FAR 4.703—Policy.
Plain-English Summary
FAR 4.703 sets the basic policy for how long contractors must keep records available for contract negotiation, administration, and audit, and what forms those records may take. It covers the general retention period after final payment, the special retention periods in FAR 4.705 through 4.705-3, and the rule that the shorter applicable period controls unless a longer period is required by contract or by the contractor’s own retention practices. It also addresses what happens when a contractor misses the original due date for submitting the final indirect cost rate proposal under the Allowable Cost and Payment clause at 52.216-7, which automatically extends certain retention periods day-for-day. In addition, the section explains when original paper records do not have to be kept or produced if they are properly imaged or stored electronically, including requirements for reliable and secure imaging, indexing, and temporary retention of originals for validation. Finally, it establishes rules for retaining computer data on reliable media, transferring data without losing integrity, keeping an audit trail, and prohibiting destruction, deletion, or overwriting of retained data during the required retention period. In practice, this section is about preserving evidence: contractors must be able to produce accurate, accessible, and trustworthy records long enough to support audits, pricing actions, and other government reviews.
Key Rules
General three-year retention
Contractors must make records and supporting evidence available for 3 years after final payment, unless a shorter or longer period applies under the specific retention rules in FAR 4.705 through 4.705-3. The term "records" is broad and includes books, documents, accounting procedures and practices, and other data in any form.
Specific record periods control
For certain records, the retention period in FAR 4.705 through 4.705-3 applies instead of the general 3-year rule. The applicable period is whichever expires first, unless another rule in this section extends it.
Longer retention can apply
If a contract clause requires a longer retention period, or if the contractor keeps the records longer for its own purposes, the contractor must continue to make them available for that longer period. In the latter case, the required availability period is the contractor’s own retention period or 3 years after final payment, whichever expires first.
Late final indirect proposal extends retention
If the contractor misses the original due date for the final indirect cost rate proposal under FAR 52.216-7(d)(2), the retention periods in FAR 4.705 are automatically extended by one day for each day the proposal is late. This extension is automatic and directly tied to the length of the delay.
Electronic images may replace originals
Original records do not have to be maintained or produced in an audit if the contractor or subcontractor provides accurate photographic or electronic images and meets the imaging safeguards in the rule. The imaging process must preserve signatures and other graphic information, be reliable and secure, and be supported by an effective indexing system.
Originals must be kept briefly after imaging
When records are imaged, the original records must still be retained for at least one year after imaging. This allows periodic validation of the imaging system and helps confirm that the electronic copies are accurate and trustworthy.
Computer data must be preserved safely
If the records are maintained on a computer, contractors must keep the data on a reliable medium for the required retention period and may transfer it from one reliable medium to another. Any transfer process must preserve integrity, reliability, and security, and the contractor must keep an audit trail describing the transfer.
No destruction during retention period
During the applicable retention period, contractors may not destroy, discard, delete, or overwrite retained computer data. The rule is intended to prevent loss of evidence that may be needed for audit or other government review.
Responsibilities
Contractor
Maintain and make available records and supporting evidence for the applicable retention period; follow the specific retention periods in FAR 4.705 through 4.705-3; comply with any longer contract clause requirement; extend retention automatically if the final indirect cost rate proposal is late; preserve record integrity when imaging or transferring electronic data; keep originals for at least one year after imaging; retain audit trails for data transfers; and avoid destroying or overwriting retained computer data.
Subcontractor
When subject to the same recordkeeping expectations, preserve records in a form that can be produced for audit or review; if using imaging, meet the same reliability, security, and indexing requirements; and retain originals for the required validation period after imaging.
Contracting Officer
Ensure contract clauses and administration requirements reflect the applicable retention obligations; rely on the retained records for negotiation and administration purposes; and recognize that longer retention may be required by contract or by the contractor’s own retention practices.
Auditors and the Comptroller General
Use the retained records and supporting evidence to conduct audits and reviews of contract negotiation and administration matters. They may require access to records kept in paper, electronic, or imaged form, provided the contractor has met the rule’s preservation requirements.
Practical Implications
This section is a records-preservation rule, not just a paper-filing rule: contractors must be able to produce usable evidence, not merely claim that records once existed.
The biggest compliance risk is miscalculating the retention clock, especially when special FAR 4.705 periods, longer contract clauses, or late final indirect cost proposals change the deadline.
Electronic recordkeeping is allowed, but only if the contractor can prove the images or data are reliable, secure, indexed, and auditable; weak scanning or poor data-transfer controls can make records unusable.
Contractors should preserve audit trails and validation procedures, because the government may question whether electronic copies accurately reflect the original records.
If a contractor keeps records longer for business reasons, that longer retention can become the practical availability period under this section, so internal retention policies should be coordinated with FAR requirements.
Official Regulatory Text
(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.