FAR 52.215-2—Audit and Records-Negotiation.
Plain-English Summary
FAR 52.215-2, Audit and Records—Negotiation, is the government’s core contract clause for access to contractor records in negotiated procurements. It covers what counts as “records,” the government’s right to examine and audit records for cost-reimbursement, incentive, time-and-materials, labor-hour, and price-redeterminable contracts, the government’s right to review records tied to certified cost or pricing data, the Comptroller General’s access rights, the right to examine supporting records for cost, funding, and performance reports, how long records must be retained and made available, and the contractor’s duty to flow the clause down to certain subcontracts. The clause also includes Alternate I, which expands access rights to an Inspector General and broadens subcontract coverage, and Alternate II, which incorporates the OMB Uniform Guidance audit requirements for certain contracts. In practice, this clause gives the government a broad audit and inspection tool to verify pricing, incurred costs, reported data, and contract performance, while also setting retention and subcontract flowdown obligations that contractors must manage carefully. It matters because failure to maintain, produce, or flow down required records can create audit findings, payment disputes, pricing challenges, and potential contractual noncompliance.
Key Rules
Records are broadly defined
“Records” includes books, documents, accounting procedures and practices, and other data in any form, including paper, electronic, and other media. This broad definition means the clause reaches far beyond formal accounting ledgers to supporting schedules, calculations, and other evidence relevant to contract costs and pricing.
Audit rights depend on contract type
For cost-reimbursement, incentive, time-and-materials, labor-hour, and price-redeterminable contracts, the government may examine and audit all records and other evidence sufficient to show costs incurred or anticipated, directly or indirectly, in performance. The government may also inspect the contractor’s plants or parts of them at reasonable times when they are engaged in contract performance.
Certified cost or pricing data can be audited
If the contractor was required to submit certified cost or pricing data for a pricing action, the contracting officer or authorized representative may examine and audit records related to the proposal, negotiations, pricing, and performance. This right is aimed at evaluating the accuracy, completeness, and currency of the certified data.
Comptroller General access is direct
The Comptroller General, or an authorized representative, may access directly pertinent records involving transactions related to the contract or subcontract and may interview current employees about those transactions. Under the basic clause, this does not require the contractor to create or keep records it does not ordinarily maintain or is not otherwise required by law to maintain.
Supporting records for reports are reviewable
If the contractor must submit cost, funding, or performance reports, the government may examine and audit the supporting records and materials to evaluate both the contractor’s reporting systems and the data reported. This ties report accuracy to the underlying records and procedures used to generate the reports.
Records must be retained and made available
The contractor must make the covered records available at its office at reasonable times for examination, audit, or reproduction until three years after final payment, or for a shorter or longer period if another FAR provision, statute, or contract clause requires it. Special retention rules apply for terminated work and for appeals, litigation, or claims until those matters are finally resolved.
Subcontract flowdown is required
The contractor must insert the clause in certain subcontracts exceeding the simplified acquisition threshold when the subcontract is cost-reimbursement, incentive, time-and-materials, labor-hour, or price-redeterminable; when certified cost or pricing data are required; or when the subcontract requires cost, funding, or performance reports. The clause may be adjusted only to identify the correct parties and contracting officer.
Alternate I expands oversight
Alternate I replaces the basic Comptroller General paragraph with broader access for the Comptroller General and an appropriate Inspector General, including access to contractor and subcontractor records and interviews of officers or employees. It also changes the flowdown rule and states that the Inspector General interview authority does not flow down to subcontracts.
Alternate II adds Uniform Guidance
Alternate II adds a paragraph stating that the OMB Uniform Guidance at 2 CFR part 200, subpart F applies to the contract. This is important where federal assistance-style audit requirements are intended to apply alongside or in addition to the FAR clause.
Responsibilities
Contracting Officer
Determine whether the clause and any alternate apply, enforce audit and inspection rights, review certified cost or pricing data and supporting records, and ensure the contractor complies with record availability and flowdown requirements.
Contractor
Maintain records sufficient to support claimed or anticipated costs, certified cost or pricing data, and required reports; allow reasonable access for examination, audit, inspection, and reproduction; retain records for the required period; and flow the clause down to covered subcontracts.
Authorized Representative of the Contracting Officer
Conduct examinations, audits, inspections, and reviews of records and supporting materials on behalf of the contracting officer, including records tied to costs, pricing, and reports.
Comptroller General
Access directly pertinent records related to the contract or subcontract and interview current employees regarding those transactions, subject to the limits stated in the clause and applicable law.
Inspector General
Under Alternate I, access contractor and subcontractor records that pertain to transactions related to the contract and interview officers or employees, except that interview authority does not flow down to subcontracts.
Subcontractor
When the clause is flowed down, maintain and provide access to required records and comply with audit and examination rights applicable to the subcontract, subject to the specific terms of the flowed-down clause and any alternate used.
