FAR 4.804-1—Closeout by the office administering the contract.
Plain-English Summary
FAR 4.804-1 sets the time standards and basic conditions for closing out contract files in the office that administers the contract. It covers when files are considered closed for simplified acquisition procedures, firm-fixed-price contracts, contracts that require settlement of indirect cost rates, and all other contracts, and it ties those deadlines to either receipt of evidence of receipt of property, final payment, or physical completion. The section also explains that the contracting officer must use the closeout procedures in FAR 4.804-5 for most closeouts, but may tailor those procedures to reflect how much administration has already been performed. It further encourages use of quick closeout procedures under FAR 42.708 when appropriate to reduce administrative cost and deobligate excess funds. Finally, it identifies two situations where a contract file may not be closed: when the contract is in litigation or under appeal, and when termination actions are still incomplete. In practice, this section is about timely administrative completion, proper documentation, and avoiding premature closeout that could interfere with disputes, terminations, or final financial reconciliation.
Key Rules
Simplified acquisition closeout
For contracts using simplified acquisition procedures, the file should be considered closed when the contracting officer receives evidence of receipt of property and final payment, unless agency regulations say otherwise. This is a streamlined standard that recognizes the lighter administration typically associated with simplified buys.
Firm-fixed-price timing
For firm-fixed-price contracts other than those using simplified acquisition procedures, the file should be closed within 6 months after the contracting officer receives evidence of physical completion. Physical completion is the trigger, but the closeout clock starts only once that evidence is received.
Indirect cost settlement timing
For contracts requiring settlement of indirect cost rates, the file should be closed within 36 months of the month in which the contracting officer receives evidence of physical completion. This longer period reflects the time needed to resolve final indirect cost rates and related financial matters.
Other contract types
All other contracts should be closed within 20 months of the month in which the contracting officer receives evidence of physical completion. This is the default closeout standard for contract types not covered by the simplified acquisition, firm-fixed-price, or indirect-cost-settlement categories.
Use closeout procedures
When closing files under the 6-, 36-, and 20-month standards, the contracting officer must use the closeout procedures in FAR 4.804-5. Those procedures may be adjusted to match the extent of contract administration already performed, so the closeout process can be scaled to the actual file history.
Quick closeout encouraged
Quick closeout procedures under FAR 42.708 should be used when appropriate to reduce administrative costs and allow deobligation of excess funds. This is especially important when final indirect cost settlement would otherwise delay closeout unnecessarily.
No closeout during disputes or incomplete terminations
A contract file may not be closed if the contract is in litigation or under appeal, or if termination actions are not yet complete. These exceptions prevent administrative closure before legal and termination-related obligations are fully resolved.
Responsibilities
Contracting Officer
Track the applicable closeout deadline, determine when evidence of receipt of property, final payment, or physical completion has been received, and initiate closeout using FAR 4.804-5 procedures. The contracting officer must also decide whether quick closeout is appropriate, tailor closeout actions to the level of prior administration, and ensure the file is not closed while litigation, appeals, or termination actions remain open.
Office Administering the Contract
Maintain the contract file, support the contracting officer with the documentation needed to establish completion and final payment, and carry out or coordinate the administrative steps required for closeout. This office is responsible for ensuring the file is ready for closure once the regulatory conditions are met.
Agency
Issue any agency-specific regulations that modify the simplified acquisition closeout standard, and establish internal processes that support timely closeout and proper use of quick closeout procedures. The agency also must ensure its personnel understand when closeout is prohibited because of litigation, appeals, or incomplete terminations.
Contractor
Provide the deliverables, property, invoices, releases, and other information needed to show contract completion and final payment status. Where indirect cost settlement or termination matters are involved, the contractor must support final audits, rate negotiations, or termination settlement actions so the file can be closed.
Practical Implications
This section is a timing rule, not just a paperwork rule: the closeout clock depends on the type of contract and the date the contracting officer receives the required evidence, so missing documentation can delay closure.
Contractors and contracting offices should distinguish between physical completion, final payment, and receipt of property; these are not always the same event, and using the wrong trigger can cause premature or late closeout.
Quick closeout can save time and money, especially on contracts with unresolved indirect cost rates, but it should be used only when the remaining risk and administrative burden justify early settlement.
A common pitfall is trying to close a file while a claim, appeal, or litigation is pending; doing so can create recordkeeping problems and undermine the government’s position in the dispute.
Another frequent issue is forgetting that termination actions must be fully completed before closeout, which means settlement, documentation, and any required approvals must be finished first.
Official Regulatory Text
(a) Except as provided in paragraph (c) of this section, time standards for closing out contract files are as follows: (1) Files for contracts using simplified acquisition procedures should be considered closed when the contracting officer receives evidence of receipt of property and final payment, unless otherwise specified by agency regulations. (2) Files for firm-fixed-price contracts, other than those using simplified acquisition procedures, should be closed within 6 months after the date on which the contracting officer receives evidence of physical completion. (3) Files for contracts requiring settlement of indirect cost rates should be closed within 36 months of the month in which the contracting officer receives evidence of physical completion. (4) Files for all other contracts should be closed within 20 months of the month in which the contracting officer receives evidence of physical completion. (b) When closing out the contract files at 4.804-1 (a)(2), (3), and (4), the contracting officer shall use the closeout procedures at 4.804-5 . However, these closeout actions may be modified to reflect the extent of administration that has been performed. Quick closeout procedures (see 42.708 ) should be used, when appropriate, to reduce administrative costs and to enable deobligation of excess funds. (c) A contract file shall not be closed if- (1) The contract is in litigation or under appeal; or (2) In the case of a termination, all termination actions have not been completed.