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ONR: The Closeout ProcessONR: The Closeout Process

Presented By: C.C. Everley

ONR Seattle Regional Office

April 2008

DISTRIBUTION STATEMENT C: Approved distribution authorized to U.S. Government agencies and their contractors; Administrative Or Operational Use 28 APR 2008

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ONR’s Regional OfficesONR’s Regional Offices SEATTLE ATLANTA

CHICAGO SAN DIEGO

BOSTON

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The information to be presented can be The information to be presented can be found at found at www.onr.navy.milwww.onr.navy.mil

Title: ONR UBA: Closeout of Contracts and GrantsTitle: ONR UBA: Closeout of Contracts and Grants

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ONR: The Closeout ProcessONR: The Closeout Process

General overview of the closeout process, General overview of the closeout process, policies and procedurespolicies and procedures

Details about deliverables and other actions Details about deliverables and other actions unique to the closeout processunique to the closeout process

Forms, instructions and web-based guidance Forms, instructions and web-based guidance and linksand links

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What is closeout? What is closeout? It is a It is a layeredlayered process process

1.1. The process of documenting and assuring the The process of documenting and assuring the fulfillment of the terms and conditions of the fulfillment of the terms and conditions of the awardaward

2.2. Of certifying awardees compliance with Of certifying awardees compliance with applicable regulations and terms and applicable regulations and terms and conditions.conditions.

3.3. Making final disposition of all award by-Making final disposition of all award by-products, such as final vouchers, reports, products, such as final vouchers, reports, patent disclosures and property.patent disclosures and property.

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Why is Closeout important?Why is Closeout important?

Government acceptance of the final Government acceptance of the final deliverables and reports is critical to the deliverables and reports is critical to the overall success of the project. In many overall success of the project. In many instances, this act of final acceptance can instances, this act of final acceptance can cause the release of final payments to the cause the release of final payments to the awardee, and ultimately lead to release of the awardee, and ultimately lead to release of the awardee from lingering obligations under the awardee from lingering obligations under the award. award.

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“ “ Contract closeout is the most unheralded Contract closeout is the most unheralded phase of the procurement process, yet, phase of the procurement process, yet, when performed efficiently and effectively, when performed efficiently and effectively, it can protect the government’s interests it can protect the government’s interests and free up significant dollars for current-and free up significant dollars for current-year program priorities.”year program priorities.”

From ESI Int’l Contracting Programs Catalog 2005-2006From ESI Int’l Contracting Programs Catalog 2005-2006

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Contracts

FAR 4.804-5 Certification of final costs Small Business requirements

Assistance Awards

DoDGARS http://www.dtic.mil/whs/directives/corres/html/32106r.htmhttp://www.dtic.mil/whs/directives/corres/html/32106r.htm

NASA Grant Handbook

Differences

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1. Awardee has complied with the terms and conditions 1. Awardee has complied with the terms and conditions set forth in the award, including timely submission of set forth in the award, including timely submission of the deliverablesthe deliverables

2. Disposition of classified information is completed2. Disposition of classified information is completed

3. Final patent and technical reports are accepted by the 3. Final patent and technical reports are accepted by the agencyagency

4. Plant and property clearance received and all property 4. Plant and property clearance received and all property is fully dispositionedis fully dispositioned

PURPOSE OF CLOSEOUT IS TO ENSURE THAT……

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PURPOSE IS TO ENSURE THAT……

5. Final costs have been reviewed and accepted, any 5. Final costs have been reviewed and accepted, any disallowed disallowed

costs are settled including:costs are settled including:>>Subcontract settlement/closeoutsSubcontract settlement/closeouts>O>Open year indirect cost ratespen year indirect cost rates>>Submission of final invoiceSubmission of final invoice>>De-obligation of funds completed (for which De-obligation of funds completed (for which

we have delegation) or recommended to we have delegation) or recommended to the buying agencythe buying agency

6. Small Business requirements have been fulfilled6. Small Business requirements have been fulfilled

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Types of DelegationsTypes of Delegations

ONR services all of DoD, as well as non DoD customers ONR services all of DoD, as well as non DoD customers (NIH, NASA, DOI, etc.)(NIH, NASA, DOI, etc.)

Functions performed depend on the delegation we Functions performed depend on the delegation we receive from the buying commandreceive from the buying command

Some delegations we have:

Full delegation (Most DoD)Full delegation (Most DoD)Property and Closeout (Most NASA)Property and Closeout (Most NASA)Voucher onlyVoucher onlyProperty only (NIH)Property only (NIH)

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Award-Specific Terms & ConditionsAward-Specific Terms & Conditions

EACH AWARD IS DIFFERENT

A thorough knowledge of specific terms and A thorough knowledge of specific terms and conditions, especially relating to final deliverable conditions, especially relating to final deliverable requirements is a prerequisite for a complete requirements is a prerequisite for a complete understanding of the closeout processunderstanding of the closeout process

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Contracts FAR 52 provisions provide detailed procedures for contract FAR 52 provisions provide detailed procedures for contract

closeoutcloseout DFARS, NMCARSDFARS, NMCARS

Grants & Cooperative Agreements DoD Grant and Agreement Regulations (DoDGARs) provides DoD Grant and Agreement Regulations (DoDGARs) provides

procedures for assistance instrumentsprocedures for assistance instruments

Also, OMB Circular A-110 Subpart D “After-the Award-Also, OMB Circular A-110 Subpart D “After-the Award-Requirements” provides additional guidanceRequirements” provides additional guidance

NASA Awards NASA Grant Handbook provides assistance for NASA awardsNASA Grant Handbook provides assistance for NASA awards

Other agencies (i.e. Army/Air Force) have their own terms and (i.e. Army/Air Force) have their own terms and conditionsconditions

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Role of the ONR ACO/AGO(Administrative Grants/Contracting Officer)

With the help of other staff members:With the help of other staff members:

Solicit the awardee for the required deliverables, Solicit the awardee for the required deliverables, including providing any forms, guidance or other including providing any forms, guidance or other counsel relative to the closeout processcounsel relative to the closeout process

Ensure that the submittals meet the administrative Ensure that the submittals meet the administrative requirements of the terms and conditions of the awardrequirements of the terms and conditions of the award

Distribution was correct, in the correct format etc.Distribution was correct, in the correct format etc.

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AGO/ACO Role Continued..AGO/ACO Role Continued..

Contact and follow up with issuing Contact and follow up with issuing agency/procurement offices following submittal to agency/procurement offices following submittal to gain acceptance or facilitate necessary changes to gain acceptance or facilitate necessary changes to the deliverablesthe deliverables

Conduct formal administrative closeout of the award, Conduct formal administrative closeout of the award, including completion of relevant forms, certifications including completion of relevant forms, certifications and releases, review and acceptance of final cost and releases, review and acceptance of final cost reports and certification of final vouchersreports and certification of final vouchers

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When does ONR start the Process?When does ONR start the Process?

Once the award is physically complete, e.g., the Once the award is physically complete, e.g., the period of performance has expired, the “clock period of performance has expired, the “clock begins ticking” for submission by the awardee of begins ticking” for submission by the awardee of final deliverables required for the awardfinal deliverables required for the award

Often the awardee is notified via e-mail that the Often the awardee is notified via e-mail that the award has expired and is reminded of the award has expired and is reminded of the deliverables required and due datedeliverables required and due date

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Awardees ResponsibilitiesAwardees Responsibilities

Make sure that all reports are sent to the correct Make sure that all reports are sent to the correct people/agenciespeople/agencies

Generally, awards will include instructions Generally, awards will include instructions relative to the distribution of each deliverable relative to the distribution of each deliverable including number of copies and mailing including number of copies and mailing addressesaddresses

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Helpful Tool….Helpful Tool….

