28654 Federal Register / Vol. 72, No. 98 / Tuesday, May 22, 2007 / Proposed Rules 

DEPARTMENT OF DEFENSE 

Defense Acquisition Regulations 

System 

48 CFR Chapter 2 

Contract Closeout; Systemic Issues 

AGENCY: Defense Acquisition 

Regulations System, Department of 

Defense. 

ACTION: Response to public comments. 

SUMMARY: The Director of Defense 

Procurement and Acquisition Policy 

(DPAP) recently completed an 

assessment of public input on systemic 

issues related to contract closeout that 

were identified in a public meeting held 

on September 21, 2005. This assessment 

has resulted in recommendations for 

revisions to policy, guidance, and 

training related to contract closeout 

responsibilities. 

FOR FURTHER INFORMATION CONTACT: Ms. 

Pat West, DPAP CPF Directorate, by 

telephone at (703) 602–8387, or by email at pat.west@osd.mil. 

SUPPLEMENTARY INFORMATION: In June 

2005, the Department of Defense (DoD) 

formed a Contract Closeout Systemic 

Issues Team to develop 

recommendations for improving the 

contract closeout process. During June/ 

July 2005, the Team engaged with 

respondents to DoD’s September 24, 

2002, Federal Register notice (67 FR 

59799) requesting public input on how 

to improve the contract closeout 

process. On September 21, 2005, DoD 

held a public meeting to discuss 

potential opportunities to streamline the 

closeout process for DoD contracts (70 

FR 46824, August 11, 2005). At the 

public meeting, interested parties 

provided input on 23 primary issue 

areas. The public meeting was attended 

by Government and industry 

representatives, and the issues 

discussed during the public meeting are 

published at http://www.acq.osd.mil/ 

dpap/general/cost-pricing.htm. 

DPAP has reviewed the public 

comments and plans to pursue 

recommended revisions to the Federal 

Acquisition Regulation (FAR), the 

Defense FAR Supplement (DFARS) and 

its companion Procedures, Guidance, 

and Information (PGI), User Guides, and 

DoD training resources. DPAP plans to 

take the following actions to enhance 

the contract closeout process: 

• Open a DFARS case on contract 

closeout to establish a comprehensive 

PGI section to address contract closeout 

and to assess whether regulatory 

clarification/revision is needed to 

address the following: 

—Cumulative Allowable Cost 

Worksheets. 

—Quick closeout. 

—Subcontract closeout. 

—Final indirect cost rate proposals. 

—Periods of performance. 

—Government property. 

—Alternate contract closing methods. 

—Contractor compliance with data 

submission requirements related to 

contract closeout. 

• Identify and make available best 

practices used by the military 

departments and defense agencies in 

completing contract closeouts. 

• Identify any additional training that 

should be provided on contract 

closeout. 

The following is a discussion of the 

public comments/recommendations 

received and the DPAP response and/or 

planned 

1. Final Vouchers 

a. Waiver of Final Voucher Audits 

Comment: The following 

recommendations were received relating 

to the waiver of final voucher audits: 

(1) Provide the administrative 

contracting officer (ACO) waiver 

authority. 

(2) Clearly identify the Government 

representative that has the authority to 

waive the audit (ACO versus procuring 

contracting officer (PCO)). 

(3) Waive the audit for contracts less 

than a specified amount (e.g., $10 

million). 

(4) Provide specific risk assessment 

guidance to the ACO for use in 

determining whether a waiver of audit 

is appropriate. 

(5) Include factors in addition to the 

dollar value in determining when final 

voucher audits should be waived, such 

as the size of the company, the number 

of contracts, and consideration of the 

contractor’s corrective actions with 

respect to system inadequacies. 

(6) Permit the Government and the 

contractor to agree to waive the final 

voucher audit when money owed is 

below a stipulated amount (e.g., less 

than $1,000). 

(7) Require final voucher audits for 

cost-type contracts only on an exception 

basis for those contractors having billing 

systems that meet specified standards. 

Audits may be required when adverse 

circumstances exist, such as inadequate 

internal control systems, contracts 

exceeding a specified dollar threshold, 

recent frequency of audits, and previous 

audit exceptions. 

(8) Allow for application of the audit 

waiver requirements at the delivery 

order level. 

DPAP Response: In cases where final 

indirect cost rates have not been 

negotiated, FAR 42.708 provides for a 

quick closeout procedure when certain 

other criteria have been met. These 

criteria may warrant expansion based on 

particular facts and circumstances. 

Therefore, the DFARS case on contract 

closeout will include a review of 

whether it is appropriate to amend the 

FAR and/or DFARS to expand on the 

existing quick closeout FAR criteria. 

Depending on the results of this review, 

DPAP may consider revisions to the 

DFARS and/or may make 

recommendations to the FAR Council 

for revisions to the current FAR 

language on quick closeout. 

In those cases where final indirect 

cost rates have been negotiated, DPAP 

does not believe a broad-based waiver of 

audits of final vouchers would facilitate 

the contract closeout process. Instead, 

DPAP believes that the contract closeout 

process is significantly reduced if 

contractors submit a Cumulative 

Allowable Cost Worksheet (CACWS) 

after the indirect cost rates are finalized. 

The CACWS allows the ACO to close 

out a contract without requesting an 

audit of the contractor’s final voucher. 

Therefore, the DFARS case on contract 

closeout will include a review to 

determine if, and to what extent, the 

CACWS should be required and/or 

encouraged in the regulations. This 

review will also include an assessment 

of how the CACWS is or should be 

structured to best meet contract closeout 

needs without imposing significant 

administrative burden on the contractor 

or the Government. 

b. Use of Bilateral Modifications 

Comment: It was recommended that 

contracting officers be permitted to use 

a bilateral modification to close out a 

contract, rather than requiring a final 

voucher, when no money is owed to the 

Government and specific risk criteria 

are met. 

DPAP Response: The DFARS case on 

contract closeout will include a review 

of the quick closeout criteria in the FAR. 

DPAP will also review the feasibility of 

permitting bilateral modifications, in 

lieu of final vouchers, when certain 

criteria are met. Depending on the 

results of this review, DPAP may 

consider revisions to the DFARS and/or 

may make recommendations to the FAR 

Council for revisions to the current FAR 

language. 

c. Issuance of Demand Letters 

Comment: It was recommended that a 

demand letter be issued if monies are 

owed the Government and a final 

voucher is not submitted within the 

required timeframes. Under the 

recommendation, this demand letter 


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would state that interest will be 

assessed as of a specified date, and 

would identify why payment is delayed 

and the reasons the contractor has not 

submitted a final voucher (e.g., 

extension of period of performance). 

Other respondents opined that issuance 

of a demand letter may further delay the 

process and may also trigger a Treasury 

Department offset. They also noted that 

it would be difficult, absent a final 

voucher, for the Government to 

determine whether or not monies are 

owed. 

