When a federal grant is terminated, organizations must act promptly to safeguard their rights and position themselves for potential remedies. As organizations prepare closeout packages that comply with 2 CFR Part 200 standards, they should consider key questions to ensure compliance, strengthen documentation, and preserve options for recovery. Under 2 CFR §200.340(a)(4), an agency may terminate an award if, under the terms and conditions of the award and to the extent authorized by law, the award no longer supports program goals or agency priorities. Additionally, 2 CFR §200.461 permits certain professional service costs such as legal, accounting, and consulting fees when necessary for proper closeout and settlement. Understanding these provisions is essential to ensure your closeout package properly accounts for allowable costs, preserves recovery options, and mitigates compliance risks. To protect your organization, consider taking the following actions:
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Scope and release language: Ensure any proposed release is narrowly tailored to the terminated award and does not waive broader rights or unrelated claims. In particular, beware of global releases embedded in fine print or administrative templates.
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Consistency and record integrity: Cross-check your closeout package against indirect rate positions, property records, and prior agency correspondence. Inconsistencies can weaken your position in future proceedings.
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Communications posture: Use clear, unambiguous language in cover letters and draft documents to preserve both administrative review and potential judicial options. Make clear that any interim submissions are provisional and under full reservation of rights.
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Subaward and vendor alignment: Verify that lower-tier notices and settlements are consistent with your closeout approach and fully documented.
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Mitigation narrative: Strengthen documentation of steps taken to minimize costs following termination and link those actions to specific cost impacts.
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Administrative holds and appeals: Understand the applicable administrative appeal process – in particular, critical deadlines to preserve rights. Where appropriate, request an agreement-officer hold on pending determinations to allow for supplementation or amendment that strengthens your position.
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Administrative versus broader remedies: While the administrative process addresses allowable termination and closeout costs under Part 200, confirm that your documents preserve flexibility for other remedies. Consider whether your submission can serve as a foundation for additional relief such as rescission and reinstatement.
Closeout is not simply a compliance exercise; it can be a critical moment to position your organization for fairness and future options. The choices made now can influence whether termination becomes a final loss or an opportunity to assert rights through structured, lawful channels. By approaching closeout with precision and foresight, organizations can maintain credibility while quietly preserving administrative or judicial remedies if circumstances warrant. How Cordatis can help: Cordatis provides legal and strategic support to protect your organization’s interests from start to finish, including the following:
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comprehensive review of closeout packages to identify gaps, inconsistencies, and vulnerabilities;
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strategic assessment of rights and remedies, focusing on available administrative and judicial pathways and how they align with your organization’s objectives;
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development and presentation of a comprehensive, well-supported schedule of termination-related costs, including a clear articulation of residual programmatic impacts;
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planning for dispute resolution, including timing, forum selection, and building a strong administrative record that supports both immediate and future claims;
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guidance on reservation of rights and communications to preserve options without undermining credibility;
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analysis of release and settlement terms to ensure they are narrowly tailored and do not waive unrelated claims; and
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support in preparing appeals or revisions to closeout submissions where necessary.
Before finalizing any closeout package, take proactive steps to protect your organization’s rights and future recovery options. Cordatis can help you navigate this process with precision and foresight. Please contact Muriel Moody Korol or Josh Schnell if we can be of assistance.
