FAR 4.704—Calculation of retention periods.
Plain-English Summary
FAR 4.704 explains how to calculate the retention periods for contractor records covered by FAR 4.705. It addresses three specific topics: how to start the retention clock for records tied to cost entries, how to treat records with multiple entries over time, how to handle records from a prior contract that are later used as certified cost or pricing data in a succeeding contract, and how to manage interfiled record categories when separate screening for disposal is impractical. In practice, this section tells contractors when the retention period begins, not just how long records must be kept, which is critical for compliant record disposition and audit readiness. It also requires contractors to organize records in annual blocks where possible, so they can dispose of records in an orderly way after the applicable retention period expires. For contracting officers and auditors, the rule helps determine whether records should still be available when reviewing cost allowability, pricing support, or contract performance history.
Key Rules
Retention starts at fiscal year end
The retention period for records in 4.705 begins at the end of the contractor’s fiscal year in which the cost entry is made charging or allocating a cost to a Government contract or subcontract. The clock does not start on the date of the individual transaction itself, but on the close of that fiscal year.
Series of entries use final entry
If a record contains a series of entries, the retention period is measured from the end of the contractor’s fiscal year in which the final entry is made. This prevents the retention period from expiring before the record is complete.
Cut records into annual blocks
Contractors should organize records into annual blocks and retain them for block disposal under the applicable retention periods. This is a practical recordkeeping method intended to simplify storage, retrieval, and destruction when the retention period ends.
Prior records used in later pricing
When records from a prior contract are relied on as certified cost or pricing data for negotiating a succeeding contract, the retention period runs from the date of the succeeding contract. This extends the useful life of the records because they support later pricing actions.
Interfiled records follow longest period
If two or more record categories listed in 4.705 are interfiled and it is not practical to screen them for disposal, the contractor must keep the entire record series for the longest retention period that applies to any of the included categories. This avoids accidental early destruction of records that still must be retained.
Responsibilities
Contractor
Determine the correct retention start date for each record category, based on the end of the fiscal year in which the relevant cost entry or final entry was made. Organize records in annual blocks, extend retention when prior records are used for certified cost or pricing data in a later contract, and retain interfiled records for the longest applicable period when screening is impractical.
Contracting Officer
Understand the retention timing rules when requesting records, evaluating pricing support, or addressing record availability issues. Use the retention framework to assess whether records should still exist for audits, negotiations, or other contract administration needs.
Auditor or Reviewing Official
Apply the retention calculation rules when determining whether requested records should have been retained and whether missing records may indicate noncompliance. Consider fiscal-year timing, final-entry timing, later contract reliance, and interfiled record treatment when evaluating record disposition.
Agency
Administer contract oversight and recordkeeping expectations consistent with FAR retention rules, and rely on the retention framework when planning audits, reviews, or requests for supporting documentation.
Practical Implications
The biggest practical issue is knowing when the retention clock starts; contractors often assume it begins on the transaction date, but FAR 4.704 ties it to the end of the fiscal year in which the entry is made.
Records with multiple entries can stay open longer than expected because the retention period starts only after the final entry in the series, so incomplete files should not be scheduled for disposal too early.
If prior-contract records are reused to support certified cost or pricing data in a later negotiation, the retention period is extended to the date of the succeeding contract, which can materially lengthen storage obligations.
Interfiled files create a common compliance risk: if categories are mixed and cannot be practically separated, the whole file must be kept for the longest applicable period, so poor filing practices can increase retention burdens.
Contractors should maintain clear fiscal-year indexing and disposal controls so they can prove when records became eligible for destruction and avoid premature deletion during audits or pricing reviews.
Official Regulatory Text
(a) The retention periods in 4.705 are calculated from the end of the contractor’s fiscal year in which an entry is made charging or allocating a cost to a Government contract or subcontract. If a specific record contains a series of entries, the retention period is calculated from the end of the contractor’s fiscal year in which the final entry is made. The contractor should cut off the records in annual blocks and retain them for block disposal under the prescribed retention periods. (b) When records generated during a prior contract are relied upon by a contractor for certified cost or pricing data in negotiating a succeeding contract, the prescribed periods shall run from the date of the succeeding contract. (c) If two or more of the record categories described in 4.705 are interfiled and screening for disposal is not practical, the contractor shall retain the entire record series for the longest period prescribed for any category of records.