COR Contract Closeout Procedures 3 — Questions and Answers
Question 1: A Contractor's Release of Claims is executed during closeout primarily to:
- Extend the contract period of performance
- Waive the government's right to audit
- Relinquish the contractor's right to assert further claims against the government (Correct answer)
- Transfer contractor liabilities to a subcontractor
Correct answer: Relinquish the contractor's right to assert further claims against the government
The Release of Claims is a bilateral agreement in which the contractor certifies it has no outstanding claims, protecting the government from future monetary demands related to that contract.
Question 2: During closeout of a fixed-price contract, the COR discovers that a deliverable was accepted but does not fully conform to specifications. What is the appropriate action?
- Proceed with closeout immediately since the item was already accepted
- Document the nonconformance and notify the CO to determine whether a price adjustment or corrective action is warranted (Correct answer)
- Reject the item retroactively and suspend the contractor
- Issue a cure notice directly to the contractor
Correct answer: Document the nonconformance and notify the CO to determine whether a price adjustment or corrective action is warranted
Even if a nonconforming item was accepted, the COR should document the issue and notify the CO, who can pursue a price reduction or other remedy before closeout.
Question 3: Which FAR clause establishes the government's right to examine and audit a contractor's records after contract completion?
- FAR 52.215-2, Audit and Records — Negotiation (Correct answer)
- FAR 52.222-1, Notice to the Government of Labor Disputes
- FAR 52.209-6, Protecting the Government's Interest
- FAR 52.232-25, Prompt Payment
Correct answer: FAR 52.215-2, Audit and Records — Negotiation
FAR 52.215-2 grants the government the right to inspect and audit contractor records related to negotiated contracts for a specified period after completion.
Question 4: After physical completion of a cost-reimbursement contract, how long must the contractor typically retain records for audit purposes?
- 1 year
- 3 years (Correct answer)
- 5 years
- 10 years
Correct answer: 3 years
FAR 4.703 generally requires contractors to retain records for 3 years after final payment, though some records have longer retention requirements.
Question 5: What is the purpose of a 'quick closeout' procedure under FAR 42.708?
- To close contracts without conducting any audits
- To negotiate and settle indirect costs rates when the amounts are not material, avoiding lengthy audit delays (Correct answer)
- To terminate contracts for convenience faster than normal
- To waive all contractor obligations on small contracts
Correct answer: To negotiate and settle indirect costs rates when the amounts are not material, avoiding lengthy audit delays
Quick closeout under FAR 42.708 allows the government and contractor to agree on final indirect cost rates when the unsettled amounts are not material, expediting closeout without a full DCAA audit.
Question 6: Which of the following best describes 'deobligation' in the context of contract closeout?
- Adding new funding to a contract before it closes
- Removing excess obligated funds from a contract and returning them to the appropriation (Correct answer)
- Transferring funds to a new contract vehicle
- Obligating funds for a follow-on contract
Correct answer: Removing excess obligated funds from a contract and returning them to the appropriation
Deobligation returns unused, obligated funds to the original appropriation during closeout so they can be reused or expire properly, improving fiscal accuracy.
Question 7: When must a Past Performance Evaluation be completed in relation to contract closeout?
- Only if the contractor requests one
- Within 120 days after the end of each contract period of performance or at closeout (Correct answer)
- At the midpoint of the contract only
- After the contractor's Release of Claims is received
Correct answer: Within 120 days after the end of each contract period of performance or at closeout
FAR 42.1502 requires agencies to evaluate past performance within 120 days after the end of each period of performance, which often coincides with closeout activities.
COR Contract Closeout Procedures 3
A Contractor's Release of Claims is executed during closeout primarily to: