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    Once DFAS has assigned a BOC # and initiated collection action, is there a regulation/policy that precludes the ACO from closing out the contract considering the collected funds would not be returned to an LOA on the contract? Additionally, the unilateral closeout modification would contain language similar to the following: "DFAS is actively pursuing collection of the debt amount of $XX under BOC # XXXXXX. The funds will be returned to the Treasury upon completion of the debt collection action."


    In consultation with DCMA AQ it is recommended that the contract remain open pending debt collection. Below are policy and regulatory requirements that would imply keeping the contract open. Though as AQ noted as regards close-out policy and regulation is silent. One item below I did want to draw your attention to is that the debt could be written-off, see the FMR reference. If that would become the case I would address that in a Memo for Record and proceed with close-out. However as debt collection is currently ongoing I would continue to follow-up with DFAS.
    DCMA-INST 104 (IPC-1) 
  The ACO shall include the LOA in the demand for payment even if the associated funds are expired or cancelled so the accounting office can make the required accounting entries.
    e.  Add new paragraph 3.6.1.: 
    3.6.1.  The ACO shall periodically follow-up with the payment office to determine whether the debt has been collected and credited to the correct appropriation(s).  
    DoD 7000.14-R Financial Management Regulation Volume 16, Chapter 5
    B. Debt Collection Initiated by Contracting Officers or Designees
    5. The contracting officer must send a copy of each demand letter to the payment office cited in the contract, as well as documentation that identifies the line of accounting for distribution of the principal amount of the debt to the supporting Accounts Receivable Office (ARO).
    6. The contracting officer must follow up periodically with the DCO, ARO, or supporting accounting office to ensure that contract debts have been collected and credited to the proper appropriations.
    021406. Termination of Collection Action
    A. General
    1. Termination of collection action is a determination to cease active collection because such action is not economically worthwhile or is otherwise inappropriate.  Before terminating collection, the agency should have pursued all appropriate means of collection and determined the debt is uncollectible.

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