A key requirement for a quick closeout procedure is that the contract must be a firm-fixed price contract. This type of contract provides a set price for the goods or services being delivered, which simplifies the financial aspects of the contract when it comes time for closeout.
With firm-fixed price contracts, the contractor bears the risk of cost overruns, and the government knows the total amount it will pay upfront. This clarity allows for a more straightforward verification process during closeout, as the costs are known and do not require further negotiation or adjustment based on incurred expenses.
In contrast, other types of contracts, such as cost-reimbursement contracts, involve more complex financial arrangements that can complicate and lengthen the closeout process. This complexity arises because these contracts require the review and approval of actual costs incurred, potentially leading to disputes or delays before final payment can be authorized.