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  • Question

    Can you change a COST CLIN into a FFP CLIN so that you can close out a contract and bypass DCMA's review of overheads? Please provide reasoning as to why you can or why you can't. - thank you


    Answer

    Please check if your contract is a candidate for "Quick Closeout" by reviewing current thresholds in Class Deviation 2019-O0009, available at  https://www.acq.osd.mil/dpap/policy/policyvault/USA001078-19-DPC.pdf

    If Quick Closeout Procedures aren't an available option, then here's the bottom line:

    Multiple pricing concepts and legal principles prevent from modifying a Cost Type CLIN to FFP after the fact of completion, and before final payment is complete.  A few concepts are provided below although not an exhaustive list.

    • Fair and reasonable pricing is determined at the time of award. 
    • Contract type (or CLIN type for a hybrid Section B) is determined, in writing, early in the contracting process.
    • Changes to CLIN type could improperly remedy problems inside a contractor's cost pool(s) or business base.
    • Changes to CLIN type could distort or conceal deficient accounting practices (Cost Accounting Standards).
    • Common law, federal statutes case and precedence inform the logic on matters such as your question, which highlights your question as a perfect occasion to consult with your agency legal counsel.
    • Were you asked to contact the contractor and let them know your officce is considering changes to the contract after completion? Always be wary of being asked to perform actions that are not covered by regulation, or could be interpreted as injurious to the contractor. Legal should be notified after further discussion with your supervisor.      

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