DPAP Response: FAR 42.705(b) and 

(c) permit the contracting officer to 

unilaterally close out a contract when 

the contractor fails to submit a final 

voucher. The DFARS case on contract 

closeout will consider if and when a 

demand letter should be issued for 

contractors that fail to submit final 

vouchers in accordance with FAR 

42.705(b). The review also will consider 

how the Government could/would 

determine if monies are owed and will 

evaluate the impact of any potential 

delays in the contract closeout process 

that the use of a demand letter may 

create. 

d. Prime Contract Closeout in Advance 

of Subcontract Closeout 

Comment: A recommendation was 

made to permit closeout of a prime 

contract even though a subcontract or 

subcontracts under that prime contract 

have not been closed. It was further 

recommended that such a process 

include adequate notice to the 

subcontractor. Conversely, a concern 

was expressed that such a closeout of a 

prime contract may result in the prime 

contractor’s unilateral closeout of 

subcontracts and elimination of the 

Government reimbursement of any 

additional subcontract costs, thereby 

inhibiting the subcontractor’s 

negotiation with the prime contractor. 

DPAP Response: The DFARS case on 

contract closeout will evaluate if/when 

it may be appropriate to permit prime 

contract closeout when one or more 

subcontracts have not been closed. 

2. Final Invoices—Fixed-Price 

Contracts 

a. Timing of Submission of a Final 

Invoice 

Comment: Recommendations were 

made to require submittal of a final 

invoice within 60 days of Government 

acceptance, or to establish a one-year 

time limit for contractors to submit the 

final invoice, after which time the 

contracting officer can unilaterally close 

the contract without further payment to 

the contractor. 

DPAP Response: DPAP believes that 

this issue is adequately addressed in 

FAR 4.804–1, which authorizes the 

contracting officer to close out fixedprice contracts within six months after 

the date on which the contracting officer 

receives evidence of physical 

completion. No evidence has been 

presented that indicates the six-month 

period is causing a significant delay in 

closing out contracts. 

b. Clarification of Requirement to 

Submit Final Vouchers 

Comment: A recommendation was 

made to clarify regulations regarding the 

need to submit a final invoice when a 

DD Form 250, Material Inspection and 

Receiving Report, is submitted. A 

second recommendation was made to 

provide an exception to the requirement 

for submission of a final voucher for 

contracts outside the continental United 

States (OCONUS). 

DPAP Response: While Appendix F of 

the DFARS currently provides guidance 

on the use of DD Form 250, DPAP 

believes it may also be helpful to 

include guidance in the PGI section on 

contract closeout to address the 

relationship between the DD Form 250 

and the final voucher. Therefore, the 

DFARS case on contract closeout will 

include an assessment of whether 

additional exceptions are needed for 

OCONUS contracts. 

c. Waiver of the Requirement to Submit 

Final Vouchers 

Comment: A recommendation was 

made to waive the requirement for 

submission of a final invoice if the 

amount due to the contractor is less 

than $1,000 and less than 10 percent of 

the contract value. In such cases, the 

respondent recommended that the 

contracting officer be permitted to 

unilaterally deobligate any remaining 

funds. 

DPAP Response: DPAP does not 

believe it is advisable to preclude 

payment to a contractor when monies 

are due. DPAP also does not believe 

there is a legal basis for the Government 

to extinguish its debt solely on the basis 

of the dollar amount involved. Thus, 

submission of a final invoice in such 

cases is necessary to ensure that proper 

payments are made under the terms of 

each contract. 

3. Final Indirect Cost Rates 

a. Timely Submission of Final Indirect 

Cost Rate Proposals 

Comment: The following 

recommendations were made to 

encourage timely submission of indirect 

cost rate proposals: 

(1) Increase the withhold amount (a 

specified percentage and/or specified 

amount, e.g., 15 percent or $100,000). 

One respondent recommended 

analyzing major vs. non-major 

contractors to identify problems 

preventing timely submission before 

enacting such a withhold. Another 

respondent stated that increased 

withholdings will cause problems in 

obtaining additional monies due to 

cancelled funds. 

(2) Provide incentives, rather than 

penalize contractors, for timely 

submission of indirect cost rate 

proposals. 

(3) Include a contract provision that 

permits the contracting officer to extend 

the indirect cost rate proposal 

submission date. 

DPAP Response: The DFARS case on 

contract closeout will include a review 

of the current provisions addressing the 

submission of final indirect cost rate 

proposals to ascertain whether any 

adjustments (positive and/or negative 

incentives) to the current regulatory 

coverage are warranted. 

DPAP does not believe action is 

necessary regarding the proposal 

submission date, because FAR 52.216–

7(d) currently authorizes the contracting 

officer to extend the submission due 

date if exceptional circumstances exist. 

b. Contract Closeout Using Rates Other 

Than Established Final Indirect Cost 

Rates 

Comment: Recommendations were 

made to allow contract closeout using 

indirect cost rates in the forward pricing 

rate agreement, provisional rates, or 

certified year-end rates rather than final 

indirect cost rates, when final indirect 

cost rates are not established on a timely 

basis. One respondent further noted that 

the use of any such rates should be by 

contractor and Government mutual 

agreement only. Another respondent 

noted that the contractor’s past history 

of costs questioned should be 

considered in determining whether to 

use such rates. 

DPAP Response: The DFARS case on 

contract closeout will review if/when 

the use of forward pricing, provisional, 

or certified year-end rates would be 

acceptable when final indirect cost rates 

are not available. The review will also 

address the issue of mutual agreement 

in using any such rates for contract 

closeout. 

c. Content of Final Indirect Cost Rate 

Proposals 

Comment: A number of 

recommendations were made regarding 

the required content of an adequate 

indirect cost rate proposal. These 


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recommendations included the 

following: 

(1) Review the content requirements 

for indirect cost rate proposals to 

determine if/where they could be 

streamlined. 

(2) Establish different content 

requirements based on dollar 

thresholds. 

(3) Provide flexibility so that the 

proposal is not rejected when it is not 

exactly the same as the content 

requirements, particularly when there 

are only format issues/problems. 

(4) Do not require submission of 

Cumulative Allowable Cost Worksheets 

at the time of submission of the indirect 

cost rate proposal (permit these 

worksheets to be submitted at a later 

date). 

DPAP Response: The DFARS case on 

contract closeout will include a review 

of the current requirements regarding 

the content of an adequate indirect cost 

rate proposal to determine if/how they 

could be streamlined, and the extent to 

which additional flexibility should be 

provided. DPAP will evaluate the need 

for the addition of DFARS/PGI language 

regarding such content, as well as PGI 

references to relevant Defense Contract 

Audit Agency (DCAA), Defense Contract 

Management Agency (DCMA), and other 

agency materials on this subject. This 

review will also assess whether 

regulatory language is needed to address 

if/when Cumulative Allowable Cost 

Worksheets must be submitted to permit 

timely audit and negotiation of indirect 

cost rates and contract closeout. 

d. Separate Proposals for Final Direct 

and Indirect Costs 

Comment: One recommendation 

would permit the separate submission 

of final direct and indirect cost 

proposals when the ACO believes 

separate submissions would facilitate 

the contract closeout process. 

