Audit and Records-Negotiation
FAR 52.215-2 requires contractors to maintain and provide government access to all records supporting costs and pricing for certain negotiated contracts, ensuring transparency and auditability throughout contract performance and for a specified retention period.
Overview
FAR 52.215-2, Audit and Records-Negotiation, establishes the government's right to examine and audit contractors' records for certain types of negotiated contracts, including cost-reimbursement, incentive, time-and-materials, labor-hour, and price redeterminable contracts. The clause requires contractors to maintain and make available all records that support costs claimed or anticipated under the contract, including those related to certified cost or pricing data, proposals, negotiations, and performance. The Comptroller General (and, in some alternates, the Inspector General) is granted access to pertinent records and employees. Contractors must retain records for at least three years after final payment (or longer if specified) and flow down these requirements to applicable subcontracts exceeding the simplified acquisition threshold. Alternate versions of the clause address special circumstances, such as contracts subject to OMB Uniform Guidance or those excluding Comptroller General access.
Key Rules
- Record Maintenance and Access
- Contractors must maintain all records supporting costs and make them available for government audit and inspection at reasonable times.
- Certified Cost or Pricing Data
- If required, all records related to proposals, negotiations, pricing, and performance must be available for audit to verify accuracy and completeness.
- Comptroller General/Inspector General Access
- The Comptroller General (and, in some cases, the Inspector General) may access and examine records and interview employees regarding contract transactions.
- Retention Period
- Records must be retained for three years after final payment, or longer if required by law or contract.
- Subcontract Flowdown
- Contractors must include this clause in applicable subcontracts over the simplified acquisition threshold.
Responsibilities
- Contracting Officers: Ensure inclusion of the clause in applicable contracts and subcontracts; exercise audit rights as needed.
- Contractors: Maintain, retain, and provide access to all required records; flow down the clause to qualifying subcontracts; comply with reporting and audit requirements.
- Agencies: Oversee compliance, conduct audits, and enforce record retention and access provisions.
Practical Implications
- This clause ensures transparency and accountability in cost-based and negotiated contracts, allowing the government to verify costs and pricing data. Contractors must have robust recordkeeping systems and be prepared for audits. Failure to comply can result in payment disputes, penalties, or contract termination. Common pitfalls include inadequate record retention, failure to flow down requirements, or denying access to auditors.