Can I add a CLIN and funding to cover the costs? This new CLIN would be the one on the final non-billing Z DD250. I realize if the contract was a FFP acquisition then I would expect the closeout costs to already be fully covered as part of the CLINS. Any input you can provide will be appreciated.
Closeout costs for contractors can stem from activities such as filing financial reports, responding to audit requests, interactions with subcontractors, etc. In accordance with government cost accounting standards, if a contractor's standard accounting practice is to record contract closeout costs as direct costs, then contract closeout costs can be considered allocable to a specific contract. However, if the contractor's standard accounting practice is to accumulate contract closeout costs in an indirect cost pool for allocation among various contracts, then contract closeout costs for any one contract would not be allocable to that specific contract. Instead, the contractor must recover its closeout costs as indirect charges against multiple contracts. Also note that if the closeout costs are incurred after the contract's period of performance ends, they would not be allowable.
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If the first scenario above applies, i.e., the contractor's standard practice is to record contract closeout costs as direct costs, then modifying the contract to add a closeout CLIN is appropriate. You may want to check with your organization's cognizant DCMA office for additional guidance.