Quick Closeout Procedures for Completed Contracts Gets a Boost

The David Packard Excellence in Acquisition Award recognizes organizations, groups, and teams that have demonstrated exemplary innovation using best acquisition practices that achieve acquisition excellence in the Defense Department.

Packard was co-founder and chairman of the Hewlett-Packard Company, a deputy secretary of defense in the Nixon administration and chairman of the Reagan's Blue Ribbon Commission on Defense Management. Each year since 1997, the Defense Department recognizes several groups as recipients of the award. This year, there were four recipients but the one that might be of most interest to Government contractors is the Defense Contract Management Agency's (DCMA's) Special Programs Quick Closeout Team (QCT)..

The QCT was recognized for innovation and creativity in the area of contract closeout. Previously, the rate of physically complete contracts coming due for closeout exceeded the number actually being closed, resulting an a 31.1 percent increase in overage contracts, further exacerbating the problem.

The QCT piloted new, quick closeout techniques that standardized risk factors and changed the paradigm in how contracts could be closed. This resulted in 4,805 contracts being closed using quick closeout  procedures and enabled a 32.8 percent improvement in overage contract reduction, creating a positive contract closeout rate and reducing the overage contract backlog.

In doing so, the QCT reduced the administrative burden to both industry and the government and limited the Defense Department's exposure to certain financial risks, ensuring the use of unliquidated funds from completed contracts before the funds could be canceled and returned to the Treasury Department.

The QCT continued to innovate by expanding application to subcontractors, opening up an additional 10 percent of contracts to quick closeout. The team also deployed multiple initiatives to encourage the practice to other federal agencies with potential significant improvements to the acquisition community at large.

DCMA blamed the increased backlog on DCAA's failure to complete incurred cost audits in a timely manner (see online source). By employing quick closeout procedures, DCMA could largely bypass the need for audit. The quick closeout process is not new and innovative. It has been part of the Federal Acquisition Regulations for decades. However, the procedures were not widely used until the QCT began its emphasis on employing the procedures.