A final acceptance document (“Z” DD250/Receiving Report or other final acceptance document) have been received and entered into Mechanization of Contract Administration Services (MOCAS).

The Line Item Schedule Shipment Report (LISSR) shows that the quantity of items shipped equals the quantity of items ordered (e.g., all line items are balanced), or are within the authorized quantity variances of the contract.

The final shipment document alerts the Industrial Specialist (IS) or Procurement Technician (PT) to input production history to generate a “Production Complete” remark in the R8 Remarks field in Mechanization of Contract Administration Services (MOCAS).

If Firm Fixed Price contracts do not automatically move to Section 2, verify:

• The final acceptance document (“Z” DD250/Receiving Report or other acceptance document) has been entered into Mechanization of Contract Administration Services (MOCAS)
• The Line Item Schedule Shipment Report (LISSR) is balanced
• Whether errors exist in production history for contracts that are 30 days past their final delivery date (FDD)

If errors or imbalances exist, notify the Industrial Specialist (IS) or Procurement Technician (PT) to assist in resolving the issue.

Once the contract is physically complete and has successfully moved to Section 2, the completion of the Contract Closeout Checklist (DD Form 1597) is required to ensure all applicable closeout administrative actions take place.

The Administrative Contracting Officer (ACO) ensures that all contract items such as hardware, data, software, spares, and support equipment have been delivered and accepted by the government before the contract is closed.

The Mechanization of Contract Administration Services (MOCAS) Administrative Contracting Officer (ACO) Notebook is annotated In Accordance With (IAW) MOCAS Data Integrity Document, paragraph O, if the contract was moved to MOCAS Section 2 with an out of balance Line Item Schedule Shipment Record (LISSR).

FAR 4.804-5 states that once a Contract Management Office (CMO) receives evidence of physical completion, they will review the contract funds status and notify the Procuring Contracting Officer (PCO) of any excess funds available for deobligation at the outset of the closeout process. It is recommended that this notification be done by e-mail with a return receipt to confirm notification. When excess or negative unliquidated funds exist, a funds review should be performed at the accounting classification reference number (ACRN) level to determine the cause.

• If it is determined that excess funds remain because of contractually acceptable unperformed work or undelivered product, the ACO will issue a modification to deobligate the excess funds and quantity. The CMO is no longer required to obtain PCO authorization prior to deobligating excess funds. However, the Administrative Contracting Officer (ACO) should notify the PCO before action is taken.

If there is a negative unliquidated obligated (NULO) at the contract or ACRN level, a request for reconciliation (DCMA Form 1797) with support documentation should be sent to Defense Finance and Accounting Service (DFAS) explaining the discrepancy.

• The unliquidated obligation (ULO) balance should equal $0.00. If the ULO is not $0.00, research should be conducted with the contractor and DFAS to determine status of balance.

Prime contractors use procedures similar to those of the government. The Administrative Contracting Officer (ACO) must ensure that all of the prime's subcontracts are paid and closed before the prime contract can be eligible for contract closeout.

All Government contract property accountable to a contract must be properly dispositioned in order for contract closeout to occur. Contracts cannot be closed unless the R9 Code 55 remark is entered into Mechanization of Contract Administration Services (MOCAS).

All classified documents must be dispositioned in accordance with government security regulations as stated in contract terms and conditions. This can be accomplished when a final DD Form 254, Department of Defense (DoD) Contract Security Classification Specification, is issued, indicating disposition, or the contractor provides written certification that all data has been properly dispositioned. (See DODD 5220.22-M, National Industrial Security Program Operating Manual about disposition and retention). The prime contractor must clear all subcontracting DD Form 254s.

Upon physical completion of a contract, a copy of the DD Form 1593, marked "Information Copy" is sent to cognizant Industrial Security Office. The cognizant Industrial Security Office can be found on the contract DD Form 254. The Administrative Contracting Officer (ACO) does not need confirmation or certification of completed actions from the security office to proceed with closeout.

