Request:
I tried for information on how to close a contract but wasn’t clear on the concept. I’m assuming the COR has to provide a memo stating closing of contract to deobligate funds. Please guide me through this.
Response:
Once all the conditions of the contract are met, final payment can be made and the contract can be closed out. Closing out the contract physically retires it – it is boxed up and stored or shipped to a federal storage facility.
The contract is considered closed physically complete and is closed only when one of two events has occured:
- All the required supplies or services have been delivered or performed, inspected and accepted; all administrative task have been finalized; and all existing options periods have expired or
- Notice has been issued to the contractor that the contract termination has been completed.
In order to closeout the contract, the office administering the contract is responsible for initiating closeout after receiving evidence of its physical completion. The Contracting Officer’s Representative (COR) needs to review the funds under the contract and the Contract Specialist administering the contract in coordination with the budget office, where appropriate, excess funds are identified to the Contracting Officer.
The COR should:
- Verify that the contractor has fulfilled the terms of the contract.
- Initiate deobligation action (i.e., coordinate with the budget office to recoup excess funds if appropriate, or secure additional funding if required).
- Assist in property certification (i.e., perform an inventory and verify that all government property has been returned to the government or otherwise disposed of as required by the contract.
The COR’s duty is completed successfully when the contractor and the government have fulfilled their obligations in a timely manner, all outstanding contract administration issues have been resolved, and all records are properly stored in accordance with record retention requirements specified by the FAR or the particular contract.