Closeout of Awards
The Defense Contract Management Agency (DCMA) closes out all contracts for for-profit entities.
However, the Office of Naval Research (ONR) regional offices handle the final administrative closeout of contracts, grants and cooperative agreements for universities and non-profits as outlined below.
Generally, award closeout is the process of documenting and assuring the fulfillment of the terms and conditions of the award, of certifying awardee compliance with applicable regulations and terms and conditions, and making final disposition of all award by-products, such as final vouchers, reports, patent disclosures and property. Though some of the closeout processes are shared, the closeout of grants and cooperative agreements varies in important ways from the closeout of contracts.
ONR services all of the Department of Defense (DoD) (U.S. Air Force, Army and Navy) as well as 10 NASA centers, performing a full range of closeout duties, including subsets of the overall process. Generally speaking, the type of delegation ONR receives from the buying command will drive the type of closeout related documents. For example, under a "voucher only" delegation, ONR would not be required to assure that a final patent report had been received. Information outlined below focuses generically on the entire closeout process.
Each individual contract, grant or cooperative agreement – collectively referred to as awards – is potentially different in its closeout requirements than the next. An intimate knowledge of the specific terms and conditions of an award, especially relating to final deliverable requirements, is a prerequisite for a complete understanding of the closeout process. Read the terms and conditions of each award for a full understanding of this aspect of the closeout process.
Deliverable Requirements and Other Actions Unique to the Closeout Process
The Federal Acquisition Regulation (FAR) at 4.804-5 provides detailed procedures for the closeout process, and charges the office administering the contract with this responsibility after receiving evidence of its physical completion. Generally speaking, most of these requirements are applicable to grants. The primary purpose of these procedures is to ensure that:
- The awardee has complied with the terms and conditions set forth in the award, including timely submission of all deliverables.
- Disposition of classified material is completed.
- Final patent report and royalty reports are cleared.
- Plant and property clearance report is received and all property is fully dispositioned.
- Final costs have been reviewed and accepted by any one of several audit approaches; any disallowed or open elements of costs are settled or dispositioned, including subcontract settlement/closeouts, open-year indirect cost rates, submission of the awardee’s final invoice and deobligation of excess funds has been recommended.
- Similarly, concerning grants and cooperative agreements, OMB Circular A-110, Subpart D, titled After-the-Award Requirements, contains closeout guidance and other procedures for subsequent disallowances and adjustments. Specifically, 71, Closeout Procedures, requires that recipients submit all financial, performance and other reports as required by the terms and conditions of the award within 90 calendar days after the date of completion of the award.
Working with ONR's Administrative Contract/Grants Officers
The administrative contracts or grants officer can assist with expediting delivery of the necessary reports and shepherding them through the submittal, review and acceptance process. The ONR Office will:
- Solicit the awardee for the required deliverables, including providing any forms, guidance or other counsel relative to this process to the awardee.
- Ensure that the awardee’s submittals meet the administrative requirements of the terms and conditions of the award (e.g., distribution was made correctly to the right parties, in the right format, etc.) Note: Administrative contracts and grants officers do not make formal decisions regarding technical acceptability of final performance deliverables.
- Contact and follow up with the issuing agency/procurement offices following submittal of deliverables to gain their formal acceptance, or facilitate necessary or desirable changes to the deliverables.
- Conduct final administrative closeout of the award, including completion of relevant forms, certifications, releases, review and acceptance of final cost.
Overview: Closeout Process
When do we start?
Once the award is physically complete (i.e., the period of performance has expired), the "clock begins ticking" for submission by the awardee of final deliverables. The administrative contracts or grants officer will prompt the awardee with a letter or other communication (such as an email) indicating the requirement to submit final deliverables, or otherwise reminding the awardee of its closeout-related obligations.
What is required?
Final deliverable requirements are usually identified in the individual award terms and conditions. They may appear as an appendix, a data requirements list or as a simple attachment. These attachments will generally include instructions relative to the distribution destination of these final deliverables, including numbers of copies and mailing addresses. In research and development, examples of final technical/performance deliverable may be a research report, data, software or, more rarely, a prototype of some sort.
Why is this process important?
Government acceptance of the awardee final deliverables and reports is critical to the project's overall success. In many instances, this act of final acceptance can cause the release of final payments to the awardee, and ultimately lead to release of the awardee from lingering obligations under the award. This acceptance may take many forms, again driven by the type of award and the individual terms and conditions.
Some common forms of acceptance are:
- Government letterhead correspondence indicating or certifying acceptable final deliverables or performance. This certification may be executed by the awarding contracting officer, or his or her delegate, such as a contracting officer's representative, program manager or program officer.
