Process for Closing Government Cotnracts

The process for closing out Government contracts is often times arduous and usually time-consuming. There are many steps in the process for both the contractor and the Government. The ACO (typically someone within DCMA - Defense Contract Management Agency) leads the contract closeout process. The ACO coordinates with other DCMA personnel, DFAS (or other appropriate payment offices), Buying Activity personnel, DCAA (or other audit agencies), the contractor, and as necessary, the office of Counsel, Defense Criminal Investigative Service, Inspector General, and the Department of Justice (ref. FAR 4.804-1(b)).

There are FAR mandated timeframes for closing out contracts. For fixed price contracts, the deadline for closing them out is six months after physical completion. For cost-type contracts, the deadline is 36 months after physical completion. Cost type take longer due to the need for a final audit. For all other contracts, its 20 months.

DCMA uses DD Form 1597 to ensure that all close-out actions have been satisfactorily accomplished. The action items include

1. Disposition of classified material completed
2. Final patent report submitted
3. Final royalty report submitted
4. Final patent report cleared
5. Final royalty report cleared
6. Issuance of report of contract completion
7. No outstanding value engineering change proposal
8. Plant clearance report received
9. Property clearance received
10. Settlement of all interim or disallowed costs
11. Price revision completed
12. Settlement of subcontracts by the prime contractor
13. Prior year overhead rates completed
14. Contractor's closing statement received
15. Final subcontracting plan report submitted
16. Termination docket completed
17. Contract audit completed
18. Contractor's closing statement completed
19. Final voucher submitted
20. Final paid voucher received
21. Final removal of excess funds recommended
22. Issuance of contract completion statement

Once this checklist is completed, the ACO notifies the Buying Activity in writing that the contract closeout process is complete.