PCO question is if Contractor submits DD250 for only 3500 hrs because that is all the hrs that were required to perform LOE SLIN, how will the Slin be balanced in MOCAS
As outlined in DCMA INST 135, Contract Closeout and in the DCMA Contract Closeout Guidebook, May 2014, a balanced Line Item Schedule Summary Report (LISSR) is a requirement for movement from MOCAS Section One to Section Two. Although, it is not specifically stated in the question, the assumption is that the inquiry is related to closeout, or closeout preparation.
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The question does not state what type of contract was awarded but the question did state that the line item was “level of effort”.
The contract could be a firm-fixed, level of effort term contract (FAR 16.207) which requires the contractor to provide a specified level of effort, over a stated period of time, on work that can be stated only in general terms; and the Government to pay the contractor a fixed dollar amount.
The contract could be a time and material contract (FAR 16.601) which may be used only when it is not possible at the time of placing the contract to estimate accurately the extent or duration of the work or to anticipate costs with any reasonable degree of confidence. A time and materials contract provides for acquiring supplies or services on the basis of direct labor hours at specified fixed hourly rates that include wages, overhead, general and administrative expenses, and profit; and actual cost for materials.
DCMA INST 135, Contract Closeout, states (bolded for emphasis):
188.8.131.52. Excess and Remaining Funds.
When identifying excess funds, the ACO shall consider the type of contract/order, clauses within the contract/order, and the reason for the excess funds (e.g., if indirect rates have not been settled for a cost reimbursement type contract, the ACO should retain enough funding to make payment on the final voucher). Generally, fixed price contracts/orders have a ULO balance of $0.00 when the contract/order becomes physically complete. However, there are instances where the contract/order allows for variances in quantity shipped, the contractor has rounded on the invoice, or performance on a specific Contracting Line Item Number (CLIN) was not necessary (e.g., fixed funds provided for maintenance or service on computer hardware). Upon completion of the review, the circumstances that caused the funds balance will dictate whether funds can be de-obligated via modification or removed automatically in MOCAS via the Q-Final process.
184.108.40.206.1. Excess funds are funds relating to a specific line item or deliverable that was not performed on a contract/order. The functional specialist shall de-obligate all excess funds by contract/order modification.
FAR 4.804-5 states that once a CMO receives evidence of physical completion, they will review the contract funds status and notify the PCO of any excess funds available for de-obligation at the outset of the closeout process. It is recommended that this notification be done by e-mail with a return receipt to confirm notification. When excess or negative unliquidated funds exist, a funds review should be performed at the accounting classification reference number (ACRN) level to determine the cause.
· If it is determined that excess funds remain because of contractually acceptable unperformed work or undelivered product, the ACO shall issue a modification to de-obligate the excess funds and quantity. The CMO is no longer required to obtain PCO authorization prior to de-obligating excess funds, however, the ACO should notify the PCO before the action is taken.
Based on the information shown in the sections above, the proper course of action to pursue would be:
· Determine if the quantity variance provision/clause in the contract and if the quantity to be received is within the allowable percentage, accept the reduced quantity DD-250 or material inspection and receiving report.
If the variance provision is not in the contract, ensure that the PCO concurs that the additional 500 hours were not required for the contract, and, reduce the order quantity in MOCAS to reflect the 3500 hours (and associated funding levels) and then process the DD-250 or material inspection and receiving report for the corresponding 3500 hours.