Most contracting groups were not easily able to summarize what stage of closeout each of their completed contracts were in. There were frequent examples of groups that did not know how many were eligible for closeout. GAO also noted that there were rarely any goals and performance measures in place to reduce contract closeout backlogs. Ultimately, in GAO’s words, “We found that closing out contracts is not the highest priority for contracting officers that are charged with awarding and administering contracts for products and services to meet mission needs.”
Procedures for quick government contract closeouts
CohnReznick has developed a tool to help contractors identify contracts, task orders, and delivery orders that may be eligible for quick closeout. If you believe your contracts have a strong case for quick closeout eligibility, reach out to your contracting officers to let them know what may be eligible for quick closeout and why they make good candidates for quick closeouts outside of the percentage and dollar thresholds as stipulated within FAR 42.708. Please note that the CohnReznick tool references a possible agency class deviation for completed contracts with less than 10% of costs audited/settled but over $1 million. Start a dialogue with your contracting officer if you’re in this situation to see if they have an active class deviation.Download
Finding contracts that are quick closeout eligible will help you:
- Collect debt on a more timely basis (retainages and rate overruns)
- Reduce costs related to maintaining records
- Reduce uncertainty and risks (will the government suddenly terminate and/or cut off further funding?)
- Minimize time searching for documents when an audit is initiated
- Help the Government reduce its contract closeout backlog and reduce GAO audit finding risks
With regards to contract closeout we recommend the following:
- Appoint someone to be responsible for ensuring that contracts are closed out timely.
- After the negotiation of final indirect rates, take inventory of completed contracts to date and determine how much cost is unaudited. (Hint: Use Schedule I of your last audited incurred cost submission.) Then, use our tool to see if those completed contracts may be eligible for quick closeout.
- Utilize standardized procurement and accounting documentation procedures from the beginning of contract awards to help facilitate contract closeouts.
For over 40 years, CohnReznick has provided comprehensive services to assist government contractors with a full life cycle approach to winning and managing contracts. We ensure your financial and procurement processes are compliant, efficient and effective - so you can focus on what matters most, profitable growth.