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  • Question

    Is a close-out action required since the Contractor has billed for the entire task order amount?


    Answer

    From the guidance found at Federal Acquisition Regulation (FAR) 4.804-5 – Procedures for Closing Out Contract Files:

    (a) The contract administration office is responsible for initiating (automated or manual) administrative closeout of the contract after receiving evidence of its physical completion. At the outset of this process, the contract administration office must review the contract funds status and notify the contracting office of any excess funds the contract administration office might deobligate…
    The administrative closeout procedures ensure, among other things, that:
    “…(1) Disposition of classified material is completed;
      …(9) Subcontracts are settled by the prime contractor;
      … (13) Contractor’s closing statement is completed;
      (14) Contractor’s final invoice has been submitted; and
      (15) Contract funds review is completed and excess funds deobligated.
    The contracting office administering the contract should also follow the guidance at (DFARS) PGI 204.804-1 Closeout by the office administering the contract and PGI 204.804-3 Closeout of paying office contract files.
    Additionally, the DCMA Closeout Guidebook advises that “quick closeout procedures should be the first area looked at when deciding how to close a contract.”

    Per
    42.708 -- Quick-Closeout Procedure, quick closeout procedures shall be used if –
    “(1) The contract, task order, or delivery order is physically complete;
    (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;
    (3) The contracting officer performs a risk assessment and determines that the use of the quick-closeout procedure is appropriate...”

    on the information you provided, the parts that are bolded above appear to apply to your situation.  Per (FAR) 4.804-5 Procedures for Closing Out Contract Files, closeout of the contract is required after receiving evidence of its physical completion.  The FAR does not provide any exceptions to this requirement.  It’s important to remember that closeout procedures are not only intended to ensure the contractor has received final payment and excess funds are de-obligated, but also to verify that the requirements of the task order have been satisfactorily completed/final acceptance has been made by the Government, the contractor has satisfied all terms and conditions of the task order and contract, and the contractor has submitted a properly executed “Release of Claims”.  While it doesn’t appear closeout of your task order requires negotiation of any unsettled costs, quick closeout procedures (FAR 42.708 -- Quick-Closeout Procedure) can save the government and the contractor both time and money and “should be the first area looked at when deciding how to close a contract.” Finally, for FFP contracts that do not exceed $500,000, (DFARS) PGI 204.804-3, Closeout of Paying Office Contract Files, allows automated contract closeout if the contract does not contain certain provisions as identified in this PGI section.  Bottom line: your task order, as you described it, is required to be closed out, but there are methods available to help streamline the closeout process.


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