The Proposal

The Civilian Agency Acquisition Council and the Defense Acquisition Regulations Council (known as the FAR Council) issued in The Federal Register Vol. 74, No. 160 Thursday, August 20, 2009 a proposal to amend the Federal Acquisition Regulation to “revise procedures for closing out contract files” in the FAR Case 2008-020. The summary section of the proposal states the revisions are for clearing final patent reports and quick close out procedures and “sets forth a description of an adequate final indirect cost rate proposal and supporting data.” The proposal follows the Director of Defense Procurement and Acquisition Policy (DRAP) May 2007 assessment that changes to improve contract closeouts needed to be made. The Council is proposing:

   1. The addition to language in FAR 4.804-5 setting forth the timeframe for clearing a required final patent report.

   2. Addition of language in FAR 42.708 that increases the threshold and the percentage limitation to be able to use quick-closeout procedures. Whereas the current quick close out procedures are supposed to apply to only relatively smaller contracts whose total amount of unsettled indirect and direct costs could not exceed 15 percent or could not represent more than $1,000,000 of the contractor’s total amount of unsettled cost type contracts, those thresholds are now increased to no more than $4,000,000 or 20% of the unsettled contracts. The language also is based on a contracting officer’s risk assessment that the procedures are appropriate. The risk assessment is to include a consideration of the contractor’s accounting, estimating and purchasing systems; amount of direct and indirect costs; other concerns of the cognizant auditors and any other pertinent information.

   3. Addition to FAR 42.705-1 for the cognizant auditor to determine the adequacy of the contractor’s proposal for audit and provide language referencing FAR 52.216-7(d)(2).

   4. Addition of language in FAR 52.216-7, Allowable Cost and Payment setting forth a description of what data is to be submitted in an adequate indirect cost proposal (ICP) where contractor “may refer to the Model Incurred Cost Proposal in Chapter 6 of DCAA’s agency Pamphlet No. 7641.90, what supplemental data, required for audit, may also be submitted with the proposal and a requirement for the contractor to update cumulative costs claimed and billed within 60 days of rate settlement.”

In addition, there are three more sections that provide for language changes that allow contracting officers to withhold fixed fees “to protect the government’s interest and to encourage the timely submission of an adequate final indirect cost rate proposal.”

{TAG_FORM_TITLE}