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DM_Simpson

Problems with Quick-closeout procedures

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With DCAA’s backlog of auditing contractor rates, I'm frustrated with not being able to closeout my subcontracts. Does anyone know of any good reference material that provides viable solutions on how to close contracts when companies either won’t or can’t accept the FAR 42.708 quick-closeout provisions? As a government contractor, we incorporate quick-closeout language in our subcontracts; however, it hasn’t helped since there seems to be some fear of an audit finding if subcontractors settle under the quick-closeout provisions or do not have government approved quick closeout rates. And, according to one of my subcontractors they can’t accept the provisions since the company’s percentage of cost reimbursement contract types to its total federal contracting dollars prohibits them from taking advantage of quick-closeout and doing so could result in an audit finding. A couple of subcontractors have proposed we convert the subcontract from a cost reimbursement to a fixed price with the fixed price being the total amount billed at the end, which seems wrong to me. Others just want permission to bill out the fee while we wait on audited rates. Good new is I have had some cases where we have been able to settle on the subcontractor’s billing rates when the amount was insignificant. I appreciate any guidance you can provide. I just don't know how to resolve this problem and would appricate any expertise or experiences with this topic you are willing to share.

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DM_Simpson,

Prime contractors will face risk if they close out Cost-type subcontracts at other-than-final billing rates. However, that risk can be mitigated with appropriate certifications and representations, it seems to me. At the end of the day, the indirect rates established for final billing are solely up to the two contracting parties and the government lacks privity.

Here's somebody's opinion on the topic, for whatever value the blog may offer.

http://www.apogeeconsulting.biz/index.php?option=com_content&view=article&id=965:why-you-subcontractors-should-not-let-your-aco-set-billing-rates-for-invoices-to-your-prime-contractors&catid=1:latest-news&Itemid=55

Hope this helps.

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