DPAP Response: DPAP does not see 

the value in permitting separate 

proposals. DPAP believes that separate 

proposals would impose an 

administrative burden on both the 

Government and the contractor, since 

both proposals and multiple final 

vouchers would be required for the 

same contract (one for direct costs, one 

for indirect costs). When final indirect 

cost rates have not been negotiated, the 

use of quick closeout procedures is a 

more feasible solution than submission 

of separate direct and indirect cost 

proposals. In addition, DPAP believes it 

is inadvisable to permit the separate 

submission of direct and indirect costs, 

since both are required to determine 

indirect cost rates, and any 

reclassification of costs between direct 

and indirect would be made 

administratively more cumbersome by 

separate proposals. 

e. Lump Sum Settlements 

Comment: One recommendation 

called for providing lump sum 

settlement guidance to the contracting 

officer. 

DPAP Response: DPAP does not see 

value in providing guidance on a lump 

sum settlement; nor does DPAP believe 

it is prudent to do so, since any such 

guidance will ultimately tie back to the 

actual incurred costs. A contracting 

officer must have a basis for 

determining the final amount due. The 

basis for this amount is the annual 

allowable incurred costs of the 

contractor and the final negotiated 

indirect cost rates. 

4. Lack of Government Resources and/ 

or Timely Action 

a. Utilization of Government Resources 

Comment: Various recommendations 

were made regarding the best utilization 

of Government resources in performing 

contract closeout functions. These 

recommendations included the 

following: 

(1) Assign an individual or team at 

each agency to be responsible for 

reducing and eliminating the backlog of 

open contracts, provide training for 

individuals to effectively reduce the 

backlog, and provide promotion 

opportunities. 

(2) Make the contract closeout 

function an integral part of contract 

administration rather than a separate 

function. 

(3) Establish Government Centers of 

Excellence for contract reconciliations, 

establishment of final indirect cost rates, 

and expiring funds to assist in resolving 

contract closeout issues. 

(4) Create a contract closeout 

contracting officer, similar to the 

termination contracting officer, who 

would be a specialist in closing out 

contracts. 

(5) Outsource the contract closeout 

function to contractors. 

DPAP Response: DPAP will review 

the current processes used by the 

military departments and defense 

agencies to identify best practices for 

utilizing resources in performing 

contract closeout. These best practices 

will be made available to the military 

departments and defense agencies for 

their consideration. 

b. Line Item Within the DoD Budget for 

Contract Closeout 

Comment: One respondent 

recommended establishing a separate 

line item in the DoD budget dedicated 

to contract closeout activities. 

DPAP Response: DPAP does not 

believe it would be beneficial to 

establish a separate budget line item for 

contract closeout activities for the 

military departments and defense 

agencies. Its establishment would 

impose the significant administrative 

burden of capturing the individual 

activities associated with contract 

closeout in the DoD cost accounting 

systems, which are not designed to 

capture costs associated with discrete 

work activities across the Department. 

The intention of the separate line item 

would be to force the military 

departments and defense agencies to 

spend sufficient monies to support the 

closeout effort. However, it could be 

easily reduced or eliminated and, by 

itself, would provide no assurance that 

contract closeouts would be completed, 

since it most likely would not change 

the closeout process but would have the 

adverse effect of reducing flexibility. 

DPAP believes the key to successful 

utilization of resources is to provide a 

set of best practices to the departments 

and agencies, and to let the departments 

and agencies apply those practices in a 

manner that best meets their particular 

situations. 

c. Timeline for DCAA Audits of Final 

Indirect Cost Rates 

Comment: A recommendation was 

made to establish a timeline by which 

DCAA audits of indirect cost rate 

proposals should be completed. Under 

this recommendation, if the audit is not 

completed by the date specified, the 

contracting officer would have the 

authority to use a third party to conduct 

the audit, and the cost of the audit could 

be reimbursed to the contractor or paid 

directly by the Government to the third 

party auditor. 

DPAP Response: DPAP believes that 

the key to timely audit of indirect cost 

rate proposals is the timely submission 

of an adequate final indirect cost rate 

proposal by the contractor. DoD has 

internal mechanisms in place to monitor 

and take actions when indirect cost rate 

proposals have been submitted but no 

audit action has been taken. However, 

in recognition of the need to ensure that 

the contracting officer and the auditor 

maintain adequate communication, the 

DFARS case on contract closeout will 

review whether PGI should include 

information regarding the action to be 

taken when a contracting officer 

believes an audit is not being performed 

on a timely basis. 


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d. Training Opportunities in Contract 

Closeout 

Comment: Recommendations were 

made to—

(1) Increase training to Government 

and contractor personnel in the area of 

contract closeout; and 

(2) Establish a section in the Defense 

Acquisition University (DAU) 

Community of Practice Lessons Learned 

for contract closeout and reference it in 

PGI. 

DPAP Response: As part of the review 

of best practices, DPAP will work with 

DAU to determine if/what training 

needs to be expanded in the area of 

contract closeout and to establish a 

community of practice that can provide 

the best contract closeout practices for 

use by DoD contracting personnel. 

e. Delineate the Roles and 

Responsibilities of Parties in the 

Contract Closeout Process 

Comment: The following 

recommendations were made to 

delineate roles and responsibilities of all 

parties to contract closeout: 

(1) Describe in the DFARS or PGI the 

roles and responsibilities for all parties 

involved in the contract closeout 

process. 

(2) Designate the ACO as the central 

control point for closeout of a contract 

and for use of the quick closeout 

process. One respondent noted that this 

could be problematic, since the ACO is 

not as knowledgeable as the PCO, and 

the PCO is a critical player in resolving 

issues related to older contracts and 

contract funding (e.g., cancelled funds). 

(3) Specifically identify the roles and 

responsibilities for cost reconciliations 

and the final determination of contract 

value when there are discrepancies 

between the Government’s and the 

contractor’s accounting records. 

DPAP Response: DPAP agrees that 

such delineation would help facilitate 

the contract closeout process. Therefore, 

as part of the DFARS case, the PGI will 

be amended to describe the contract 

closeout process and to delineate the 

roles and responsibilities of all parties 

involved in that process. 

Regarding contracts for which there 

are discrepancies in cost reconciliations, 

DoD has legislative authority to close 

out contracts entered into prior to 

October 1, 1996, that have an 

unreconciled balance of $100,000 or 

less. Absent additional legislative 

authority, DPAP does not believe it can 

provide contracting officers with the 

authority to close out such contracts. 

f. Contract Closeout in the Absence of 

Defense Finance and Accounting 

Service (DFAS) Approval 

Comment: A recommendation was 

made to allow the ACO to close out the 

contract if, after notifying DFAS that a 

contract is administratively complete, 

no response is received within 60 days 

of the notification. 

DPAP Response: Since DFAS has the 

accounting responsibility within DoD, it 

would not be appropriate to close out 

the contract without DFAS approval. 