AdminWeb

Database for awardees to submit reports

Can be found at:

http://www.onr.navy.mil/

Can be found at:

http://www.onr.navy.mil/

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Typical Deliverables and Typical Deliverables and Due DatesDue Dates

In General :

Final Technical Reporting 90 days after expiration

Final Patent Reporting 90 days after expiration

Final Cost Reporting 90 days after expiration

Final Property Reporting 90 days after expiration

Final Security Reporting 90 days after expiration

Final Small Business Reporting 30 days after expiration

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Helpful Tool….

All required documents can be found on the ONR website:

http://www.onr.navy.mil/

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Final Technical ReportFinal Technical Report

Usually due by 90 days after award expiration-check Usually due by 90 days after award expiration-check award terms and conditions for clarification and required award terms and conditions for clarification and required distributiondistribution

Format: contractor/recipient can use any format Format: contractor/recipient can use any format acceptable to the awarding agency. They should acceptable to the awarding agency. They should contact the Program Manager if questions arise.contact the Program Manager if questions arise.

Include form SF 298 “Report Documentation Page”Include form SF 298 “Report Documentation Page”

Acceptance is provided by awarding agencyAcceptance is provided by awarding agency

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Technical PerformanceTechnical PerformanceDD 250 (For some contracts)DD 250 (For some contracts)

DD 250 : DD 250 : Material Inspection and Receiving ReportMaterial Inspection and Receiving Report

Instructions will be noted in Section E and/or in Instructions will be noted in Section E and/or in the CDRL (Contract’s Data Requirements the CDRL (Contract’s Data Requirements Listing) in the contract. Listing) in the contract.

Acceptance is provided by awarding agencyAcceptance is provided by awarding agency

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Final Patent ReportFinal Patent Report

Form DD 882Form DD 882

Dd0882.pdf

Acceptance is provided by awarding agency

*Patent reports are usually required even if they are negative

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Final Cost ReportingFinal Cost Reporting

Assistance Awards

DoD: Form SF 269DoD: Form SF 269

NASA: Form SF 272NASA: Form SF 272

ContractsContracts

Voucher Form: Voucher Form:

SF1034/SF 1035SF1034/SF 1035

Also need to submit: Also need to submit: Contractor’s Contractor’s Release and Release and Assignment formsAssignment forms

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Final Property ReportingFinal Property Reporting

The final property reports are generally concerned with The final property reports are generally concerned with where title to property vests- i.e. with the Government or where title to property vests- i.e. with the Government or the recipient.the recipient.

Forms Used:Forms Used: DoD : DD 1662 (soon to be obsolete)DoD : DD 1662 (soon to be obsolete) NASA: NASA: ContractsContracts : NASA form 1018 : NASA form 1018

GrantsGrants : Letter with signature (e-mail in some : Letter with signature (e-mail in some instances) will suffice for negative reports or instances) will suffice for negative reports or for instances where title vests with the for instances where title vests with the recipient. recipient.

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ACO Role in Final Property ReportingACO Role in Final Property Reporting

Vesting of Title DeterminationVesting of Title Determination

Coordinate Disposition of Property with Plant Coordinate Disposition of Property with Plant Clearance OfficerClearance Officer

Reporting of the Property Closeout Process Reporting of the Property Closeout Process to interested partiesto interested parties

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Final Security Closeout

* Government obtains awardee certification

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What is “Acceptance” of a Final Report?

Definition of acceptance: FAR 46.101Definition of acceptance: FAR 46.101

Acceptance can take many different forms and is driven by Acceptance can take many different forms and is driven by the type of award and the individual terms and conditions. the type of award and the individual terms and conditions.

