The Department Does Not Fully Ensure Compliance With Contract Closeout Requirements
Contract closeout is an important contract administration procedure that involves verifying that goods and services were provided as intended, validating final costs and payments, and freeing excess funds for possible use elsewhere. Timely and effective closeout ultimately protects the Government’s interests and helps agencies efficiently manage residual contract funds.
The Department does not fully ensure its Operating Administrations comply with Federal and departmental closeout requirements. Specifically, the Operating Administrations we reviewed—the Federal Aviation Administration (FAA), Federal Highway Administration (FHWA), National Highway Traffic Safety Administration (NHTSA), and the Office of the Secretary (OST)—did not fully comply with closeout requirements and frequently did not close out contracts timely. In total, 42 of the 58 closed contracts in our sample were not closed out within Federal Acquisition Regulation and Acquisition Management System timeframes. Our in-depth review of selected NHTSA and OST contracts files found also a lack of evidence that four key contract closeout steps were completed. Finally, because contract files were not always properly maintained, FAA, FHWA, NHTSA, and OST were unable to locate the files for 21 percent of the 120 total contracts in our audit samples.
The Department concurred with all five of our recommendations to help improve DOT’s compliance with contract closeout requirements.