Contract Closeout NCMA Workshop October 27, 2014 Hycentha Hodge Instructor UCLA Retired Deputy Commander, DCMA Western Regional Command

Disclaimer The information in this presentation was prepared and accomplished by me in my own personal capacity. Although I am a formal employee of the Defense Contract Management Agency (DCMA), the comments and opinions expressed herein are my own and does not reflect the official views of DCMA, the Department of Defense, or the United States Government 2

Outline Contract Physical Completion FAR-Mandated Time Standards DCMA Performance Metric DCMA Closeout Footprint West Region Closeout Footprint Closeout Overage Reason Codes What About Quick Closeout Procedures? 3

Contract Physical Completion Contractor has completed the required deliveries or the contractor has performed all services Government has inspected and accepted the supplies Government has accepted these services All option provisions, if any, have expired Government has given the contractor a notice of complete contract termination, if applicable. 4 No job is complete until the paperwork is done! No job is complete until the paperwork is done!

FAR-Mandated Time Standards Contracts Using Simplified Acquisition Procedures – upon evidence of receipt of property and final payment Fixed Price Contracts - 6 months after physical completion (Exception for fixed price unilateral purchases orders – MOCAS sets the overage date as 3 months after physical completion) Cost Reimbursement Contracts – 36 months after physical completion All Other Contracts – 20 months after physical completion 5 Do not close contracts in litigation or under appeal and in case of terminated contracts until all termination actions are complete!

DD Form 1597 Contract Check List   CONTRACT CLOSEOUT CHECK-LIST (Use a separate page to attach any comments.) 1. CONTRACT NUMBER 2. CONTRACT MODIFICATION NUMBERS (If applicable) 3. NAME OF CONTRACTOR 4. DATE OF PHYSICAL COMPLETION (YYYYMMDD) 6. MILESTONES/CALENDAR MONTHS AFTER PHYSICAL COMPLETION (FAR 4.804-1) 7. FORECAST COMPLETION DATE (YYYYMMDD) 8. DATE ACTION COMPLETED (YYYYMMDD) (NA if not applicable) 5. ACTION ITEMS Category 2 Category 3 Category 4 a. DISPOSITION OF CLASSIFIED MATERIAL COMPLETED b. FINAL PATENT REPORT SUBMITTED (Inventions Disclosures) DD 882 c. FINAL ROYALTY REPORT SUBMITTED d. FINAL PATENT REPORT CLEARED (Inventions Disclosures) e. FINAL ROYALTY REPORT CLEARED f. ISSUANCE OF REPORT OF CONTRACT COMPLETION g. NO OUTSTANDING VALUE ENGINEERING CHANGE PROPOSAL (VECP) h. PLANT CLEARANCE REPORT RECEIVED DD 1593 i. PROPERTY CLEARANCE RECEIVED DD 1593 j. SETTLEMENT OF ALL INTERIM OR DISALLOWED COSTS (DCAA Form 1) k. PRICE REVISION COMPLETED l. SETTLEMENT OF SUBCONTRACTS BY THE PRIME CONTRACTOR m. PRIOR YEAR OVERHEAD RATES COMPLETED n. CONTRACTOR'S CLOSING STATEMENT RECEIVED o. FINAL SUBCONTRACTING PLAN REPORT SUBMITTED p. TERMINATION DOCKET COMPLETED DD 1593 q. CONTRACT AUDIT COMPLETED r. CONTRACTOR'S CLOSING STATEMENT COMPLETED s. FINAL VOUCHER SUBMITTED SF 1034 t. FINAL PAID VOUCHER RECEIVED SF 1034 u. FINAL REMOVAL OF EXCESS FUNDS RECOMMENDED v. ISSUANCE OF CONTRACT COMPLETION STATEMENT (Or MILSCAP Format Identifier PK9) 6 36 20 w. OTHER REQUIREMENTS COMPLETED (Specify) 9. RESPONSIBLE OFFICIAL a. TYPED NAME (Last, First, Middle Initial) b. TITLE c. SIGNATURE (Sign only upon completion of all actions) d. DATE SIGNED (YYYYMMDD) 6

