Estimated read time: 6 minutes
🚀 Key Takeaways
Point 1: Review each contract at the task-order level. Current funding, period of performance, modifications, billing terms, and incurred costs may differ across orders under the same vehicle.
Point 2: Verify open items against executed documents. The signed contract and modifications—not an internal spreadsheet or verbal expectation—control the funded and contractual position.
Point 3: Build an October carry-forward list. September 30 does not resolve pending modifications, billing rejections, missing subcontractor invoices, or coding errors. Assign responsibility and a target date to each item.
The September 30 Contract Review
A September 30 GovCon financial review should provide a contract-by-contract picture of active work as the federal fiscal year closes. It is different from simply running a company-wide profit-and-loss statement.
Federal contracts contain specific funding, performance, billing, and documentation requirements. A company may look profitable overall while one task order is approaching its funded limit, another has aging unbilled revenue, and a third contains costs posted outside the period of performance. Those details become visible only when finance and contract information are reviewed together.
The purpose of the review is straightforward: determine what is complete, what remains open, what requires correction, and what must carry into the new federal fiscal year.
The Core Concept: Review the Contract Record and the Financial Record Together
| Contract Review Question | Reliable Evidence | Common Risk |
|---|---|---|
| What is the current funded amount? | Executed contract and modifications | Using total ceiling or expected funding |
| Is performance still authorized? | Period of performance and current options | Charging after the authorized period |
| What has been performed and billed? | Job-cost detail, billing register, invoice portal | Unexplained unbilled work |
| Are costs charged correctly? | Source documents and project detail | Direct/indirect miscoding or duplicate costs |
| What remains unresolved? | Open-item log with owner and due date | Relying on email chains and memory |
How to Perform the September 30 Review
1. Confirm the current contract record
For each active contract or task order, confirm the contract number, customer, type, total value, funded amount, period of performance, option periods, billing terms, key deliverables, and latest modification.
Then compare those facts with the accounting, billing, and project-management systems. If a modification added funds but the project ledger was never updated, financial reports may understate available funding. If a period of performance changed but the timekeeping system still uses the old dates, valid labor could be rejected—or invalid charges could be allowed.
2. Compare incurred and forecast costs with funding
Calculate the remaining funded position using the contractor’s established methodology and reliable incurred-cost data. Next, forecast expected labor, subcontracts, travel, materials, other direct costs, and applicable indirect costs through the next review point.
For applicable cost-reimbursement contracts, review the specific limitation clause. FAR 52.232-20 and 52.232-22 include notice provisions based on expected costs over the next 60 days and the applicable estimated cost or allotted funding. The exact clause, thresholds, and contract schedule matter.
3. Review billing and supporting documentation
Prepare a contract-level list of invoices submitted, paid, outstanding, rejected, or not yet prepared. Identify missing support such as approved time, travel records, subcontractor invoices, receiving information, or milestone evidence.
Do not group all delays together. An invoice rejected for a missing attachment requires a different action from work that is not contractually billable until a milestone is accepted.
4. Analyze project costs for exceptions
Review labor, subcontractors, travel, materials, and other direct costs by project. Look for transactions that do not fit expected activity, including:
- Labor charged to an inactive or incorrect code
- Costs posted outside the period of performance
- Duplicate vendor invoices
- Direct expenses charged to an indirect account
- Indirect activity charged directly without consistent treatment
- Costs lacking required support
FAR 31.202 and 31.203 distinguish direct and indirect costs and emphasize consistent treatment in like circumstances. The correct classification depends on the facts, established practices, and applicable contract requirements.
5. Build a controlled carry-forward list
Some issues will remain open on September 30. Document each issue, financial impact, responsible owner, next action, expected resolution date, and escalation point.
Typical carry-forward items include pending funding modifications, rejected-invoice corrections, missing subcontractor costs, project-code corrections, customer documentation requests, and accounting adjustments.
What Should Happen on October 1?
October 1 begins the new federal fiscal year, but it should not create artificial accounting entries. Continue following the company’s normal accounting periods and policies.
Use the transition as a management control. Leadership should be able to answer which contracts remain active, how much funding is available, what work and billing remain, and which issues require action. The carry-forward list should become part of the October close and contract-status meeting—not a static year-end document.
👉 Watch the related YouTube Short: [Federal Fiscal Year-End: What GovCons Should Review Now — YouTube link]
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What’s Next in the Series
✅ Episode 1: Federal Fiscal Year-End Checklist for Government Contractors
✅ Episode 2: Federal Fiscal Year-End: What GovCons Should Review Now
3️⃣ Episode 3: Starting FY2027 Strong: Review Contract Funding, Backlog & Burn
4️⃣ Episode 4: Reconcile Timesheets, Payroll & Labor Distribution
5️⃣ Episode 5: Unallowable Costs: What GovCons Should Clean Up Before Year-End
6️⃣ Episode 6: Review Your Indirect Rates Before They Hurt Your Margins
7️⃣ Episode 7: Billing, WIP & Unbilled Revenue: Your GovCon Year-End Review
8️⃣ Episode 8: How to Build Your 2027 GovCon Financial Plan