contracts prior to the establishment of indirect cost rates regardless of dollar value or the percent of unsettled direct costs and indirect costs allocable to a contract. Therefore under this authority, the ACO could exceed the current limitation of “the lesser of $1,000,000 or 10%” provided that certain specified conditions are met. But again, the use of this authority is completely discretionary on the part of the ACO and need not be applied by the Government in this situation.


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