- The Final DD Form 250 – Material Inspection and Acceptance Report (most commonly used in cost-type or fixed fee contracts).
- Other electronic communication indicating final acceptances
Specific Deliverables (Formats, Forms and Other Information)
Final technical performance closeout is generally due 60 to 90 days after the period of performance has expired, but one should refer to the specific terms and conditions of the award and its governing regulations. ONR grantees are generally free to submit final technical reports on normal bond paper, but are also charged with including a complete Report Documentation Page SF 298 as the last page of each copy of every scientific and technical report prepared under their grant. The form contains instructions for preparation.
Contractors may have a specific format to comply with for submission of final technical data, such as the final Material and Inspection Receiving Report (DD Form 250). Look for and read an attachment to the contract called a "CDRL" – a contracts data requirements listing – which is a one-stop-shop for all required deliverables, their due dates and their distribution instructions.
Many granting agencies, including ONR, reserve the right to direct its grantees to make additional distribution of technical reports in accordance with a supplemental distribution list provided by the program officer or contracting officer's representative. Also, any discrepancies in actual performance or delivery must be reconciled before the award can be closed.
Final Patents Closeout
Generally due at the end of the period of performance.
Format/Forms Used: The DoD uses the DD Form 882 – Report of Inventions and Subcontracts. Under NASA awards, however, each research grantee, research contractor and research subcontractor is required to report new technology to the NASA Technology Utilization Office, using a NASA Form 666A and/or NASA Form C-3043.
Final patents closeout may involve additional form submittal, such as a invention disclosure report, and involve complex legal issues, such as copyrights and royalties. Cost of the forms which you will need can be easily accessed and downloaded for use:
Final Cost Closeout
Generally due at the end of the period of performance.
Format/Forms Used: DoD agreements commonly use SF1034 | 1035 for contracts and SF269 or SF272 for grants.
The ONR administrative contract or grants officer will conduct some type of final financial review of the costs incurred under a given award, to ensure that all costs are reasonable, allocable and allowable. This review may take the form of:
- A desk review, where cost elements originally budgeted in the proposal are compared and contrasted with those costs actually incurred.
- A full audit of the individual award, as conducted by the cognizant federal agency for audit of the awardee’s institution, either Department of Health and Human Services or Defense Contract Audit Agency. These are generally reserved for high-dollar awards.
- Reliance on the OMB Circular A-133 for reports for the institution which characterize the overall abilities of the awardee’s management control and incurred cost systems. These reports are based upon generally agreed to accounting principals, and establish a benchmark of transactional acceptance by reliance on the overall systemic tests of the awardee’s financial system.
During this financial review process, the administrative contract or grant officer may disallow or accept final costs, and will execute the final completion voucher releasing any residual payments still due. He or she will also execute several forms internal to the government, including forms DD 1593 and/or DD 1594, and a final contract/grant completion statement summarizing the acceptance of final deliverables.
Also, the award terms and conditions may require or urge submission of final financial peripheral documents, such as final releases from liabilities, obligations, claims, refunds, rebates and credits. Importantly, many of these same duties and requirements may "FLOW DOWN" to the prime contractor, in order to ensure final closeout of subcontractors and sub-recipient monitoring.
Final Property Closeout
Generally due at the end of the period of performance, usually 60 to 90 days thereafter.
These reports are generally concerned with that property where title is vested with the government (e.g., federally owned).
Format/Forms Used: DD Form 1662, NASA Form 1018 (for contract awards), and also generic letterhead inventories for most grants.
The ONR administrative contract or grant officer, working with the cognizant procuring office, will take the necessary steps to execute the responsibilities of the government when property has been provided to or acquired by the contractor. This process will ensure the final accounting for and disposition of all federally owned property under the contract or grant, and will make final determinations as to vesting of title, final dispositioning and reporting of the property closeout process to the specific, interested parties.
Final Security Closeout
Generally due as applicable from the terms and conditions of the award.
Format/Forms Used or Referenced: See DoD Directive 5220.22-R, Section VII, 7-104 and 7-106). Also, Form DD 254
For classified awards, prudent steps shall be taken by both the awardee and the contract administration office to ensure final disposition of all classified material generated to or access by the contractor in the performance of the contract. These procedures vary based on the type, access and nature of the classified material involved. ONR's regional offices have access to industrial security specialists which can assist them in the performance of these duties. The awardee should direct any and all questions relating to these procedures to the cognizant administrative contracting officer for further guidance.
Disposition instructions or retention authority received from the authorized activity will be forwarded to the contractor and a copy provided the cognizant industrial security office. After a classified contract is closed and final contract completion statement has been issued, all classified material approved for retention by the contractor is under the cognizance of the procuring contracting office and cognizant industrial security office.