5.2.5 Contract Closeout
Contract closeout is an often overlooked aspect of contract administration. The closeout process ensures that the work agreed to had been successfully completed, that the contractor has been paid, that any owner material, tools and equipment has been returned by the contractor, and that there will be no future claims under the contract for additional payments. Checklists are a common tool for organizations to ensure that their particular requirements have been met. Evidence that each requirement is met is typically required for and included in the contract closeout file.
Some specific activities designed to be included in the contract closeout process (adapted from CIPS) are listed below. The confirmation of transfer of assets such as documents and intellectual property is especially important for nuclear facilties and is discussed further in the next section 5.3.
Contract closeout activities
- ensuring completion of all administrative matters
- recording that all technical issues have been completed
- determining the extent of any liquidated damages to be deducted from the contract price
- recording the end of the retention and guarantee periods and the date of the final inspection
- recording the date of release of retention and/or bank guarantees
- agreeing to a statement of specific limits on continuing contractual obligations after completion of work and any ongoing obligations following the end of guarantees or maintenance periods
- recording any materials reconciliation
- transferring any assets, including data and intellectual property, and any loan items
- transferring operational systems to the successful supplier
- recording the process of final contract payments and a summary of the financial payments and received
- summarizing claims made against or received from the supplier
- ensuring the retention of records relating to the contract to counter any subsequent claims that may be brought.
For large projects such as NPPs many of these items will have been addressed in part as individual portions of the contract were completed (e.g. specific systems having being turned over). Final contract closeout then confirms that all required activities are complete.
Knowledge of the original contract is necessary to avoid oversight of important requirements and/or loss of money by the owner. This can be complicated for long duration, large nuclear contracts, as the specific terms and conditions may have been negotiated many years ago and forgotten (or never known) by the staff members asked to close the contract. This can be avoided by maintaining a strong contract management organization over the life of the contract.