Quick-closeout procedure
The quick-closeout procedure allows contracts with low unsettled costs to be closed quickly by negotiating final costs, streamlining the closeout process and reducing administrative delays.
Overview
FAR 42.708 establishes the quick-closeout procedure, allowing contracting officers to negotiate and settle direct and indirect costs for a contract, task order, or delivery order before final indirect cost rates are determined. This process is intended for contracts that are physically complete and have relatively insignificant unsettled costs (not exceeding $1,000,000 or 10% of the contract value, whichever is less). The contracting officer must conduct a risk assessment considering the contractor's systems, auditor concerns, and other relevant factors. If a reasonable estimate of allocable costs can be agreed upon, the contract can be closed out quickly. Once settled, the indirect cost rates used are final for that contract and do not set a precedent for other contracts, nor are adjustments made for over- or under-recoveries on other contracts.
Key Rules
- Eligibility for Quick-Closeout
- Applies to physically complete contracts with unsettled costs below $1,000,000 or 10% of contract value.
- Risk Assessment Requirement
- Contracting officer must assess risk, including contractor systems and auditor input, before proceeding.
- Finality of Settlement
- Settled indirect cost rates are final for the closed contract and do not affect other contracts.
- No Precedent Set
- Rates used in quick-closeout do not bind future rate negotiations.
Responsibilities
- Contracting Officers: Must determine eligibility, conduct risk assessments, negotiate settlements, and ensure compliance with thresholds and documentation.
- Contractors: Must provide necessary cost data, participate in negotiations, and agree to reasonable estimates.
- Agencies: Oversee proper application of the procedure and ensure audit and documentation requirements are met.
Practical Implications
- Enables faster contract closeout, reducing administrative burden and freeing up resources.
- Helps avoid lengthy delays due to unresolved indirect cost rates.
- Contractors and agencies must ensure all criteria are met to avoid compliance issues or disputes.