Department of Commerce

Deobligation of Insignificant Remaining Contract Funds

As a Contracting Officer, I deobligate (remove) excess funds on expired contracts on a regular basis. Oftentimes, these deobligations are an insignificant amount of money. I’ve seen deobligations for as little as a $.01. Any deobligation we complete requires a contract modification. The entire process can take hours and cost the Government hundreds, if not thousands of dollars. Any deobligation modification is supposed to be signed off bi-laterally by the vendor as well. Once of the primary purposes of the deobligations is to close out the contract.

 

My suggestion is to allow finance to deobligate insignificant amounts of funds without a formal contract modification. An email from both the vendor and the contracting officer seems sufficient. What’s considered significant is a matter of opinion. I would peg it at $100. The bottom line is spending thousands of dollars to deobligate a few pennies or dollars is completely inefficient and a waste of valuable tax dollars.

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Idea No. 8564