Oregon procurement manual

What is Contract Closeout?

Contract Closeout is the final stage of the contract life cycle.
 

When to close out a contract

An agency should initiate the closeout process when a contract is physically complete. Physical completion of a contract is triggered by any one of the following events:
  • The contractor has completed product delivery and the agency has inspected and accepted the delivered products.
  • The contractor has performed all services and the agency has accepted these services
  • All contract option provisions, if any, have expired.
  • The agency has terminated the contract according to contract terms.

How to close out a contract

Three key tasks comprise the Contract Closeout stage:
  1. Verify completion of contract
  2. Close out the contract
  3. Perform a lessons learned review
 

1. Verify completion of the contract

The contract administrator must determine if the contract is physically complete and ready for closeout. Contract Closeout can occur when all obligations have been met and all legal, administrative, and managerial tasks have been executed. The contract administrator must verify that all contract completion tasks have occurred.

Resource: Use the DAS Procurement Services Contract Closeout Checklist  to verify contract completion.      

Examples of tasks that support contract completion include:
  • All contractual obligations are completed.
  • All invoices, with the exception of the final, are submitted and paid.
  • All testing reports are received and analyzed.
  • All inspections are completed and accepted.
  • Any government-furnished property is returned.
  • The contractor has closed any subcontracts that may exist.
  • Classified materials, security badges and keys are returned and are accounted for.
  • All parties agree that no claims, issues, or unresolved matters exist on the contract.
  • All required contract audits are completed.
  • An out-brief with the contractor’s personnel and management has occurred.
  • Contractor performance evaluation is completed.
  • All warranties or other final deliverables are obtained.
  • Punch list items are completed.
  • Certificates of substantial completion or final completion are obtained.
  • Other administrative or contractual requirements are met.
 
The agency must formally document the completion of the contract in a letter or other communication to the contractor stating that all products or services have been accepted and the contract is physically complete. This communication should note that:
  • Contractor performance agreed with the promises made in the contract.
  • All contractual requirements were met.
  • All products and services have been received and accepted.
  • All claims against Oregon state government that relate to the contract have been resolved.
  • All invoices have been received and paid with the exception of final payment.
 
If the contractor has submitted a final invoice, the agency may include in the communication information regarding final payment. Final payment should not be made until the agency has verified that the contract is complete and all products and services have been received and accepted.
 

2. Close out the contract

The contract administrator should initiate Contract Closeout tasks as soon as possible after determining that the contract is physically complete. Contract Closeout brings a formal end to the contract relationship between the agency and the contractor. It encompasses the completion of all contractually required administrative actions, the resolution of all outstanding issues and the rendering of final payment.

The agency must compile the procurement file, including the solicitation, contract, amendment, work order, or contract administration file according to OAR 125-246-0556.

Resource: Use the DAS Procurement Services Contract File Checklist to track procurement file contents.

The agency must also retain and archive the procurement file according to Oregon public records law. Refer to the Secretary of State’s Records Management website for information on records retention policy and requirements for contracts and agreements.

Similar to contract initiation tasks, Contract Closeout is a process and requires the agency to review the contract, procurement files, and other relevant documents to ensure all necessary requirements of the contract are being met.
 

3. Perform a lessons learned review

The final task in the Contract Closeout stage is a review of lessons learned that involves the parties of the contract and key stakeholders. Learning from experience and identifying the successes and the areas for improvement will inform and improve future contract management and project delivery. The lessons learned review should provide a facilitated forum for discussion.

The principal objectives of the review are to:
  • Identify learning opportunities for application in the contractor’s execution of future contracts.
  • Identify areas for improvement in contract documentation and processes.
  • Identify learning opportunities for improvement across state and agency contracts.
  • Provide contractors with the opportunity to give feedback to state government and the procuring agency.
The contract administrator should conduct a lessons learned review for all major contracts at Contract Closeout. The contract administrator should then draft a report of the findings and provide it to the stakeholders interviewed for review and comment.

Once comments have been incorporated, the report should be included in the procurement file, and a copy provided to the agency Designated Procurement Officer (DPO) and State Chief Procurement Officer (State CPO). The DPO should review these reports to identify patterns and opportunities for improvement within the agency. The State CPO will use these reports to identify patterns and opportunities for improvement within Oregon state government.