However, the DFARS case on contract 

closeout will include a review of 

whether PGI/DFARS language is needed 

to address the actions to be taken when 

the contracting officer believes a timely 

response has not been received from 

DFAS. 

5. Submission of Contract Closeout Data 

a. Contract Closeout as a Condition for 

Future Awards or as an Element of Past 

Performance 

Comment: One respondent 

recommended including contractor 

performance in submitting closeout 

data, in the contractor’s past 

performance ratings. Another 

respondent noted that any data 

submitted for past performance must 

distinguish between contractor 

performance in submitting the closeout 

documents and Government-controlled 

actions. A third respondent 

recommended precluding the award of 

future contracts for contractors that 

continually fail to submit the required 

contract closeout items. 

DPAP Response: The Office of Federal 

Procurement Policy Guide on Best 

Practices for Collecting and Using 

Current and Past Performance 

Information (May 2000) includes 

consideration of timely completion of 

all administrative requirements under 

‘‘Business Relations’’ as a criterion for 

evaluating past performance. The 

DFARS case on contract closeout will 

review whether contract closeout 

should be a more specific past 

performance element. Depending on the 

results of this review, DPAP may 

consider revisions to the DFARS and/or 

may make recommendations to the FAR 

Council for revisions to the current FAR 

language on contract closeout. 

DPAP does not believe it would be 

appropriate to broadly prohibit the 

award of future contracts to contractors 

with any history of failing to submit 

contract closeout items. To do so would 

be tantamount to debarment, and DPAP 

does not believe that failure to submit 

contract closeout items meets the 

debarment criteria at FAR 9.406–2. 

b. Incentives for Fulfillment of 

Contractor Closeout Requirements 

Comment: The following 

recommendations were made to 

encourage contractors to complete 

contract closeout activities: 

(1) Include specific contractual terms 

that provide positive and/or negative 

consequences for the fulfillment of 

contractor closeout commitments. 

(2) Provide award fees or profit factors 

based on the submission of contract 

closeout documents. 

(3) Include submittal of contract 

closeout documents a milestone for 

receiving a performance-based payment. 

(4) Include contract closeout activities 

as a separately priced contract line item. 

A specific recommendation was made to 

address the allowability of contractor 

costs associated with required contract 

cost and payment reconciliations. 

DPAP Response: The DFARS case on 

contract closeout will review whether 

regulatory clarification/revisions are 

needed to provide additional incentives 

(positive and/or negative) for 

encouraging submission of contractor 

closeout data. This will include a 

review of the criteria for determining 

whether to impose a withhold, the 

approval or denial of direct billing 

authority, the potential impact on 

contractor past performance 

evaluations, and the inclusion of a 

contract closeout milestone in 

determining performance-based 

payments. 

DPAP does not believe that award fees 

or other profit factors are appropriate 

means by which to compel the 

contractor to complete contract closeout 

responsibilities, since award fee and 

profit criteria are intended to focus on 

cost, quality, and technical 

performance. They are not intended to 

be a means to further reward contractors 

for satisfying basic contract 

administration responsibilities. 

DPAP also does not believe it is 

advisable to include contract closeout 

activities as a separately priced contract 

line item. This would most likely be 

perceived as increasing the cost or price 

of the contract, rather than simply 

encouraging submittal of the closeout 

data. Similarly, DPAP does not believe 

that it is necessary to promulgate 

specific cost allowability rules related to 

contractor reconciliation efforts. The 

contractor should consider the cost of 

normal contract closeout (including 

reconciliations) when submitting 

proposals for contracts and/or indirect 

cost rates. Furthermore, in those 

instances where unusual circumstances 

require the contractor to expend effort 

that is charged as a direct cost beyond 


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the current contract period of 

performance, the contractor should 

request a contract modification to 

address these costs, including any 

necessary extension to the period of 

performance. 

6. Missing Documentation 

a. Determination That a Contract Is 

Administratively Complete 

Comment: A recommendation was 

made to authorize the ACO to issue a 

final determination that a contract is 

administratively complete if the 

Government and the contractor agree 

that no additional services or products 

will be received by the Government and 

there are no outstanding actions. 

DPAP Response: DPAP believes that 

the current listing of actions at FAR 

4.804 for determining that a contract is 

administratively closed provides 

sufficient criteria for the contracting 

officer. Ensuring that the items in this 

listing are all complete is akin to 

ensuring that there are no outstanding 

actions. Thus, DPAP does not plan 

further action with regard to this 

recommendation. 

b. Adequacy of the Government’s 

Contract Files 

Comment: A recommendation was 

made to specify in the regulations and/ 

or PGI what constitutes an adequate 

contract file (e.g., modifications, DD 

250’s, invoices, payment vouchers) for 

purposes of contract closeout, and to 

require that contracting officers 

maintain such a file. 

DPAP Response: The DFARS case will 

review whether guidance should be 

added to PGI to address what 

constitutes an adequate contract file (see 

response to Comment 6.a. above). 

Currently, FAR Subpart 4.8 delineates 

the applicable contract file 

documentation requirements depending 

on the product or service acquired and 

contract type and complexity. FAR 

4.802 allows agencies to retain contract 

files in any medium (paper, electronic, 

microfilm, etc.) or any combination of 

media. The Electronic Data Access 

(EDA) system is DoD’s electronic file 

cabinet containing electronic versions of 

contractual documents, including 

modifications, and is accessible via the 

Internet 24 hours a day at http:// 

eda.ogden.disa.mil. Also, DFAS has an 

ongoing Voucher attachment system 

initiative that uploads supporting 

documentation for disbursing vouchers 

in EDA. However, it may be advisable 

to include these requirements, as well as 

any other applicable contract file 

documentation information, in PGI. 

7. Quick Closeout Procedures 

a. Broaden the Use of Quick Closeout 

Procedures 

Comment: Three respondents 

recommended broadening the use of 

quick closeout procedures by raising the 

dollar threshold and/or percentage 

limitations currently in the regulations 

and by extending the existing DCMA 

deviation. Two respondents 

recommended considering mandating 

the use of quick closeout procedures for 

low-dollar value contracts and making a 

thorough analysis to determine the 

numbers of contracts that would be 

affected by such a mandate. 

DPAP Response: The DFARS case on 

contract closeout will review whether it 

is appropriate to amend the DFARS to 

expand on the existing quick closeout 

criteria at FAR 42.708. In addition, 

depending on the results of this review, 

DPAP also may make recommendations 

to the FAR Council for revisions to the 

current FAR language on quick closeout. 

b. Require Mutual Agreement To Use 

Quick Closeout Procedures 

Comment: A recommendation was 

made to provide for the quick closeout 

process to be one of mutual agreement 

between the Government and the 

contractor. 

