Government Contracts Final DFARS Rule Addresses Close-Out Authority
Wednesday, June 5, 2019

Final DFARS Rule Addresses Close-Out Authority

The Department of Defense has amended the Defense Federal Acquisition Regulation Supplement. The final rule in DFARS Case 2018-D012 (¶70,016.982) amends DFARS 204.804 to allow contracting officers to close out contracts through modifications without completing a reconciliation audit or another corrective action in accordance with FAR 4.804-5(a)(3) through (15), as appropriate. COs may only use this authority where the contract is at least 17 fiscal years old, there are no further supplies or services due, and a person at least one level above the CO determines the contract is not reconcilable because the contract or payment records have been lost or the time or effort required to establish the exact amount owed the government or contractor is disproportionate to the amount at issue. When using the new authority, COs may close out contracts through a negotiated settlement. The closeout process must include a bilateral modification. The rule also adds DFARS 204.804(3)(iv) to implement the authority provided in section 836 of the National Defense Authorization Act for Fiscal Year 2017 (PL 114-328), as modified by section 824 of the NDAA for FY 2018 (PL 115-91), to waive provisions of acquisition law or regulation in order to close out contracts in accordance with section 836. The final rule makes changes to the proposed rule (¶70,020.406) at DFARS 204.804(3)(i)(C) to replace “individual” with “contracting official” to ensure the required determination would be made by a contracting official. The rule supersedes DFARS Class Deviation 2018-O0014 (¶70,245.87).

By Government Contracts Editorial Staff

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