When the Report of Inventions and Subcontracts (DD Form 882) contains a report of patentable subject inventions, or if the Administrative Contracting Officer (ACO) has reason to believe that a negative DD Form 882 has failed to disclose an invention, the ACO should not impose a 60-day suspense for a patent clearance response and must obtain clearance from the buying activity. If there is an invention on the final report (DD882), the contractor should indicate whether they anticipate filing a Patent on the DD Form 882. (Please verify if these blocks are marked.) If the contractor is undecided at this time, we should follow-up with them on a periodic basis (even though they officially have 2 years to decide). The need for periodic follow-up is – the contractor may have forgotten about a disclosed invention or just decided not to file and not notified us.

If the contractor indicates they intend to file, technically they have one year to do so. Once the contractor files with the U.S. Patents Office and receives their Patent filing number, they need to complete a Confirmatory Instrument (or license).

Some buying commands will accept partially completed (contingent) Confirmatory Instruments (i.e. contractors will file later, or contractor has filed and not received filing number). Check with the Patent Council at the Buying Activity to see if they will give a patent clearance based on this contingent Confirmatory Instrument.

If the contractor indicates that they are not going to file, we just need that in writing and forward that to the Patent Council requesting final Patent Clearance. Keep all of this information in our contract file.

It is important to note that the Government has a 3-year look-back period after final payment on the contract to examine the books and records of the contractor for the purpose of asserting title and/or determine ownership rights to patentable subject inventions if the final patent report is found unacceptable. The contractor has a regulatory duty to retain its books and records for 3 years after final payment on the contract. As such, if in the unlikely event an unreported invention is discovered after closure, the contract can be re-opened, and the invention issues addressed.

When the contract contains FAR 52.227-9, Refund of Royalties, a final royalty report must be submitted by the contractor stating the royalties paid or required to be paid. This report must be submitted before final contract payment.

When the contract includes FAR 52.248-1, Value Engineering, the Administrative Contracting Officer (ACO) verifies no outstanding Value Engineering Change Proposals (VECPs) requiring payment or disposition exist before closing the contract.

All open actions and liabilities must be resolved prior to closeout. The government may at any time during contract performance fully or partially terminate contracts for default or for convenience. The government may terminate a contract for default when the contractor has materially breached the contract by failing to perform in accordance with contract requirements. Under termination for default, the contractor is liable for any additional costs to the government to obtain terminated items. The government may also terminate a contract for convenience. Termination for convenience can occur when Congress or the program office withholds funding or the user determines that the item is no longer required. Pursuant to the Termination for Convenience clause, FAR 52.249 the government is liable for certain costs.

A contractor at any time has a right to submit a claim against the government for a perceived government liability which at the time is not recognized in the contract. An example of such a claim is when the contractor submits a proposal because it asserts that a government individual by his actions required the contractor to accomplish effort not specified in the contract.

If a claim is denied by the government or the government and the contractor cannot agree on certain other contract issues, the contractor has the right to submit its dispute to a third party such as the Armed Services Board of Contract Appeals (ASBCA) for resolution. Alternate Dispute Resolution is another means available to both parties.

All litigation issues must be resolved before proceeding toward closeout. The contractor, under the Disputes Clause, may appeal a decision of the contracting officer directly to the Court of Federal Claims. The prime contractor may sue or be sued by a subcontractor for damages related to the contract in question. The Administrative Contracting Officer (ACO) and Procuring Contracting Officer (PCO) must work together to ensure that any litigation and resulting cost impact is resolved under the contract before the contract is closed.