DPAP Response: DPAP believes that 

the FAR already clearly requires mutual 

agreement between the Government and 

the contractor in order to use quick 

closeout procedures. FAR 42.708 

requires the contracting officer to 

‘‘negotiate’’ the settlement of indirect 

costs for a specific contract, in advance 

of the determination of the final indirect 

cost rates. In addition, FAR 42.708 

allows the use of quick closeout 

procedures only if ‘‘agreement’’ can be 

reached on a reasonable estimate of 

allocable dollars. Thus, DPAP does not 

believe any further action is needed 

regarding this recommendation. 

c. Justification for Not Using Quick 

Closeout Procedures 

Comment: A recommendation was 

made to require that an ACO perform a 

risk assessment to justify not using 

quick closeout procedures, when final 

indirect cost rates have not been 

established. In conjunction with this 

recommendation, one respondent 

recommended that the risk assessment 

include a cost/benefit analysis of 

applying quick closeout procedures. 

DPAP Response: DPAP believes it is 

unnecessarily burdensome to require a 

risk assessment whenever quick 

closeout procedures are not used and 

final indirect cost rates have not been 

established. However, the DFARS case 

will review whether regulatory revisions 

are needed to address the criteria a 

contracting officer should consider for 

applying quick closeout procedures. 

Depending on the results of this review, 

DPAP may consider revisions to the 

DFARS and/or may make 

recommendations to the FAR Council 

for revisions to the current FAR 

language on quick closeout. 

d. Evaluation of the Use of Quick 

Closeout Procedures 

Comment: A recommendation was 

made to evaluate instances in which the 

criteria for using quick closeout applied, 

but the quick closeout procedure was 

not used by the ACO. 

DPAP Response: As part of the 

DFARS case on contract closeout, input 

will be obtained from contracting 

personnel as to if/why contracting 

officers do not apply quick closeout 

procedures when the facts/ 

circumstances satisfy the FAR criteria 

for use of such procedures. This input 

will be considered in determining 

whether any regulatory revisions are 

needed regarding the quick closeout 

procedures. 

8. Subcontracts 

a. Closeout Plan for Subcontracts 

Comment: A recommendation was 

made to require a contract closeout plan 

as part of the subcontracting plan. 

DPAP Response: DPAP does not 

believe there would be significant 

benefit to requiring a specific contract 

closeout plan as part of the 

subcontracting plan. However, the 

DFARS case on contract closeout will 

include a review to determine whether 

existing regulations should be amended 

to emphasize contract closeout in 

discussing contractor responsibilities for 

managing subcontracts. 

b. Require the Use of Quick Closeout 

Procedures for Subcontracts 

Comment: A recommendation was 

made to require the use of quick 

closeout procedures for subcontracts, 

including interdivisional transfers, to 

the maximum extent possible. 

DPAP Response: FAR 42.202 states 

that it is the prime contractor’s 

responsibility to manage its 

subcontracts under existing regulations. 

However, the DFARS case on contract 

closeout will review whether regulatory 

revisions are needed to address 

subcontracts. 

c. Waiver of Final Subcontract Assist 

Audits 

Comment: A recommendation was 

made to establish a threshold for assist 

audits and to permit prime contractors 


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to waive audits for subcontracts that are 

below this established threshold when 

the lack of negotiated subcontractor 

indirect rates is preventing closeout of 

the prime contract. 

DPAP Response: The DFARS case on 

contract closeout will review if/how 

subcontracts should be closed when 

subcontract final indirect cost rates have 

not been negotiated. Since DPAP 

believes that the contract closeout 

process is significantly reduced if 

contractors (including subcontractors 

when required) submit an adequate final 

indirect cost rate proposal and prepare 

a Cumulative Allowable Cost Worksheet 

(CACWS) when the indirect cost rates 

are finalized, the DFARS case will also 

review the extent to which a final 

indirect cost rate proposal and a 

CACWS should be required and/or 

encouraged for subcontractors/ 

subcontracts. 

d. Requirement for Audit Coordination 

Between the Prime Contractor and 

DCAA 

Comment: A recommendation was 

made to require DCAA to provide 

feedback to prime contractors on the 

status of assist audits. 

DPAP Response: The DFARS case on 

contract closeout will review the current 

process to assess whether DFARS 

revisions are needed to address the 

steps a prime contractor can take to 

determine the status of DCAA assist 

audits of subcontract costs. 

e. Use of Third-Party Auditors to 

Complete Subcontract Assist Audits 

Comment: A recommendation was 

made to use third-party auditors for 

subcontract audits where the 

Government does not already have a 

presence, similar to the policy on Other 

Transactions. 

DPAP Response: DPAP does not 

believe that any action is needed with 

regard to this comment. In accordance 

with DoD Directive 5105.36, Defense 

Contract Audit Agency (DCAA), DCAA 

is responsible for performing all 

contract audits required in the 

negotiation, administration, and 

settlement of DoD contracts and 

subcontracts. Should the prime 

contractor have any issues related to 

audits of subcontractors, those issues 

should be raised with the cognizant 

DCAA auditor. 

9. Reconciliations 

a. Require Annual Reconciliation of 

Contract Payments 

Comment: A recommendation was 

made to encourage or require that the 

Government and the contractor 

reconcile payments on an annual basis. 

DPAP Response: The DFARS case on 

contract closeout will review if/when it 

would be feasible to establish an annual 

contract reconciliation process. 

b. Establish Thresholds for Performing 

Contract Reconciliations 

Comment: A recommendation was 

made to consider establishing dollar 

thresholds for performing contract 

reconciliations. 

DPAP Response: DPAP does not 

believe it would be statutorily permitted 

to establish dollar thresholds below 

which contract reconciliations would 

not be required. Absent statutory 

authority, DPAP does not believe it can 

provide the contracting officer with the 

authority to close out unreconciled 

contracts. 

c. Require Replacement Funds Be 

Acquired on a Timely Basis 

Comment: A recommendation was 

made to require that replacement funds 

be obtained on a timely basis. 

DPAP Response: The DFARS case on 

contract closeout will consider whether 

to add specific language to PGI 

emphasizing the need for agencies to 

obtain replacement funds on a timely 

basis. 

d. Require That DFAS Notify 

Contractors of Payment Offsets 

Comment: A recommendation was 

made to require that DFAS notify the 

contractor when there is an offset to a 

contractor payment. 

DPAP Response: DFAS currently 

notifies contractors by letter and/or 

telephone when there is an offset. The 

DFARS case on contract closeout will 

include a review of whether the DFARS/ 

PGI should be amended to describe this 

process. 

e. Require the Update of Cumulative 

Accounting Classification Reference 

Number (ACRN)/Contract Line Item 

Numbering (CLIN) Schedules After Each 

Contract Modification 

Comment: A recommendation was 

made to require the updating of the 

cumulative ACRN/CLIN schedule each 

time a modification is issued. 

DPAP Response: The DFARS case on 

contract closeout will review whether 

PGI language is needed to emphasize 

the importance of maintaining an 

updated ACRN/CLIN schedule. 

f. Provide Contractors Access to 

Contract ACRN and Mechanization of 

Contract Administration Services 

(MOCAS) Data, and Consider 

Simplifying ACRN/CLIN Accounting 

Comment: A recommendation was 

made that DoD should provide 

contractors with read-only access to 

their contract ACRN data, allow 

visibility to all modifications, add CLIN 

data to MOCAS, and consider 

alternatives to and simplify the ACRN/ 

CLIN accounting. 