Common forms of acceptance:Common forms of acceptance: Government correspondence indicating or certifying Government correspondence indicating or certifying

acceptable final deliverables or performanceacceptable final deliverables or performance

DD 250-Material and Acceptance Report (most often DD 250-Material and Acceptance Report (most often used in cost-type or fixed fee contracts)used in cost-type or fixed fee contracts)

Electronic communication from Program ManagersElectronic communication from Program Managers

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Administrative Contracting OfficerAdministrative Contracting OfficerDuties in Accepting Final CostsDuties in Accepting Final Costs

The ONR ACO/AGO will conduct a final financial review The ONR ACO/AGO will conduct a final financial review of the costs incurred under a given award, to ensure that of the costs incurred under a given award, to ensure that all costs are reasonable, allocable, and allowable. This all costs are reasonable, allocable, and allowable. This review may take the form of :review may take the form of :

Primary reliance on the Primary reliance on the OMB Circular A-133 financial financial audit which characterizes the overall abilities of the audit which characterizes the overall abilities of the awardee’s management control and incurred cost awardee’s management control and incurred cost systems. The audits are generally performed by an systems. The audits are generally performed by an independent auditor and reviewed by the cognizant audit independent auditor and reviewed by the cognizant audit agency.agency.

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Additional Forms of Cost Additional Forms of Cost Acceptance When NeededAcceptance When Needed

A desk review, where cost elements originally A desk review, where cost elements originally budgeted in the proposal are compared and budgeted in the proposal are compared and contrasted with those costs actually incurred contrasted with those costs actually incurred

A full audit of the individual award, as conducted A full audit of the individual award, as conducted by the cognizant federal agency for audit of the by the cognizant federal agency for audit of the awardee’s institution, either Department of awardee’s institution, either Department of Health and Human Services or Defense Contract Health and Human Services or Defense Contract Audit Agency. These are generally reserved for Audit Agency. These are generally reserved for high-dollar awards. high-dollar awards.

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Cost Acceptance/Non-AcceptanceCost Acceptance/Non-Acceptance

During the financial review process, the ACO/AGO may During the financial review process, the ACO/AGO may disallow or accept final costs, and will execute the final disallow or accept final costs, and will execute the final completion voucher releasing any residual payments still completion voucher releasing any residual payments still duedue

He or she will also execute several forms internal to the He or she will also execute several forms internal to the government, including a final contract/grant completion government, including a final contract/grant completion statement summarizing the acceptance of final deliverables. statement summarizing the acceptance of final deliverables. The forms will be sent to the awarding agency for final The forms will be sent to the awarding agency for final actions that are neededactions that are needed

Award will be administratively closed for all functions that Award will be administratively closed for all functions that were delegatedwere delegated

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Quick Closeout(For Contracts Only)

Reference: FAR 42.708 Reference: FAR 42.708

Only applies to finalization of provisional Only applies to finalization of provisional indirect rates on cost contracts (not necessary indirect rates on cost contracts (not necessary when rates are already fixed or predetermined) when rates are already fixed or predetermined)

Usually more applicable to major cost type Usually more applicable to major cost type subcontracts awarded to for-profit subcontracts awarded to for-profit entities under non-profit/university prime entities under non-profit/university prime contracts contracts

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Quick Closeout(For Contracts Only)

Maximum indirect cost allocation to one contract using QC is $1 million & total indirect cost  allocations per FY to all contracts using QC cannot exceed 15% of total indirect costs allocated to all cost contracts

Contact ONR ACO for guidance/coordination for either potential prime or subcontract application.

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Impact of Prioritizing CloseoutsImpact of Prioritizing Closeouts

Reduced backlog of expired awards by 45%Reduced backlog of expired awards by 45%

Reduced age of “old dogs” by 50%Reduced age of “old dogs” by 50%

Achieved active/expired ratio of 75% / 25%Achieved active/expired ratio of 75% / 25%

Currently operating in maintenance modeCurrently operating in maintenance mode

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Collaborative Workspace

CollaborativeWorkspace

Firewall

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What’s in The Future…What’s in The Future…

Public Law 106-107 Public Law 106-107 Grants StreamliningGrants Streamlining Electronic Reporting Systems Electronic Reporting Systems

Across AgenciesAcross Agencies

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My Contact InformationMy Contact Information

C.C. EverleyC.C. Everley

everleceverlec@onr.navy.mil@onr.navy.mil

(206) 548-7239 (206) 548-7239