The Office of the Inspector General (OIG) of the U.S. Department of Transportation (USDOT) issued a report on July 23, 2015 revealing that foursome of its operating administrations — involving highway, aviation, traffic safety, and the Office of the Secretary — do not uniformly comply with Federal Acquisition Regulation (FAR) and departmental 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.
In its report, the OIG found that USDOT does not fully ensure that its operating administrations comply with federal and departmental closeout requirements. The OIG reviewed the Federal Aviation Administration (FAA), Federal Highway Administration (FHWA), National Highway Traffic Safety Administration (NHTSA), and the Office of the Secretary (OST) and found that they did not fully comply with closeout requirements and frequently did not close out contracts in a timely fashion. Specifically, 42 of the 58 closed contracts in the OIG’s audit sample were not closed out within FAR and Acquisition Management System time frames. In addition, the OIG’s review of selected NHTSA and OST contracts files found 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 the OIG’s recommendations to help improve USDOT’s compliance with contract closeout requirements.
A copy of the OIG report can be found at: https://www.oig.dot.gov/sites/default/files/DOT%20Contract%20Closeout%20Process%20Final%20Report%5E7-23-15.pdf
