Closure priorities, certification and reporting

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1. What goes first

Closing Foreign Military Sales cases is a managed workload with a set order. The priority for reconciliation and closure runs from Defense Security Cooperation Agency (DSCA) focus cases, to Building Partner Capacity (BPC) cases, to accelerated closure candidates and then other closure candidates (SAMM C16.3.2.1). A focus case is any case DSCA’s financial policy division identifies as needing priority action (SAMM C16.3.2.1.1). Only that division can authorize a different order for particular cases, countries or closure categories (SAMM C16.3.2.2).

Before certifying a case for closure, the implementing agency (IA) must complete a series of actions set out as checklists in the Case Reconciliation and Closure Guide (SAMM C16.3.4). There are separate checklists for the ordinary route, for interim closure under the Accelerated Case Closure Procedure (ACCP), and for final closure under it. How the two closure regimes differ is covered in how a case is reconciled and closed.

2. The unliquidated obligation

The manual describes an unliquidated obligation (ULO), in its most basic form, as the difference between obligations and disbursements for articles and services (SAMM C16.3.5.1). Its main components are unbilled contract amounts and unsettled indirect costs such as overhead. Unanticipated accounting transactions, unbilled reimbursable documents and unreconciled systemic differences are part of it too. So are outstanding commitments on contracts with incentive or award fees.

The IA determines, validates and certifies the ULO value for closure (SAMM C16.3.5.2). Any ULO on a contract carries an estimated contract administration services amount, and the two together make the total ULO. Both are reported through performance reporting, and those transactions must come before the closure transaction (SAMM C16.3.5.3). For accelerated cases closed on an interim basis, documents supporting the ULO value form part of the closure certificate, and are given to the purchaser on request (SAMM C16.3.5.4).

Conditions that block closure are tracked as inhibitors (SAMM C16.3.6). DSCA prescribes a standard set of pre-certification inhibitors, which the agencies’ systems mirror to varying degrees. A separate set of post-certification inhibitors identifies conditions that stop a certified case from closing.

3. A case must be paid in full

"A case must be fully collected before it can be closed" (SAMM C16.3.10.1). The Defense Finance and Accounting Service in Indianapolis (DFAS-IN) should deal with undercollection before closure. If a case is still not paid when the IA is ready to certify it, the certificate and its closure transaction go to DFAS-IN anyway. The follow-up rules that apply while a case is still active are covered in problem disbursements and unpaid bills on an active case.

For cases paid with national funds, the government generally may not move money from a holding account or another case on its own to cover the shortfall (SAMM C16.3.10.2). DFAS-IN tells the purchaser each quarter what is owed to close the case. The purchaser may wire the amount, authorize a transfer from a holding account, or authorize cross-leveling of collections from another case. For cases funded by Foreign Military Financing, DFAS-IN asks DSCA whether more committed funding can be provided (SAMM C16.3.10.3). If it can, DFAS-IN moves the collection from the relevant holding account and closes the case. If not, the purchaser must pay cash.

For a case already certified, DFAS-IN aligns ordered values with delivered values and bills the balance on the next quarterly bill, naming the case whose closure it blocks (SAMM C16.3.10.4.1 and SAMM C16.3.10.4.2). Fifteen days after the due date, unpaid cases go on a report to DSCA (SAMM C16.3.10.4.3). DSCA then contacts the purchaser and follows up every 30 days until paid or funds are realigned, raising the matter to senior management after two follow-ups where appropriate (SAMM C16.3.10.4.5). DFAS-IN is kept informed in writing of every follow-up, to support any arrearage requirements (SAMM C16.3.10.4.6).

4. Special cases

An FMF-financed case is not closed for accounting purposes until its commitment adjustments are complete (SAMM C16.3.18). BPC cases must be submitted for closure when they reach supply and services complete, because the discrepancy report process does not apply to them (SAMM C16.3.20). Delivery problems on them are pursued under the relevant contract first. If no contractual remedy exists, or the contractor is not liable, the agency asks the DSCA program manager how to proceed. Contingency support cases, set up as place holders for emergencies, may stay open until the support is provided. For such cases implemented in fiscal year 2017 or earlier, closure under the chapter’s rules follows once requisitions or execution have occurred (SAMM C16.3.21). IAs must keep reconciling interim closed accelerated cases to reach final closure as early as possible (SAMM C16.3.15).

5. Goals, reports and oversight

Within the first 30 days of each fiscal year, DSCA sets certification goals for the agencies and DFAS by policy memorandum (SAMM C16.3.22.1). The goals are meant to control the growth and aging of supply complete and interim closed inventories and to strengthen audit readiness. A quarterly status report tracks progress, including accelerated cases still open more than two years after supply complete and cases kept open at the purchaser’s request (SAMM C16.3.22.2). DFAS-IN provides its data by the 10th of the month after each quarter, and the agencies by the 25th.

Closure performance is measured at senior level. The Security Cooperation Business Forum, chaired by the DSCA Director and meeting quarterly, is a primary oversight body (SAMM C16.3.22.3). Its members include senior representatives of the agencies, DFAS and the Foreign Procurement Group. DFAS-IN supplies closure statistics at the end of each quarter, in a form DSCA decides (SAMM C16.3.22.4). DSCA and the agencies may also hold periodic meetings with DFAS-IN on reconciliation and closure policy and issues (SAMM C16.3.22.5).

Key terms

DSCA focus case	A case DSCA identifies for priority reconciliation and closure.
Unliquidated obligation (ULO)	The difference between obligations and disbursements for articles and services on a case.
Closure inhibitor	A standard condition that prevents a case from being certified or closed.
Cross-leveling	Moving collections from one case to another, at the purchaser’s authorization.
Contingency support case	A place holder case for emergencies that may stay open until support is provided.

Every statement above links to the document behind it. The full source list for this piece is on the sources page.

This page describes public United States government programs for general information. It is not legal, regulatory or procurement advice, and it does not address the facts of any particular case.

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