SETTLEMENT OF INDIRECT COSTS USING QUICK CLOSEOUT PROCEDURES SAMPLE
MEMORANDUM

INSTRUCTIONS

-   ***This Sample Memorandum is required to be used in the Acquisition
    Management Division if a determination is made under Quick Closeout
    Procedures to negotiate the settlement of indirect costs for a
    specific contract, in advance of the determination of final indirect
    cost rates and without requiring an independent audit be
    performed.***

-   ***This Sample Memorandum is required to be reviewed and signed by
    the Volpe Center Contracting Officer responsible for contract
    closeout (usually the Contracts Branch Chief, DTS-852).***

-   ***REMINDER: See the Acquisition Management Division/Contracts Price
    Analyst (DTS-85/CPA) to obtain any audit information required from
    DCAA to close out the contract.***

-   ***This Sample Memorandum is set up to address a variety of
    circumstances that may, or may not, pertain to the contract in
    question. Accordingly, this Sample Memorandum requires customization
    to fit the particular circumstances of the physically complete
    contract. Also, please remember to delete the footnotes (which are
    included to assist you in customizing your letter) prior to
    finalizing your Memorandum.***

INFORMATION: Determination to Use Quick Closeout Procedures

For the Settlement of Indirect Costs;

Contract No. \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_;

Contractor Name \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

From:

Orin D. Cook

Contracting Officer

To: File

Pursuant to FAR 42.708 and TAM 1242.708 and 1242.7100, DOT quick-close
out procedures (including the decision not to obtain an independent
audit) are determined to be appropriate for use under this contract for
the settlement of indirect costs based on the following
findings/rationale: *(Check off the applicable item(s))*

-   1\. All terms and conditions of the contract have been met
    satisfactorily; and the contract is physically complete.[^1]

-   2\. The reason an independent audit was not obtained is due to the
    relatively insignificant estimated amount of [\$(*insert amount of
    unsettled indirect cost*)]{.underline} of unsettled indirect cost to
    be allocated to the contract.[^2]

-   3\. Based on review of the supporting information indicated below,
    it is anticipated that agreement can be reached on a reasonable
    estimation of allocable dollars:[^3]

-   a\. The contractor has submitted both a final indirect cost rate
    proposal reflecting actual cost experience during the covered
    period(s), together with supporting cost or pricing data, for each
    of its fiscal years for which quick-closeout is involved, and a
    final voucher and a summary of all costs by cost element and for
    each of its fiscal years for the subject contract. [^4]

-   b\. The cognizant audit agency *[(insert name of
    agency]{.underline}*) has provided the contractor's indirect cost
    history covering a sufficient number of fiscal years to see the
    trend of claimed, audit questioned, and disallowed costs; and any
    other information that could impact the decision to use
    quick-closeout procedures (see attached document).[^5]

-   c\. If the cognizant audit agency is unable to provide contractor
    indirect cost history, the contractor was requested to and has
    provided its indirect cost history.[^6]

-   d\. The following contract indirect cost rate ceilings have been
    reviewed: *(insert indirect rate ceiling(s))
    \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_*

-   e\. Explain why quick close out procedures are appropriate in light
    of the information checked off above[^7]
    :\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_
    \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

> \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_.

-   4\. The extent of the analysis that was performed in lieu of
    obtaining an independent audit in order to establish the final
    indirect cost rates[^8]: *(Check off the applicable item(s))*

-   a\. Ceiling indirect cost rates established in the contract, if
    applicable, are consistent with FAR 42.707(c)(1) and (2).

-   b\. Contractor's claimed actual rates adjusted based on the
    contractor's indirect cost history.

-   c\. Recommended rates from the cognizant audit agency, the local
    pricing office, another installation pricing office, or other
    recognized knowledgeable source.

-   d\. Billing rates established in the contract.

-   e\. Previous year's final rates in the contract, if established.

-   f\. Contracts established final rates for another fiscal year
    closest to the period for which quick-closeout rates are being
    established.

-   g\. Other:
    \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_.

-   5\. Other factors affecting the Contracting Officer's decision and
    the mitigation of risk include[^9]: *(Check off the applicable
    item(s))*

-   a\. The contractor has an approved accounting system.

-   b\. There are no significant audit issues nor problems in previous
    pre-award, post-award, or final audits.

-   c\. Contract ceilings below claimed indirect rates.

-   d\. There is no suspected fraud or wrongdoing under the contract.

-   e\.
    Other:\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_.

cc: DTS-823/Accounting Branch

[^1]: ^1^ Required by FAR 42.708 to be checked in order to use quick
    closeout procedures. If the item does not apply then quick closeout
    procedures cannot be used. REMINDER: Indirect cost amounts are
    considered insignificant when the total unsettled indirect cost to
    be allocated to any one contract does not exceed \$1,000,000.

[^2]: ^1^

[^3]: ^1^

[^4]: ^2^ Required by TAM 1242.708-70, DOT quick-closeout procedures, as
    applicable. You must be able to complete items 3.a., 3.e. and either
    3.b. or 3.c. as a minimum in order to proceed with quick-closeout
    procedures.

[^5]: ^2^

[^6]: ^2^

[^7]: ^2^

[^8]: ^3^ Per TAM 1242.708-70, final indirect cost rates should be
    established using at least one of the analysis techniques listed
    hereunder. Also, per TAM 1242.7100 the extent of the analysis
    performed in lieu of obtaining an independent audit must be
    addressed.

[^9]: ^4^ Required per TAM 1242.7100; at least one item needs to be
    addressed.