FAR 52.214-26—Audit and Records-Sealed Bidding.
Plain-English Summary
FAR 52.214-26, Audit and Records—Sealed Bidding, gives the Government audit and access rights when certified cost or pricing data are required for the pricing of a contract modification under a sealed bidding contract. It defines the term “records” broadly to include books, documents, accounting procedures and practices, and other data in any form, including electronic data. The clause explains what the Contracting Officer or an authorized representative may examine and audit—specifically records related to the proposal for the modification, negotiations, pricing, and performance—to verify the accuracy, completeness, and currency of certified cost or pricing data. It also gives the Comptroller General the same access rights and, in the basic clause, the right to interview current employees; Alternate I changes the Government access language to include the Comptroller General and certain Inspectors General and adjusts the subcontract flowdown requirement. The clause sets record availability and retention expectations, including access at the contractor’s office at reasonable times, retention for three years after final payment, longer retention periods under FAR Subpart 4.7, and special retention for terminated work and disputes, litigation, or claims. Finally, it requires the contractor to flow the clause down to covered subcontracts, with Alternate I modifying the scope of that flowdown. In practice, this clause is about preserving the Government’s ability to verify pricing support and later resolve disputes, terminations, and claims by ensuring the underlying records remain available.
Key Rules
Broad definition of records
“Records” includes books, documents, accounting procedures and practices, and other data, regardless of form. This means paper files, spreadsheets, emails, databases, and other electronic information can all be subject to access and audit.
Audit rights for modifications
If certified cost or pricing data are required for a contract modification, the Contracting Officer or authorized representative may examine and audit records related to the proposal, negotiations, pricing, and performance of that modification. The purpose is to evaluate the accuracy, completeness, and currency of the certified data.
Comptroller General access
Under the basic clause, the Comptroller General or an authorized representative has the same rights as the Contracting Officer and may also interview current employees about the transactions. Alternate I expands access to certain Inspectors General and changes the specific access language.
Record availability and retention
The contractor must make the relevant records available at its office at all reasonable times for examination, audit, or reproduction until three years after final payment, or longer if FAR Subpart 4.7 requires it. If the contract is terminated, records for the terminated work must be kept for three years after final termination settlement.
Claims and disputes retention
Records relating to appeals under the Disputes clause, litigation, or settlement of claims arising under or relating to the contract must be retained until those matters are finally resolved. This retention period can extend well beyond final payment.
Subcontract flowdown
The contractor must include the clause in subcontracts expected to exceed the certified cost or pricing data threshold at the time of subcontract award. Alternate I changes the flowdown language and states that the Inspector General’s interview authority does not flow down to subcontracts.
Responsibilities
Contracting Officer
When certified cost or pricing data are required for a modification, use the clause to obtain access to relevant contractor records and, if needed, authorize representatives to examine, audit, or reproduce those records. The Contracting Officer also relies on the clause to support price analysis, defective pricing review, and post-award verification.
Authorized Representative of the Contracting Officer
Examine, audit, and reproduce records related to the modification proposal, negotiations, pricing, and performance as needed to evaluate the certified cost or pricing data. This representative acts within the authority delegated by the Contracting Officer.
Comptroller General
Exercise the same audit and access rights as the Contracting Officer under the basic clause, and in the basic clause may interview current employees regarding the transactions. Under Alternate I, certain Inspectors General may also exercise specified access rights.
Inspector General (Alternate I)
Under Alternate I, access records and interview officers or employees as provided in the alternate clause language for transactions relating to the contract or subcontract. The alternate also limits the flowdown of interview authority to subcontracts.
Contractor
Maintain and make available all covered records at its office at reasonable times for examination, audit, or reproduction; preserve records for the required retention periods; and support Government review of certified cost or pricing data for modifications. The contractor must also flow the clause down to covered subcontracts and ensure subcontract compliance.
Subcontractor
When the clause is flowed down, maintain and provide access to records related to the subcontract as required by the incorporated clause. Subcontractors must retain records for the applicable period and support audits tied to certified cost or pricing data requirements.
Practical Implications
This clause is most important when a modification requires certified cost or pricing data; contractors should expect the Government to test the support behind labor, material, indirect rates, projections, and assumptions.
Recordkeeping must be organized enough to allow retrieval and reproduction of supporting data, including electronic records and underlying calculations, not just the final proposal package.
Retention periods can extend beyond final payment, especially for terminations, disputes, litigation, or claims, so contractors should not destroy records based only on normal closeout timing.
Flowdown is a common compliance gap: prime contractors must ensure covered subcontracts include the clause, and they should track which subcontracts exceed the threshold at award.
Alternate I changes who may access records and interview personnel, so agencies and contractors should confirm which version of the clause is in the contract before responding to audit requests.
Official Regulatory Text
As prescribed in 14.201-7 (a)(1) , insert the following clause: Audit and Records-Sealed Bidding (Jun 2020) (a) As used in this clause, "records" 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. (b) Certified cost or pricing data . If the Contractor has been required to submit certified cost or pricing data in connection with the pricing of any modification to this contract, the Contracting Officer, or an authorized representative of the Contracting Officer, in order to evaluate the accuracy, completeness, and currency of the certified cost or pricing data, shall have the right to examine and audit all of the Contractor’s records, including computations and projections, related to- (1) The proposal for the modification; (2) The discussions conducted on the proposal(s), including those related to negotiating; (3) Pricing of the modification; or (4) Performance of the modification. (c) Comptroller General . In the case of pricing any modification, the Comptroller General of the United States, or an authorized representative, shall have the same rights as specified in paragraph (b) of this clause and also the right to interview any current employee regarding such transactions. (d) Availability . The Contractor shall make available at its office at all reasonable times the materials described in paragraph (b) of this clause, for examination, audit, or reproduction, until 3 years after final payment under this contract, or for any other period specified in subpart 4.7 of the Federal Acquisition Regulation (FAR). FAR subpart 4.7 , Contractor Records Retention, in effect on the date of this contract, is incorporated by reference in its entirety and made a part of this contract. (1) If this contract is completely or partially terminated, the records relating to the work terminated shall be made available for 3 years after any resulting final termination settlement. (2) Records pertaining to appeals under the Disputes clause or to litigation or the settlement of claims arising under or relating to the performance of this contract shall be made available until disposition of such appeals, litigation, or claims. (e) Subcontracts. The Contractor shall insert a clause containing all the provisions of this clause, including this paragraph (e), in all subcontracts expected to exceed the threshold for submission of certified cost or pricing data in FAR 15.403-4 (a)(1) on the date of subcontract award. (End of clause) Alternate I (Mar 2009) . As prescribed in 14.201-7 (a)(2), substitute the following paragraphs (c) and (e) for paragraphs (c) and (e) of the basic clause: (c) The Comptroller General of the United States, an appropriate Inspector General appointed under section 3 or 8 G of the Inspector General Act of 1978 ( 5 U.S.C. App. ), or an authorized representative of either of the foregoing officials, shall have access to and the right to- (1) Examine any of the Contractor’s or any subcontractors' records that pertain to, and involve transactions relating to, this contract or a subcontract hereunder; and (2) Interview any officer or employee regarding such transactions. (e)(1) Except as provided in paragraph (e)(2), the Contractor shall insert a clause containing the provisions of this clause, including this paragraph (e), in all subcontracts. (2) The authority of the Inspector General under paragraph (c)(2) of this clause does not flow down to subcontracts.