DPAP Response: DPAP does not 

believe any action is needed with regard 

to this recommendation, because the 

access described is already available. A 

contractor can request access to the 

contract ACRN data by contacting the 

cognizant paying office identified on the 

DFAS Web site at http:// 

www.defenselink.mil/dfas/about/ 

Contacts.html. In addition, contract 

information, including modifications, 

can be accessed on the Internet via the 

Electronic Document Access system at 

http://eda.ogden.disa.mil. Furthermore, 

the ACRN/CLIN data is already 

included in MOCAS. 

With regard to simplifying the ACRN/ 

CLIN accounting, DoD is working to 

develop a comprehensive data structure 

that will support the requirements for 

budgeting, financial accounting, cost/ 

performance management, and external 

reporting throughout the Department. 

This effort is intended to standardize 

categorization of financial information 

along several dimensions to support 

financial management and reporting 

functions and, when implemented, will 

provide a common foundation to track, 

process, and report DoD business 

transactions. 

g. Automated Structuring of Contract 

CLINS/SubCLINS 

Comment: A recommendation was 

made to not allow agency accounting 

systems to drive how contracts are 

structured, i.e., systems automatically 

add SubCLINs to a CLIN. 

DPAP Response: DPAP believes the 

DFARS adequately addresses this issue. 

The criteria for establishing CLINs are 

specified in DFARS 204.7103 and 

204.7104. 

10. Contract vs. Delivery Order Basis 

a. Clearance of Government Property, 

Final Patent Reports, Security Release, 

etc. 

Comment: A recommendation was 

made to clear the Government property, 

final patent report, security release, and 

other pertinent documents one time 

against the contract instead of on an 

order-by-order basis. 

DPAP Response: The DFARS case on 

contract closeout will review if/when it 

may be appropriate to provide for a onetime clearance of the Government 

property, final patent report, security 

release, and other pertinent documents 

instead of on an order-by-order basis. 


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b. Close Contracts by Task Order 

Comment: Two recommendations 

were made to close out all task orders 

as they are completed instead of waiting 

until the end of the contract, or to 

explore best practice options. 

DPAP Response: The DFARS case on 

contract closeout will review whether 

DFARS/PGI language is needed to 

specifically address the closeout of task 

orders. Note that DCMA currently has a 

process to close out task orders as they 

are completed to facilitate closeout of 

indefinite-delivery, indefinite-quantity 

contracts. 

c. Contract Period of Performance 

Comment: A recommendation was 

made to clarify language on the period 

of performance for a task order versus 

that specified in the basic contract, i.e., 

if and when the task order period of 

performance may fall outside the period 

of performance specified in the basic 

contract. 

DPAP Response: The DFARS case will 

review whether the regulations should 

be revised to specifically address issues 

regarding contract and task order 

periods of performance. 

11. Time-and-Materials (T&M) 

Contracts 

a. Streamline Closeout Procedures 

Comment: A recommendation was 

made to streamline closeout procedures 

for T&M contracts that are valued at less 

than a specified amount (e.g., $1 

million). 

DPAP Response: The DFARS case on 

contract closeout will review if and 

when streamlined closeout procedures 

would be appropriate for T&M 

contracts. Note that the May 17, 2005, 

DCAA memorandum, Audit Guidance 

on Low Risk Time and Material/Labor 

Hour Contract Closeout Initiative, 

provides audit procedures for 

expediting the closeout of T&M 

contracts valued at $1 million or less 

when contractors meet certain low risk 

criteria. The memorandum (05–PPD–

037(R)) is available at http:// 

www.dcaa.mil/. 

b. Verification of Employee 

Qualifications 

Comment: A recommendation was 

made for DoD guidance to provide extra 

focus on employee qualifications when 

closing out T&M contracts. 

DPAP Response: The review of 

employee qualifications should be a part 

of the contracting officer representative 

and/or audit responsibilities during 

contract performance so as to ensure 

that employees are properly qualified 

before they perform contract work. 

DPAP is currently working to provide 

PGI guidance to delineate the duties of 

all parties in the contract administration 

process. The review of employee 

qualifications will be an integral part of 

this delineation of duties. Thus, while 

the Government is not precluded from 

reviewing employee qualifications at the 

end of the contract, DPAP believes this 

issue is better addressed in the guidance 

on administering T&M contracts, rather 

than any specific guidance on contract 

closeout. 

12. Classified Contracts 

Comment: Two recommendations 

were made for the use of quick closeout 

procedures, or certified year-end rates, 

for all classified contracts. 

DPAP Response: DPAP does not 

believe it would be advisable to provide 

blanket quick closeout authority for all 

classified contracts. However, the 

DFARS case on contract closeout will 

review whether there are any particular 

characteristics of classified contracts 

that would warrant more extensive use 

of quick closeout procedures than is 

provided for non-classified contracts. 

13. Classified Documents 

Comment: Two recommendations 

were made to develop a contract clause 

that provides clear instructions for the 

disposition of classified documents, and 

to allow the contracting officer the 

authority to transfer classified 

documents to other contracts. 

DPAP Response: The DFARS case on 

contract closeout will review whether 

language on classified contracts should 

be added to PGI. In DoD, the security 

classification management program 

implements the requirements of the 

National Industrial Security Program 

Operating Manual (NISPOM). The 

security office receives, evaluates, 

interprets, and obtains clarification and 

changes to classification guidance for 

contracts and proposals, and issues 

classification guidance. Classification 

and distribution guidance is available at 

https://intranet.acq.osd.mil/intranet/ 

admin/security/secguide/Implemnt/ 

Altrnats/Classif.htm. In DoD contracts, 

the DD Form 254, Department of 

Defense Contract Security Classification 

Specification, establishes security 

classification levels of classified 

information and hardware, 

downgrading, and declassification 

instructions, public dissemination 

instructions for information related to 

the contract, and other special security 

requirements. If a DD Form 254 is not 

provided with a solicitation or contract, 

the security office and the contracting 

office are required to jointly take the 

actions necessary to obtain one. 

14. Government Property 

Comment: The following 

recommendations were made relating to 

Government property: 

(1) Distinguish between the role of the 

ACO and that of the Government 

property administrator. 

(2) Provide contracting personnel 

with disposition authority for special 

tooling, special test equipment, and 

other property with an acquisition value 

of $5,000 or less, and be specific in 

identifying who has disposition 

authority (i.e., Government property 

administrator). 

(3) Provide contracting officers with 

the authority to make the determination 

as to whether property should be 

reutilized or scrapped, and to scrap 

military unique items that have been 

rejected for reutilization by the buying 

agency. There is little value in retaining 

these items if they have been rejected by 

the buying agency. 

(4) Delegate authority to the 

Government property administrator to 

transfer property to other contracts (e.g., 

to follow-on contracts to reduce costs). 

