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Quick closeout/final voucher


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A contractor has determined an award is eligible for quick closeout procedures and has broached it with the government. The government is motivated to request a final invoice from the contractor because they want to deobligate remaining funds left on CLINs. The contractor tells the government it submitted its incurred cost submission on time every year but several years of the contract were not audited or deemed final by cognizant audit agency. Audit agency made no response or audit determination whatsoever for these years (though some of the years were deemed final by audit agency). Contractor has proposed generating their completion voucher to include all rate adjustments for the actual, but not audited, rates for each year. Government seems fine with this idea and has requested the invoice. Contractor thinks to submit the invoice a written determination by the CO would at least be needed, accepting the rates. Can a contractor submit the invoice without the written consent of the CO and remain within the terms of the contract, and the allowable cost and payment clause? Can they accept an authorization absent formal ‘closeout’ procedures and submit the invoice, assuming all relevant information has been disclosed.

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Hi Vern, thanks for your note, there are no extenuating terms on the rates themselves, treating this as a customary cost plus fixed fee contract subject to allowable cost and payment. There are no rate caps or ceilings. There are funds available to pay the final invoice. From my perspective, it is mutually beneficial to move forward in closing the contract at the actual rates for each year, as I am confident in the rates, and the sum of the indirect cost rate adjustments across all contract years is very small, like less than 2% of contract costs across all years. The government seems anxious to get the invoice submitted and paid but the CO has been somewhat absent from the discussions, despite our request to get the CO to stamp the rates to clear the way for the invoice submission. As a contractor, I am weary of submitting the invoice without the CO's buy in and frankly want to make sure both sides are covered from a compliance and audit perspective. My feeling is to insist on getting the CO's involvement (whoever that is at this point, contracts shop has turnover and this has been complete for some time), but also only feel so comfortable telling the government how to close their contracts. And looking at the closeout procedures I could not tell how solid ground we would be on, as a contractor, if the file was pulled in an audit and while the invoice got paid there was never a true evaluation and acceptance of the rates.

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Are you questioning the Quick Closeout language in FAR.42.708..."(a) The contracting officer responsible for contract closeout shall negotiate (emphasis added) the settlement of direct and indirect costs for a specific contract, task order, or delivery order to be closed, in advance of the determination of final direct costs and indirect rates set forth in 42.705..." Seems to me you can include language in the submittal that indicates the facts to date regarding rates as indicated above.

I would request contracting officer written clarification that the government wishes to proceed with 42.708 and 42.705-1 Contracting Officer Determination Procedure.  It appears that contracting officers should coordinate with other government functions, that may be backed up with work.

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Neil, that is exactly right. We are on solid ground, I think, until we hit the section you added for emphasis (the language that is giving me pause). I have already made reference to those FAR sections in the discussions thus far but I still have not secured what I would consider adequate consideration for the rates, except the directive for us to submit the invoice as I proposed. I think taking another attempt at language clearly indicating the facts, again, plus a request for written CO determination sounds reasonable. If it is withheld or cannot be secured for some reason, caveating the invoice submission in writing that it represents the CO acceptance or something may work. I assume at the end of the day some CO somewhere will need to review and approve the invoice for it to be paid. Could also include a memorandum with the invoice I suppose. All of the detailed backup has been furnished already through discussions. Or , I suppose, do nothing and stand down until they find a CO who can make a reasonable determination. 

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17 hours ago, Needforspeed said:

Government seems fine with this idea and has requested the invoice.

 

17 hours ago, Needforspeed said:

Can a contractor submit the invoice without the written consent of the CO

Need, can you reconcile these two statements?

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Retread, a person other than the CO - a COR - requested moving forward with the submission. But, they are motivated by clearing a funding line for the budget office versus initiating formal closeout procedures. So, I know that I can submit the invoice, I’m more or less concerned with whether I should for the reasons stated eg is there audit risk. 

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On 4/28/2022 at 3:08 PM, Needforspeed said:

The contractor tells the government it submitted its incurred cost submission on time every year but several years of the contract were not audited or deemed final by cognizant audit agency. Audit agency made no response or audit determination whatsoever for these years (though some of the years were deemed final by audit agency).

Don't know the agency but the following pertains to DOD.

Normally, when the DCAA does not perform an audit because it deems the contractor's final billing rate proposal to be low risk, it generates a Memo which is sent to the Contracting Officer and retained in DCAA files. At that point, it is up to the CO to establish final billing rates, which may be done either by accepting the contractor's proposed rates as submitted, or by negotiating with the contractor. (Typically, it's the former.)

If the contractor submitted its proposed final billing rates timely and -- for whatever reason -- no audit was performed and no Memo to File generated by DCAA then, as Neil pointed out, there is an opportunity to negotiate final billing rates. If the amount of "unsettled" indirect dollars is judged to be low (either within FAR limits or within limits established by the DCMA Class Deviation to those FAR limits), then the CO can close out the contract at either provisional billing rates or the contractor's submitted/certified final billing rates.

Edited to add that recent NDAA language requires DCAA to issue its audit report within one year of the contractor's submission. If that doesn't happen, the contractor's rates should be accepted as proposed.

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