204.804 Closeout of contract files.

(1) Except as provided in paragraph (3) of this section, contracting officers shall close out contracts

in accordance with the procedures at PGI 204.804 . The closeout date for file purposes shall be

determined and documented by the procuring contracting officer.

(2) The head of the contracting activity shall assign the highest priority to close out of contracts

awarded for performance in a contingency area. Heads of contracting activities shall monitor and

assess on a regular basis the progress of contingency contract closeout activities and take

appropriate steps if a backlog occurs. For guidance on the planning and execution of closing out

such contracts, see PGI 207.105 (b)(20)(C)(8) and PGI 225.373 (e).

(3)(i) In accordance with section 836 of the National Defense Authorization Act for Fiscal Year 2017

(Pub. L. 114-328), section 824 of the National Defense Authorization Act for Fiscal Year 2018 (Pub.

L. 115-91), and section 820 of the National Defense Authorization Act for Fiscal Year 2021 (Pub. L.

116-283), contracting officers may close out contracts or groups of contracts through issuance of

one or more modifications to such contracts without completing a reconciliation audit or other

corrective action in accordance with FAR 4.804-5(a)(3) through (15), as appropriate, if each

contract—

(A)( 1 ) For military construction (as defined at 10 U.S.C. 2801) or shipbuilding, was awarded at

least 10 fiscal years before the current fiscal year; or

( 2 ) For a ll other contracts, was awarded at least 7 fiscal years before the current fiscal year;

(B) The performance or delivery was completed at least 4 years prior to the current fiscal year; and

(C) Has been determined by a contracting official, at least one level above the contracting officer, to

be not otherwise reconcilable, because—

(1) The contract or related payment records have been destroyed or lost; or

(2) Although contract or related payment records are available, the time or effort required to

establish the exact amount owed to the U.S. Government or amount owed to the contractor is

disproportionate to the amount at issue.

(ii) Any contract or group of contracts meeting the requirements of paragraph (3)(i) of this section

may be closed out through a negotiated settlement with the contractor. Except as provided in

paragraph (3)(ii)(B) of this section, the contract closeout process shall include a bilateral

modification of the affected contract, including those contracts that are closed out in accordance

with a negotiated settlement.

(A) For a contract or groups of contracts, the contracting officer shall prepare a negotiation

settlement memorandum that describes how the requirements of paragraph (3)(i) of this section

have been met.

(B) For a group of contracts, a bilateral modification of at least one contract shall be made to reflect

the negotiated settlement for a group of contracts, and unilateral modifications may be made, as

appropriate, to other contracts in the group to reflect the negotiated settlement.

(iii) For contract closeout actions under paragraph (3) of this section, remaining contract balances—
(A) May be offset with balances in other contract line items within the same contract, regardless of

the year or type of appropriation obligated to fund each contract line item and regardless of whether

the appropriation obligated to fund such contract line item has closed; and

(B) May be offset with balances on other contracts, regardless of the year or type of appropriations

obligated to fund each contract and regardless of whether such appropriations have closed.

(iv) USD(A&S) is authorized to waive any provision of acquisition law or regulation in order to carry

out the closeout procedures authorized in paragraph (3)(i) of this section (see procedures at PGI

204.804 (3)(iv)).

(4) When using the clause at 252.204-7022, Expediting Contract Closeout, to expedite contract

closeout, determine the residual dollar amount upon completion of all applicable closeout

requirements of FAR 4.804.

204.804-70 Contract clause.

Parent topic: Subpart 204.8 - CONTRACT FILES