Example of Cost Type Contract Dissecting Closeout Process Example of Cost Type Contract Final Voucher Accept Work Reconcile Funding Close Contract Mods Definitized SubKs Closed Price Revision Final Rates Deoblig Funds Review Patent /Royalties Litigation Termination Property Clearance Interim Contract Completion Record Warranties Dispose of Classified 36 months Contract Physically Complete Completion Statement Line Item Recon Work solutions-- tools, workarounds, relief Identify show stoppers Start the closeout process early Deliver Work

DFARS PGI 204.804-2(2) If the administrative contracting officer (ACO) cannot close out a contract within the specified time period (see FAR 4.804-1), the ACO shall notify the procuring contracting officer (PCO) within 45 days after the expiration of the time period of— (i) The reasons for the delay; and (ii) The new target date for closeout. 8 The reason for the delay in closing your contract is among the many reasons at our disposal. Let me tell you about our performance indicators.

The DCMA performance usually looks pretty good!! Performance Indicators The DCMA performance usually looks pretty good!! Contract Closeout Timeliness Indicator Title: AQ--Contract Closeout: Timeliness Indicator: Percent of Contracts closed on time per FAR 4.804-1 requirements Indicator Rationale:  Provide status of timely closeout of contracts that are administered by DCMA.  Performance Standard: Close 90% of contracts within the FAR 4.804-1 time standards.  Date Performance Standard is to be Achieved: End of Fiscal Year (FY) Contract Closeout: Number of Overage Contracts Indicator Title: AQ--Contract Closeout: Number of Overage Contracts Indicator: Percent of contracts past overage date  Indicator Rational:  To provide status of the overage contracts to the Administrative Contracting Officers and Contract Administrators so they are able to track their respective contracts which will help them reduce their numbers. Performance Standard: Reduce number of contracts past overage date at a 10% annual rate.   9 This is the reality Data obtained from DCMA West Region

West Region Overage Footprint February 2012 – 4,666 September 2015 – 8,736 10 Contract Count 2012/Jan 2012/Feb DCMA Western Regional Command 4,324 4,666 The trend is moving in the wrong direction…. Data obtained from DCMA West Region

West Region 11 R2 Codes Definition Total as of 09/30/2015 A - Contractor has not submitted final invoice/voucher 1429 B - Final acceptance not received 30 C - Contractor has no submitted patent/royalty report 321 D - Patent/royalty clearance required 220 E - Contractor has not submitted proposal for final price 8 F - Supplement Agreement covering Final price redetermination required 2 G - Settlement of subcontracts pending 78 H - Final Audit in Process 655 J - Disallowed cost pending K - Final audit of Govt property pending 1 L - Independent research & development rates pending M - Neg of O/H Rates Pending 5119 N - Additional funds requested, but not yet received 45 P - Recon w/Pay Off & Ktr Being Accomplished 236 Q - Armed Serviced Board of Contract Appeals case 35 West Region 11 Data obtained from DCMA West Region

West Region 12 R - Public Law 85-804 case S S - Litigation/investigation pending 44 T - Termination in process 2 U - Warranty clause action pending 1 V - Disposal of Gov't Prop Pending 74 W - Contract Mod Pending 111 X - Awaiting contractor's submission of the release and assignment 41 Y - Proper final invoice/voucher forwarded to dFAS for payment, awaiting payment 179 Z - Awaiting disposition instructions on classified materials from the Buying Activity. The ACO is responsible for notifying DIS that the contract is complete and classified material should be dispositioned 3 - Canceled funds (Do Not Use - Use "Y" when Final voucher/invoice has been forwarded to DFAS 8 - Appropriations in Red (Do Not Use) - Pre-validation Action Pending 6 - Fee Withheld 7 - Awaiting Removal from Excess Funds 26 Blanks 66 Total OA Reason Codes* 8670 Total OA Ks in Section 2 8736 *OA reason codes filtered by R2 code in the first position only Section 2 On-Time** 11620 Section 2 Approaching OA ** 896 * * - These numbers are as of 10/3/2015 Total Ks in Section 2 - On Time/Approaching OA/OA 21252 12 Data obtained from DCMA West Region

Quick Closeout Class Deviation 13

Uncle Sam Wants You!   14 To do your part to assure contracts are delivered on time, on cost, on quality, and then close ON TIME!!