(5) Permit the Government property 

administrator to grant accountability 

relief on the spot for recorded property 

that was not found at contract 

completion if (a) the contractor has an 

approved property system, (b) the lost 

item has an acquisition date of five 

years or later, and (c) the lost item has 

an acquisition cost of $100,000 or less. 

The Government property administrator 

would retain the right to a full Lost/ 

Damaged/Destroyed Report. 

(6) Establish a site property and/or 

plant-wide disposition contract for each 

business element location. As each 

contract is completed, all property 

would be automatically transferred to 

the disposition contract. Each respective 

buying office could fund a line item on 

the disposition contract for disposal of 

its property, or the predominant agency 

could fund the entire contract. 

(7) Transfer accountability for 

property to the Government for 

purposes of contract closeout once 

property is submitted on an inventory 

schedule. This is an efficient method, 

because it removes property from the 

contract. 

(8) Consider a system to allow the 

capture of data related to DoD property 

in the possession of contractors, since 

DD Form 1662 was discontinued after 

fiscal year 2005. 

(9) Develop a contract clause that 

provides clear instructions for the 

disposition of Government property. 

(10) Provide contracting officers with 

the authority to remove the property 

clauses from contracts where there is no 


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probability of issues in these areas (e.g., 

service contracts with little or no 

property). 

(11) Set a timeframe (e.g., 90 days) at 

the end of the contract for disposition of 

lost property. 

(12) Clarify an apparent inconsistency 

between final contract closeout and the 

timeframe for overall closeout of 

Government property. 

DPAP Response: DPAP anticipates 

that a final rule revising FAR coverage 

on Government property will be issued 

in early 2007. The FAR rule is 

anticipated to include a number of 

changes to existing Government 

property rules. As such, DPAP believes 

it would be premature to attempt to 

address the specific recommendations 

provided with regard to Government 

property in advance of issuance of that 

final rule. Upon issuance of the rule, 

DPAP will review whether the above 

comments warrant any additional 

regulatory or PGI coverage. 

15. Patents 

a. Contract Closeout Based on Negative 

Interim and Final Patent Reports 

Comment: A recommendation was 

made to allow the contracting officer to 

proceed with contract closeout within a 

specified timeframe (e.g., 30 days), if a 

contractor has submitted a negative 

report on all interim and final patent 

right reports, unless the contracting 

officer receives notification that there 

are patent issues precluding such 

closeout. 

DPAP Response: The DFARS case on 

contract closeout will review whether 

DFARS/PGI language should be added 

to address if/when a contract could or 

should be closed out if all interim 

reports and the final patent reports are 

negative. Note that current DCMA 

contract closeout procedures provide a 

structured timeframe of 60 days for 

proceeding with closeout when patent 

reports containing a negative reply are 

received. 

b. Omission of Patent Clauses From 

Contracts 

Comment: Three recommendations 

were made to provide contracting 

officers with the authority to remove the 

patent clauses from contracts where 

there is no probability of issues in these 

areas (e.g. service contracts with no 

patent issues), to clarify PGI as to when 

the clause is needed, and to reconsider 

how often to issue negative reports on 

patents. Currently, a negative report is 

required every 12 months. 

DPAP Response: DPAP does not 

believe any guidance is needed in the 

area of contract closeout to address this 

issue. However, DPAP notes that DoD 

has a current DFARS case regarding 

patents, data, and copyrights. Thus, 

DPAP will forward this 

recommendation to the cognizant 

DFARS committee for consideration. 

c. Review FAR 52.301 Matrix for 

Mandatory and Discretionary Clauses 

Comment: A recommendation was 

made to review the FAR 52.301 matrix, 

which identifies contract clauses that 

are mandatory versus those that are 

discretionary, to ensure that clauses are 

not being included in contracts 

unnecessarily. 

DPAP Response: The current matrix at 

FAR 52.301 indicates when a FAR 

clause is required, required as 

applicable, or optional. Thus, DPAP 

does not believe any further action is 

necessary with regard to this 

recommendation. 

16. Planning 

Comment: A recommendation was 

made to require a contract closeout plan 

as part of the acquisition plan. The 

contract closeout plan should consider 

the up-front effort, perceived benefit, 

and dollar threshold. The plan should 

also include a memorandum of 

agreement between the contractor and 

the Government that weighs the costs 

and benefits of a closeout plan. 

DPAP Response: DPAP does not 

believe that there would be significant 

benefit to requiring a specific contract 

closeout plan as part of the acquisition 

plan. However, the DFARS case on 

contract closeout will review whether 

the DFARS/PGI should be revised to 

address how contract closeout should be 

considered in developing the 

acquisition plan. 

17. Mechanization of Contract 

Administration Services (MOCAS) 

Comment: A recommendation was 

made to revise MOCAS so that it is 

automatically updated to reflect the 

current performance period when the 

contract period is extended. 

DPAP Response: DPAP will work 

with DCMA to ensure that MOCAS 

capabilities include providing current 

contract period of performance 

information. 

18. Electronic Submission 

Comment: Two recommendations 

were made to study Wide Area 

WorkFlow (WAWF) for duplication, 

because DD Form 1594, Contract 

Completion Statement, and DD Form 

1597, Contract Closeout Checklist, 

duplicate the current electronic closeout 

processes being done in Procurement 

Defense Desktop (PD2). 

DPAP Response: DPAP does not 

believe any action is needed with regard 

to this recommendation, because the use 

of WAWF does not duplicate PD2. DD 

Form 1597 is needed, because not all 

contracting offices use PD2. When the 

forms are generated electronically in 

PD2, the forms do not have to be 

completed manually. However, PD2 

does permit manual closeout using DD 

Form 1597 and DD Form 1594 for orders 

under blanket purchase agreements. 

19. Allowability of Contract Closeout 

Costs 

a. Definition of ‘‘Period of Performance’’

and Guidance on the Allowability of 

Costs Incurred After the Period of 

Performance 

Comment: Four recommendations 

were made to clarify the regulations to 

specify what is meant by the period of 

performance, or to provide regulations 

or guidance as to the allowability of 

costs incurred for contract closeout after 

the end of the performance period, such 

as subcontractor costs billed and paid 

outside the period of performance, or 

material transfers that occur after the 

period of performance. 

DPAP Response: DPAP does not 

believe it is necessary or advisable to 

provide blanket guidance regarding this 

issue. The circumstances noted in the 

recommendation must be addressed on 

a case-by-case basis. DPAP believes the 

current regulations adequately address 

this issue. FAR 31.201–2, Determining 

Allowability, states that a cost is 

allowable only when the cost is 

reasonable, is allocable, complies with 

applicable Cost Accounting Standards 

or generally accepted accounting 

principles, complies with the terms of 

the contract, and complies with the 

specific provisions in FAR Subpart 31.2. 