The FAR contains a number of warranty clauses suitable for use in different acquisition situations. Some of the warranty clauses can extend well beyond the physical completion of the contract. As long as there is not a Contract Line Item Number (CLIN) or money attached for extended warranty, the contract must not be held open just for warranty. The contractor must have a process on how to handle a warranty item, and if necessary, the contract can always be reopened through the Closed-Contract Database (CCDB). Just because a contract is closed in Mechanization of Contract Administration Services (MOCAS) does not relieve the contractor of their contractual responsibility to perform under the warranty clause. When a contract contains provisions for extended testing periods after shipment and before final notice of acceptance where final payment is withheld from contractor, the contract must be moved to MOCAS Section 3 and coded “GUA”. When a contract is moved to Section 3, the R2 indicator drops the information that had resided in the R2 overage delay reason code and transfers the information to the R6 and resides there while the contract is in Section 3. Accordingly, an NLA alert for the Administrative Contracting Officer (ACO) will be generated 21 calendar days before the effective overage date, or Estimated Closing Date (ECD), as it appears in the R6.

After contracts are physically complete and ready to be closed, except for funds, there may be instances where unliquidated funding remains on the contract. In these instances, a review must be accomplished to determine if the funds are “excess” or “remaining” to the contract requirements. Upon completion of the review, the circumstances that cause the funds balance will dictate whether funds must be deobligated via modification because they were “excess” or Q final-ed because they are remaining funds.

Excess funds are funds relating to a specific line item or deliverable that was not performed on a contract. A contract modification must be issued to deobligate excess funds. Some examples of contracts that have excess funds are as follow:

• Deliverable Contract Line Item Number (CLIN): Contract required 10 widgets. 8 widgets have been delivered and 2 widgets will not be delivered. Because the contract required 10 widgets and the contractor is not going to deliver (perform as required by contract), the funds associated with the 2 widgets are “excess funds” and must be deobligated via modification.
• Non-Deliverable CLIN: Contract called for 5 trips. 3 trips were accomplished and 2 were not. Because 2 trips were not performed as required by the contract, the monies associated with these 2 trips are considered “excess funds” and must be deobligated via a modification.

Remaining funds are funds left on contract due to a price variance, rounding or cost underrun and where all contract performance as required by the contract has been completed and paid in full. The Administrative Contracting Officer (ACO) Notebook will be annotated with a remark that “the $XX (Amount of Funds) funds are remaining funds.” Some examples of contracts that have “remaining funds” are as follow:

• Deliverable CLIN: Contract required 10 widgets. 10 widgets were delivered. The contractor billed less than the price contained in the contract and does not plan to bill at the contract price. The money leftover is “remaining funds” and is systematically removed via the “Q Final” process in Mechanization of Contract Administration Services (MOCAS). ACO must annotate the ACO Notebook in MOCAS with the amount of the remaining funds and process the “F” Notice of Last Action (NLA) in MOCAS or E-Tools. This allows the mechanical removal of funds in MOCAS, alerts the Procuring Contracting Officer (PCO) not to reopen the contract, and generates the PK9/EDI 567 transaction (notifies PCO that the contract is administratively closed) and identifies “remaining funds.” PCO is responsible for notifying the funding station.
• Non-Deliverable CLIN: Contract is for travel. The number of trips is not specified, and performance is complete and accepted. The money leftover is “remaining funds” and ACO should follow the “Q final” process to close the contract.

A final acceptance document (“Z” DD250/Receiving Report or other final acceptance document) have been received and entered into Mechanization of Contract Administration Services (MOCAS).

Mechanization of Contract Administration Services (MOCAS) will generate a notice of last action (NLA) when final payment has been processed for Part A contracts. ACO will verify that a Final Pay NLA has been issued. MOCAS will automatically generate a PK9, Contract Completion Statement, in lieu of a DD Form 1594, to notify the buying activity that the contract is closed. If the PK9 does not transmit the Administrative Contracting Officer (ACO) should complete a DD Form 1594, to notify the buying activity that the contract is closed.

The closeout checklist must be signed by the Administrative Contracting Officer (ACO) prior to closing the contract either manually or in the tool. Once contract is closed manually or using the tool, ACO will upload the signed checklist into their official contract file.

If a contract does not contain a Royalties Clause and it should, a modification must be done to add the clause to the contract.