4.804-5 Procedures for closing out contract files
Source: FAR 4.804-5 on acquisition.gov
FAR 4.804-5 mandates a thorough, documented process for contract closeout, requiring all administrative actions and reports to be completed and verified before final file closure.
Overview
FAR 4.804-5 outlines the detailed procedures for closing out contract files once a contract is physically complete. The regulation assigns responsibility to the contract administration office to initiate and manage the administrative closeout process, ensuring all contractual and regulatory requirements are satisfied before final closure. This includes verifying the disposition of classified materials, clearing patent and royalty reports, settling costs and subcontracts, completing audits, and deobligating excess funds. The contracting officer must then prepare a contract completion statement with specific information and ensure proper file documentation.
Key Rules
- Initiation of Closeout
- The contract administration office starts closeout after confirming physical completion and must review contract funds for possible deobligation.
- Completion of Administrative Actions
- All required actions (e.g., property clearance, audit, final invoice, patent/royalty reports) must be verified as complete before closeout.
- Patent Report Procedures
- Final patent reports should be cleared within 60 days; if not received, the contractor must be notified, and legal counsel consulted if there is no response.
- Contract Completion Statement
- The contracting officer must prepare a detailed completion statement once all closeout actions are verified.
- File Documentation
- The signed original completion statement must be filed appropriately, with copies placed in relevant contract administration files.
Responsibilities
- Contracting Officers: Ensure all closeout actions are completed, prepare and file the contract completion statement, and manage notifications regarding patent reports.
- Contractors: Submit required reports (patent, royalty), final invoices, and closing statements; settle subcontracts and costs.
- Agencies: Oversee compliance with closeout procedures and provide legal counsel as needed.
Practical Implications
- This section ensures contracts are properly closed, reducing risk of unresolved obligations or unreturned funds. Failure to follow these steps can delay closeout, impact future awards, or result in audit findings. Contractors and contracting officers must coordinate closely to ensure all documentation and actions are completed promptly.
(a) The contract administration office is responsible for initiating (automated or manual) administrative closeout of the contract after receiving evidence of its physical completion. At the outset of this process, the contract administration office must review the contract funds status and notify the contracting office of any excess funds the contract administration office might deobligate. When complete, the administrative closeout procedures must ensure that-
(1) Disposition of classified material is completed;
(2) Final patent report is cleared. If a final patent report is required, the contracting officer may proceed with contract closeout in accordance with the following procedures, or as otherwise prescribed by agency procedures:
(i) Final patent reports should be cleared within 60 days of receipt.
(ii) If the final patent report is not received, the contracting officer shall notify the contractor of the contractor’s obligations and the Government’s rights under the applicable patent rights clause, in accordance with 27.303. If the contractor fails to respond to this notification, the contracting officer may proceed with contract closeout upon consultation with the agency legal counsel responsible for patent matters regarding the contractor’s failure to respond.
(3) Final royalty report is cleared;
(4) There is no outstanding value engineering change proposal;
(5) Plant clearance report is received;
(6) Property clearance is received;
(7) All interim or disallowed costs are settled;
(8) Price revision is completed;
(9) Subcontracts are settled by the prime contractor;
(10) Prior year indirect cost rates are settled;
(11) Termination docket is completed;
(12) Contract audit is completed;
(13) Contractor’s closing statement is completed;
(14) Contractor’s final invoice has been submitted; and
(15) Contract funds review is completed and excess funds deobligated.
(b) When the actions in paragraph (a) of this section have been verified, the contracting officer administering the contract must ensure that a contract completion statement, containing the following information, is prepared:
(1) Contract administration office name and address (if different from the contracting office).
(2) Contracting office name and address.
(3) Contract number.
(4) Last modification number.
(5) Last call or order number.
(6) Contractor name and address.
(7) Dollar amount of excess funds, if any.
(8) Voucher number and date, if final payment has been made.
(9) Invoice number and date, if the final approved invoice has been forwarded to a disbursing office of another agency or activity and the status of the payment is unknown.
(10) A statement that all required contract administration actions have been fully and satisfactorily accomplished.
(11) Name and signature of the contracting officer.
(12) Date.
(c) When the statement is completed, the contracting officer must ensure that-
(1) The signed original is placed in the contracting office contract file (or forwarded to the contracting office for placement in the files if the contract administration office is different from the contracting office); and
(2) A signed copy is placed in the appropriate contract administration file if administration is performed by a contract administration office.