Reconciling an active case

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1. Reconcile while the case runs

The Security Assistance Management Manual treats reconciliation as work for the whole life of a Foreign Military Sales case. It runs from implementation of the Letter of Offer and Acceptance (LOA) to the point the case is supply and services complete (SAMM C16.2.1). Each case manager must perform an annual case and payment schedule review or reconciliation on every case. That means comparing data between systems, comparing the LOA with performance and with the underlying contracts, and checking system data against supporting documents.

The manual is direct about timing. Case managers are responsible for timely reconciliation and closure certification however the work is delegated, and "CMs should not wait until a case is ready to be closed to reconcile the case" (SAMM C16.2.1). Lines of accounting, requisitions and funding documents should be reconciled and closed as material is delivered and services performed. How a case is finally reconciled and closed is covered in how a case is reconciled and closed.

2. The relationships that matter

The LOA should keep giving an accurate picture of how the case is actually executing (SAMM C16.2.2.1). The primary comparisons are listed in the Case Reconciliation and Closure Guide. Contracts are the hardest part. "Lack of timely reconciliation of contracts and other funding documents supporting cases are the most significant obstacles precluding efficient case execution and closure" (SAMM C16.2.2.2). One LOA may rest on several contracts and funding documents, and each needs regular monitoring and timely closeout.

The manual therefore stresses the case manager’s relationship with the contracting community (SAMM C16.2.2.3). It defines that community widely: the program manager, the procuring and administrative contracting officers, the contracting officer’s representative and the contractor. It also includes the disbursing and accounting offices, the foreign purchaser, the Defense Contract Management Agency and the Defense Contract Audit Agency. Involvement can start before award, in planning and in building the statement of work, so the case manager understands the clauses, modifications and financial links that follow.

3. The annual review

Reviews with the purchaser are part of the same effort, and the manual calls them an excellent opportunity to resolve issues promptly and keep data accurate (SAMM C16.2.3). Two reviews are required at defined intervals: the annual case review and the Triannual Review.

Every case must be reviewed at least once each calendar year (SAMM C16.2.3.1). The review falls on the anniversary of implementation, or in preparation for a formal review with the purchaser, or when the case value changes by ten percent or more. The guide’s matrix sets the minimum items and the point in the case life cycle at which each is reviewed (SAMM C16.2.3.1.1). The case manager signs and dates a checklist, which becomes an official part of the case file. Automation and electronic filing are preferred where practical, but an automated replacement for the process needs DSCA approval.

The Defense Security Cooperation Agency (DSCA) checks the work (SAMM C16.2.3.1.2). Each quarter it reviews a sample of annual reviews, drawn from three age groups: cases implemented for under 2 years, for 2 to 5 years, and for more than 5 years. It gives feedback, directs corrective action where needed, looks for systemic trends and keeps a master list of results for audit (SAMM C16.2.3.1.2.1).

4. Abnormal balances

Some figures in the purchaser accounting and billing system are atypical of what a case’s values should be. The manual calls these abnormal balances (SAMM C16.2.3.2). Examples include deliveries, disbursements or obligations greater than the ordered value, and negative delivered or disbursed balances. Disbursements greater than obligations, and aged progress payments against undelivered items, also count. They can cause improper billing and affect termination liability, reserve calculations and country program health reporting, so the implementing agencies must review and correct them as DSCA directs.

5. Checks before money moves

Contractor payments above set thresholds are prevalidated (SAMM C16.2.4). Requests arrive daily from the contract payment system. The Defense Finance and Accounting Service (DFAS) confirms that enough obligation was already recorded before the disbursing office pays. Liquidating progress payments are checked too, so the outstanding balance is not over-liquidated. The goal is to prevent problem disbursements, such as unmatched disbursements and negative unliquidated obligations.

Expenditure authority is required before any disbursement on a case, including reconciliation adjustments (SAMM C16.2.5). If the purchaser holds a Federal Reserve Bank account, DFAS in Indianapolis may make an emergency draw from it. If not, DFAS may ask the purchaser for more payment or take other appropriate action.

6. Surcharges

Surcharges need their own attention (SAMM C16.2.10). They consist of the administrative surcharge, contract administration services and the logistics support charge. Accessorial charges such as packing, crating, handling and transportation are also included. The manual requires annual review and reconciliation of surcharge accuracy, and calls it an important part of case closure.

7. Contracts and funding documents

Contract status is established from the available records: entitlement records, shipping documents such as the DD Form 250, contracting officer records and contract completion statements (SAMM C16.2.15.1). The type of contract determines what closure requires. Case lines may be closed while supporting contracts stay open, if the conditional closure criteria are met. The implementing agency makes sure obligations and disbursements are recorded accurately, and that disbursements match what the contractor claims to have been paid.

Other funding documents need a prompt when their work completion date has passed without a final document (SAMM C16.2.15.2). Where final costs and indirect rates are slow to settle, the agency is encouraged to ask the contracting officer to consider quick closeout (SAMM C16.2.15.3). That lets the officer settle direct and indirect costs on a contract or order in advance, under FAR 42.708 and DFARS 242.708. The manual also recommends requesting final documents within six months after material is received or work is complete, to reduce the need to reopen a case later (SAMM C16.2.15.4).

Key terms

Execution phase reconciliation	Reconciliation carried out from implementation until a case is supply and services complete.
Annual case review	The required yearly review of each case, documented on a signed checklist.
Abnormal balance	A figure in the billing system that is atypical of what the case values should be.
Prevalidation	DFAS’s check that an obligation is recorded before a contractor is paid.
Contracting community	Everyone from contracting officers and auditors to the purchaser whose records bear on a case.

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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