4.703 Policy
Source: FAR 4.703 on acquisition.gov
Contractors must retain and make available all relevant records for at least three years after final payment, with specific requirements for electronic storage and longer retention in certain cases.
Overview
FAR 4.703 establishes the policy for contractor records retention, specifying what records must be made available, the required retention periods, and acceptable storage formats. Contractors must retain and provide access to all relevant records—including books, documents, accounting procedures, and supporting evidence—needed for contract negotiation, administration, and audit purposes. The standard retention period is three years after final payment, unless a longer period is specified by contract clauses, contractor practices, or delayed submission of final indirect cost rate proposals. The regulation also allows for electronic storage of records, provided certain integrity and accessibility requirements are met, and outlines procedures for retaining and transferring computer data.
Key Rules
- Retention Periods
- Contractors must retain records for 3 years after final payment or as specified in FAR 4.705-4.705-3, whichever is shorter, unless exceptions apply.
- Longer Retention Requirements
- Longer retention may be required by contract clauses, contractor's own practices, or late submission of final indirect cost rate proposals.
- Electronic and Photographic Records
- Contractors may store records electronically if imaging processes are reliable, records are indexed, and originals are kept for at least one year after imaging.
- Computer Data Retention
- Computer data must be retained on reliable media, with integrity and audit trails maintained, and not destroyed or overwritten during the retention period.
Responsibilities
- Contracting Officers: Ensure contractors are aware of and comply with retention and access requirements.
- Contractors: Retain, safeguard, and provide access to all required records for the specified periods; follow procedures for electronic and computer data storage.
- Agencies: May audit or request records as needed for contract oversight.
Practical Implications
- This policy ensures government access to contractor records for audits and contract administration.
- Contractors must implement robust recordkeeping and data management systems, especially for electronic records.
- Failure to comply can result in audit issues, payment delays, or contract disputes.
(a) Except as stated in 4.703(b), contractors shall make available records, which includes books, documents, accounting procedures and practices, and other data, regardless of type and regardless of whether such items are in written form, in the form of computer data, or in any other form, and other supporting evidence to satisfy contract negotiation, administration, and audit requirements of the contracting agencies and the Comptroller General for-
(1) 3 years after final payment; or
(2) For certain records the period specified in 4.705 through 4.705-3, whichever of these periods expires first.
(b) Contractors shall make available the foregoing records and supporting evidence for a longer period of time than is required in 4.703(a) if-
(1) A retention period longer than that cited in 4.703(a) is specified in any contract clause; or
(2) The contractor, for its own purposes, retains the foregoing records and supporting evidence for a longer period. Under this circumstance, the retention period shall be the period of the contractor’s retention or 3 years after final payment, whichever period expires first.
(3) The contractor does not meet the original due date for submission of final indirect cost rate proposals specified in paragraph (d)(2) of the clause at 52.216-7, Allowable Cost and Payment. Under these circumstances, the retention periods in 4.705 shall be automatically extended one day for each day the proposal is not submitted after the original due date.
(c) Nothing in this section shall be construed to preclude a contractor from duplicating or storing original records in electronic form unless they contain significant information not shown on the record copy. Original records need not be maintained or produced in an audit if the contractor or subcontractor provides photographic or electronic images of the original records and meets the following requirements:
(1) The contractor or subcontractor has established procedures to ensure that the imaging process preserves accurate images of the original records, including signatures and other written or graphic images, and that the imaging process is reliable and secure so as to maintain the integrity of the records.
(2) The contractor or subcontractor maintains an effective indexing system to permit timely and convenient access to the imaged records.
(3) The contractor or subcontractor retains the original records for a minimum of one year after imaging to permit periodic validation of the imaging systems.
(d) If the information described in paragraph (a) of this section is maintained on a computer, contractors shall retain the computer data on a reliable medium for the time periods prescribed. Contractors may transfer computer data in machine readable form from one reliable computer medium to another. Contractors’ computer data retention and transfer procedures shall maintain the integrity, reliability, and security of the original computer data. Contractors shall also retain an audit trail describing the data transfer. For the record retention time periods prescribed, contractors shall not destroy, discard, delete, or write over such computer data.