Overview
FAR 4.703 establishes the mandatory requirements for contractors to retain and make available all contract-related records—including financial, accounting, and computer data—to facilitate government audits and contract administration. It defines the standard retention period and provides specific guidelines for the integrity and storage of electronic and digital records.
Key Rules
- Standard Retention Period: Contractors must generally maintain records for 3 years after final payment, or for the specific periods cited in FAR 4.705, whichever expires first.
- Extensions to Retention: Periods are extended if a specific contract clause requires it, if the contractor keeps records longer for their own purposes, or if the contractor is late in submitting final indirect cost rate proposals.
- Electronic Storage: Contractors may store records electronically or via photographic images provided they have secure imaging procedures, an effective indexing system for easy access, and retain the original hard copies for at least one year to validate the imaging process.
- Data Integrity: Computerized data must be maintained on reliable media with a clear audit trail. Contractors are strictly prohibited from deleting, discarding, or overwriting such data during the required retention period.
- Scope of Records: The requirement applies to all formats (written, computer data, etc.) and includes books, documents, accounting procedures, and supporting evidence.
Practical Implications
- Audit Readiness: Contractors must ensure their record-keeping systems can withstand scrutiny by the Contracting Officer or the Comptroller General years after the physical work on a contract is complete.
- System Synchronization: Companies need to align their internal document destruction policies with the "final payment" milestone of each specific federal contract to avoid premature disposal of required evidence.