In reading these allowability criteria, the 

key criteria for this particular issue are 

the terms of the contract. The contractor 

should consider the cost of normal 

contract closeout when submitting 

proposals for contracts and/or indirect 

cost rates. Furthermore, when unusual 

circumstances will require the 

contractor to expend effort that is 

charged as a direct cost beyond the 

current contract period of performance, 

the contractor should request a contract 

modification to extend the period of 

performance. With regard to subcontract 

costs and material transfers, when the 

contractor becomes aware that such 

costs may be incurred outside the 

period of performance, the contractor 

should notify the contracting officer and 

should request an appropriate contract 

modification to the existing period of 

performance. 


jlentini on PROD1PC65 with PROPOSALS
28662 Federal Register / Vol. 72, No. 98 / Tuesday, May 22, 2007 / Proposed Rules 

b. Guidance on Determining ‘‘Physical 

Completeness’’

Comment: One recommendation was 

made to provide guidance on ‘‘physical 

completion.’’

DPAP Response: DPAP does not 

believe additional guidance on this 

issue is necessary. FAR 4.804–4 

provides specific criteria that must exist 

for a contract to be physically complete. 

20. Statute of Limitations 

Comment: Two recommendations 

were made to shorten the statute of 

limitations for submission of a claim 

(currently six years) to mitigate issues 

concerning expired funds, lost 

documentation, software changes, and 

Government/contractor storage costs; 

and to consider that reducing the period 

would set precedence to reduce the time 

requirements in other areas. 

DPAP Response: The length of time 

allowed for the submission of a claim is 

directly related to the period specified 

in the Contract Disputes Act (41 U.S.C. 

605), which was amended upon 

enactment of the Clinger-Cohen Act in 

1996. Any revision to this period would 

require a change to existing statutes. 

DPAP believes this issue is better 

addressed by focusing on the systemic 

issues that hinder contract closeout 

rather than pursuing a legislative 

change. 

21. Transportation Clause 

Comment: A recommendation was 

made to revise the clause at DFARS 

252.247–7023, Transportation of 

Supplies by Sea, to reduce the needless 

inclusion of this clause in contracts or 

to consider issuing guidance specifying 

when the clause needs to be used. 

Currently it is often included when 

obviously unnecessary. 

DPAP Response: DPAP will refer this 

issue to the DFARS Transportation 

Committee to review whether the 

current clause prescription should be 

revised. 

22. Settlement of Contract Debts 

Comment: A recommendation was 

made to permit the contracting officer to 

negotiate the settlement of contract 

debts across a number of contracts. This 

would avoid the need to find 

replacement funds, which often takes 

years and substantially delays the 

closeout process. 

DPAP Response: DPAP does not 

believe any guidance is needed in the 

area of contract closeout to address this 

issue. However, DPAP notes that there 

is a current FAR case that is focusing on 

the contract debt process. Therefore, 

this recommendation will be forwarded 

to the cognizant FAR team for 

consideration. 

23. Consolidation of Guidance on 

Contract Closeout 

Comment: A number of 

recommendations were made that the 

DCAA Contract Audit Closeout Guide 

be incorporated into PGI to establish a 

single reference source for contracting 

personnel, and that the PGI be 

supported with training. 

DPAP Response: DPAP agrees that 

providing a consolidated resource for 

contract closeout guidance will facilitate 

the process. Thus, the DFARS case on 

contract closeout will include PGI 

language on contract closeout. In 

addition to providing basic guidance 

addressing the contract closeout 

process, this PGI section will also 

include links to agency guidebooks, 

training, and any other relevant 

information. 

Michele P. Peterson, 

Editor, Defense Acquisition Regulations 

System. 

[FR Doc. E7–9734 Filed 5–21–07; 8:45 am] 

BILLING CODE 5001–08–P 

DEPARTMENT OF DEFENSE 

Defense Acquisition Regulations 

System 

48 CFR Part 207 

RIN 0750–AF39 

Defense Federal Acquisition 

Regulation Supplement; Lease of 

Vessels, Aircraft, and Combat Vehicles 

(DFARS Case 2006–D013) 

AGENCY: Defense Acquisition 

Regulations System, Department of 

Defense (DoD). 

ACTION: Proposed rule with request for 

comments. 

SUMMARY: DoD is proposing to amend 

the Defense Federal Acquisition 

Regulation Supplement (DFARS) to 

address statutory provisions relating to 

leasing. The proposed rule permits the 

lease of a vessel, aircraft, or combat 

vehicle only if the contract will be longterm or will provide for a substantial 

termination liability. 

DATES: Comments on the proposed rule 

should be submitted in writing to the 

address shown below on or before July 

23, 2007, to be considered in the 

formation of the final rule. 

ADDRESSES: You may submit comments, 

identified by DFARS Case 2006–D013, 

using any of the following methods: 

• Federal eRulemaking Portal: http:// 

www.regulations.gov. Follow the 

instructions for submitting comments. 

• E-mail: dfars@osd.mil. Include 

DFARS Case 2006–D013 in the subject 

line of the message. 

• Fax: (703) 602–7887. 

• Mail: Defense Acquisition 

Regulations System, Attn: Mr. Gary 

Delaney, OUSD (AT&L) DPAP(DARS), 

IMD 3C132, 3062 Defense Pentagon, 

Washington, DC 20301–3062. 

• Hand Delivery/Courier: Defense 

Acquisition Regulations System, Crystal 

Square 4, Suite 200A, 241 18th Street, 

Arlington, VA 22202–3402. 

Comments received generally will be 

posted without change to http:// 

www.regulations.gov, including any 

personal information provided. 

FOR FURTHER INFORMATION CONTACT: Mr. 

Gary Delaney, (703) 602–8384. 

SUPPLEMENTARY INFORMATION: 

A. Background 

10 U.S.C. 2401, as amended by 

Section 815 of the National Defense 

Authorization Act for Fiscal Year 2006 

(Pub. L. 109–163), permits DoD to award 

a contract for the lease of a vessel, 

aircraft, or combat vehicle only if the 

contract will be long-term or will 

provide for a substantial termination 

liability, and if the Secretary concerned 

fulfills certain other requirements. Prior 

to the enactment of Public Law 109–

163, the provisions of 10 U.S.C. 2401 

applied to vessels and aircraft; Section 

815 of Public Law 109–163 amended 10 

U.S.C. 2401 to also include combat 

vehicles. This proposed rule amends 

DFARS 207.470 to reflect the statutory 

provisions. 

This rule was not subject to Office of 

Management and Budget review under 

Executive Order 12866, dated 

September 30, 1993. 

B. Regulatory Flexibility Act 

DoD does not expect this rule to have 

a significant economic impact on a 

substantial number of small entities 

within the meaning of the Regulatory 

Flexibility Act, 5 U.S.C. 601, et seq., 

because the rule relates primarily to 

DoD planning and budget 

considerations with regard to leasing of 

vessels, aircraft, and combat vehicles. 

Therefore, DoD has not performed an 

initial regulatory flexibility analysis. 

DoD invites comments from small 

businesses and other interested parties. 

DoD also will consider comments from 

small entities concerning the affected 

DFARS subpart in accordance with 5 

U.S.C. 610. Such comments should be 

submitted separately and should cite 

DFARS Case 2006–D013. 


jlentini on PROD1PC65 with PROPOSALS