FAR 4.804-5—Procedures for closing out contract files.
Plain-English Summary
FAR 4.804-5 explains the administrative closeout process for physically completed contracts and the documentation that must exist before a contract file can be formally closed. It covers who starts closeout, how the contract administration office must review contract funds and identify excess funds for possible deobligation, and the specific completion items that must be verified before closeout can proceed. Those items include disposition of classified material, clearance of final patent and royalty reports, resolution of value engineering change proposals, plant and property clearance, settlement of interim or disallowed costs, price revisions, subcontract settlement, prior-year indirect cost rate settlement, termination docket completion, audit completion, contractor closing statement completion, final invoice submission, and contract funds review. The section also addresses the special patent-report procedure, including the 60-day target for clearing final patent reports and the contracting officer’s duty to notify the contractor and consult legal counsel if the report is not received. Finally, it requires a formal contract completion statement with specified data elements and directs where the signed statement must be filed. In practice, this section is the checklist and recordkeeping rule set that helps agencies ensure all financial, property, legal, and administrative matters are resolved before closing a contract file.
Key Rules
Closeout starts after completion
The contract administration office is responsible for initiating administrative closeout once it has evidence that the contract is physically complete. Closeout may be automated or manual, but it cannot begin until completion is established.
Review funds and excess balances
At the outset of closeout, the contract administration office must review contract funds status and notify the contracting office of any excess funds that may be deobligated. This ensures unused funds are identified early and returned to the proper account when appropriate.
All required actions must be cleared
Before closeout is complete, the listed administrative, legal, property, audit, and financial actions must be verified as finished. These include classified material disposition, patent and royalty report clearance, value engineering, plant and property clearance, cost settlement, price revision, subcontract settlement, indirect rate settlement, termination docket completion, audit completion, contractor closing statement, final invoice submission, and funds review.
Patent reports have special handling
If a final patent report is required, the contracting officer may close out the contract under agency procedures, but the report should normally be cleared within 60 days of receipt. If the report is not received, the contracting officer must notify the contractor of its obligations and the Government’s rights under the patent rights clause, and may proceed only after consulting agency legal counsel if the contractor does not respond.
Completion statement is required
Once the required actions are verified, the contracting officer administering the contract must ensure a contract completion statement is prepared. The statement must include specific identifying and financial information, plus a certification that all required contract administration actions have been fully and satisfactorily accomplished.
Statement must be filed properly
After the completion statement is signed, the contracting officer must ensure the original is placed in the contracting office file, or forwarded there if administration was performed elsewhere, and that a signed copy is placed in the contract administration file when applicable.
Responsibilities
Contract Administration Office
Initiate administrative closeout after evidence of physical completion is received; review contract funds status at the outset; notify the contracting office of excess funds that may be deobligated; verify completion of the required administrative closeout actions; and, when applicable, support preparation and filing of the contract completion statement.
Contracting Officer
Ensure the required closeout actions have been verified; handle the special patent-report notification process when a final patent report is missing; consult agency legal counsel before proceeding when the contractor fails to respond; ensure the contract completion statement is prepared and signed; and ensure the signed statement is filed in the proper contract files.
Contractor
Submit required final patent and royalty reports, final invoice, closing statement, and any other required closeout deliverables; settle subcontracts; resolve interim or disallowed costs and other outstanding administrative matters; and respond to patent-rights notifications if the final patent report is not received.
Agency Legal Counsel Responsible for Patent Matters
Advise the contracting officer when a final patent report is not received and the contractor fails to respond to the required notification, before the contracting officer proceeds with closeout.
Contracting Office
Receive the signed original contract completion statement when the contract administration office is different from the contracting office, and maintain it in the official contract file.
Contract Administration File Holder / Administering Office
Maintain a signed copy of the contract completion statement in the appropriate contract administration file when contract administration is performed by a separate office.
Practical Implications
This section functions as a closeout checklist, so missing even one required item can delay file closure and final fund deobligation. Contracting officers and administrators should track closeout actions early rather than waiting until the end of performance.
The funds review is especially important because excess funds may be deobligated only after review and coordination; failing to identify excess balances can leave money unnecessarily tied up in expired contracts.
Patent-report handling is a common delay point. If the contractor does not submit the report, the contracting officer must document the notification and, if there is still no response, consult legal counsel before moving ahead.
Property and classified-material disposition are not optional housekeeping items; unresolved property clearance, plant clearance, or classified material issues can block closeout even when the work itself is finished.
The contract completion statement is the formal record that closeout actions were completed. If it is incomplete, unsigned, or filed in the wrong place, the agency may have an audit trail problem even if the contract was otherwise administratively closed.
Official Regulatory Text
(a) The contract administration office is responsible for initiating (automated or manual) administrative closeout of the contract after receiving evidence of its physical completion. At the outset of this process, the contract administration office must review the contract funds status and notify the contracting office of any excess funds the contract administration office might deobligate. When complete, the administrative closeout procedures must ensure that- (1) Disposition of classified material is completed; (2) Final patent report is cleared . If a final patent report is required, the contracting officer may proceed with contract closeout in accordance with the following procedures, or as otherwise prescribed by agency procedures: (i) Final patent reports should be cleared within 60 days of receipt. (ii) If the final patent report is not received, the contracting officer shall notify the contractor of the contractor’s obligations and the Government’s rights under the applicable patent rights clause, in accordance with 27.303 . If the contractor fails to respond to this notification, the contracting officer may proceed with contract closeout upon consultation with the agency legal counsel responsible for patent matters regarding the contractor’s failure to respond. (3) Final royalty report is cleared; (4) There is no outstanding value engineering change proposal; (5) Plant clearance report is received; (6) Property clearance is received; (7) All interim or disallowed costs are settled; (8) Price revision is completed; (9) Subcontracts are settled by the prime contractor; (10) Prior year indirect cost rates are settled; (11) Termination docket is completed; (12) Contract audit is completed; (13) Contractor’s closing statement is completed; (14) Contractor’s final invoice has been submitted; and (15) Contract funds review is completed and excess funds deobligated. (b) When the actions in paragraph (a) of this section have been verified, the contracting officer administering the contract must ensure that a contract completion statement, containing the following information, is prepared: (1) Contract administration office name and address (if different from the contracting office). (2) Contracting office name and address. (3) Contract number. (4) Last modification number. (5) Last call or order number. (6) Contractor name and address. (7) Dollar amount of excess funds, if any. (8) Voucher number and date, if final payment has been made. (9) Invoice number and date, if the final approved invoice has been forwarded to a disbursing office of another agency or activity and the status of the payment is unknown. (10) A statement that all required contract administration actions have been fully and satisfactorily accomplished. (11) Name and signature of the contracting officer. (12) Date. (c) When the statement is completed, the contracting officer must ensure that- (1) The signed original is placed in the contracting office contract file (or forwarded to the contracting office for placement in the files if the contract administration office is different from the contracting office); and (2) A signed copy is placed in the appropriate contract administration file if administration is performed by a contract administration office.