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Records Retention Requirements in Federal Contracting

As contracting parties, government agencies and their contractors must adhere to specific requirements in retaining contracts and records generated during the formation and administration of federal contracts. The Federal Acquisition Regulation (FAR) contains requirements describing specific retention periods of various records throughout the procurement lifecycle. It is important for contractors to ensure strict compliance with these record retention policies and procedures as contract documents and related materials may be required as supporting evidence in case of bid protests or claims litigation. Furthermore, contract documents and materials may also be subject to Government audits during the required retention periods. Contractors should also be generally cognizant of retention requirements applicable to federal agencies in case they need access to government files and records. Depending on the specific type of file or record, contractors may obtain government records during the discovery process in case of litigation, or pursuant to a Freedom of Information Act (FOIA) request. Federal agencies also make certain contractual documents and records available publicly.

o Contractor Retention of Files & Records Relating to Government Contracts

FAR Subpart 4.7 outlines policies and procedures pertaining to records retention by contractors and subcontractors. These policies and procedures are prescribed to meet the Government’s records review requirements and are applicable to contracts that contain clauses at FAR 52.214-26 or 52.215-2. Under FAR § 4.703(a), contractors are typically required to retain and make available all records relating to Government contracts for a period of three years after a final payment is made. This includes all documents, materials, records including supporting evidence to satisfy contract negotiations, administration, and audit requirements. Importantly, if a contract clause specifies a retention period of longer than three years, then that specified period controls.

Specific retention periods are also designated for financial and cost accounting, pay administration, and acquisition records. These three types of records described in detail in FAR §§ 4.705-1 - 4.705-3 must generally be retained by contractors for four years. Notable exceptions include labor cost distribution cards, petty cash records, clock cards, paid checks, and store requisitions. These records must be retained for two years. The retention period for the records described in FAR § 4.705 is calculated from the end of the contractor’s fiscal year in which an entry is made charging the cost to a federal government contract or subcontract.

o Government Retention of Contract Files & Records

Federal government agencies are similarly subject to the FAR’s retention requirements for contract files. Specifically, FAR Subpart 4.8 prescribes requirements for establishing, maintaining, and disposing of contract files. FAR § 4.805(a) requires agencies to manage and dispose of contract files and records in accordance with the National Archives and Records Administration (NARA) General Records Schedule 1.1, Financial Management and Reporting Records. The FAR requires agencies to prescribe consistent procedures for documents stored in all media types, including microfilm and various electronic media.

Under FAR § 4.805(c), agencies are typically required to retain contracts and related records and documents for six years after final payment is made on the contract. These records and documents include proposals from successful and unsuccessful offerors. An exception to this retention requirement is contractor payrolls submitted under construction contracts in accordance with Department of Labor (DOL) regulations with related certifications, anti-kickback affidavits, and other related records. Agencies are required to retain such records for three years after contract completion. Files related to canceled solicitation and data submitted to the Federal Procurement Data System (FPDS) must be retained for six years. Agencies are permitted to retain unaccepted unsolicited proposals in accordance with their internal procedures. Notably, records and documents relating to ongoing investigations and litigation, including bid protests or similar matters, must be retained until final clearance or settlement is reached. While agencies may have shorter or longer retention periods outlined in their internal policies, shorter than prescribed retention periods require NARA approval pursuant to FAR § 4.805(c).

The FAR mandates both the Government and its contractors, including subcontractors, to maintain and retain contractual files and records for designated periods. Adhering to these records retention requirements is not only mandatory but also helpful to contractors in both present and future contracts. For instance, access to recently concluded contracts may facilitate informed decision-making for performance under future contracts. Furthermore, well-defined record retention policies and procedures consistent with FAR requirements minimize the risk of errors, support any litigation efforts, and promote a smoother process in face of potential audits.

This Federal Procurement Insight is provided as a general summary of the applicable law in the practice area and does not constitute legal advice. Contractors wishing to learn more are encouraged to consult the TILLIT LAW PLLC Client Portal or Contact Us to determine how the law would apply in a specific situation.