Agency/Program Office
Support audit requests, identify reporting or pricing requirements that trigger the clause, and coordinate with contracting personnel and auditors when records or interviews are needed.
Practical Implications
Contractors should expect broad access to supporting documentation, not just final invoices or summary ledgers. Audit teams often want source data, calculations, assumptions, and negotiation files, especially for cost-type and certified pricing actions.
Record retention is a common compliance trap. The three-year period starts after final payment, but termination, disputes, claims, or other clauses/statutes can extend retention much longer, so contractors need a defensible retention schedule.
Flowdown is not optional when the subcontract meets the clause’s thresholds and triggers. Prime contractors should identify affected subcontracts early and ensure the correct clause text, including the applicable alternate, is inserted with only limited changes.
The clause can affect pricing strategy and documentation discipline. If a contractor submits certified cost or pricing data, it should be prepared to support the proposal, negotiation positions, pricing build-up, and post-award performance records.
Alternate I and Alternate II materially change the compliance burden. Contractors should verify whether the solicitation or contract includes an alternate, because Inspector General access and Uniform Guidance audit requirements can expand oversight beyond the basic clause.
Official Regulatory Text
As prescribed in 15.209 (b) , insert the following clause: Audit and Records-Negotiation (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) Examination of costs . If this is a cost-reimbursement, incentive, time-and-materials, labor-hour, or price redeterminable contract, or any combination of these, the Contractor shall maintain and the Contracting Officer, or an authorized representative of the Contracting Officer, shall have the right to examine and audit all records and other evidence sufficient to reflect properly all costs claimed to have been incurred or anticipated to be incurred directly or indirectly in performance of this contract. This right of examination shall include inspection at all reasonable times of the Contractor’s plants, or parts of them, engaged in performing the contract. (c) Certified cost or pricing data . If the Contractor has been required to submit certified cost or pricing data in connection with any pricing action relating 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 contract, subcontract, or modification; (2) The discussions conducted on the proposal(s), including those related to negotiating; (3) Pricing of the contract, subcontract, or modification; or (4) Performance of the contract, subcontract or modification. (d) Comptroller General.- (1) The Comptroller General of the United States, or an authorized representative, shall have access to and the right to examine any of the Contractor’s directly pertinent records involving transactions related to this contract or a subcontract hereunder and to interview any current employee regarding such transactions. (2) This paragraph may not be construed to require the Contractor or subcontractor to create or maintain any record that the Contractor or subcontractor does not maintain in the ordinary course of business or pursuant to a provision of law. (e) Reports . If the Contractor is required to furnish cost, funding, or performance reports, the Contracting Officer or an authorized representative of the Contracting Officer shall have the right to examine and audit the supporting records and materials, for the purpose of evaluating- (1) The effectiveness of the Contractor’s policies and procedures to produce data compatible with the objectives of these reports; and (2) The data reported. (f) Availability . The Contractor shall make available at its office at all reasonable times the records, materials, and other evidence described in paragraphs (a), (b), (c), (d), and (e) of this clause, for examination, audit, or reproduction, until 3 years after final payment under this contract or for any shorter period specified in subpart 4.7 , Contractor Records Retention, of the Federal Acquisition Regulation (FAR), or for any longer period required by statute or by other clauses of this contract. In addition- (1) If this contract is completely or partially terminated, the Contractor shall make available the records relating to the work terminated until 3 years after any resulting final termination settlement; and (2) The Contractor shall make available records relating to appeals under the Disputes clause or to litigation or the settlement of claims arising under or relating to this contract until such appeals, litigation, or claims are finally resolved. (g) The Contractor shall insert a clause containing all the terms of this clause, including this paragraph (g), in all subcontracts under this contract that exceed the simplified acquisition threshold, as defined in FAR 2.101 on the date of subcontract award, and— (1) That are cost-reimbursement, incentive, time-and-materials, labor-hour, or price-redeterminable type or any combination of these; (2) For which certified cost or pricing data are required; or (3) That require the subcontractor to furnish reports as discussed in paragraph (e) of this clause. The clause may be altered only as necessary to identify properly the contracting parties and the Contracting Officer under the Government prime contract. (End of clause) Alternate I (Mar 2009) . As prescribed in 15.209 (b)(2), substitute the following paragraphs (d)(1) and (g) for paragraphs (d)(1) and (g) of the basic clause: (d) Comptroller General or Inspector General. (1) The Comptroller General of the United States, an appropriate Inspector General appointed under section 3 or 8G 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- (i) Examine any of the Contractor’s or any subcontractor’s records that pertain to and involve transactions relating to this contract or a subcontract hereunder; and (ii) Interview any officer or employee regarding such transactions. (g)(1) Except as provided in paragraph (g)(2) of this clause, the Contractor shall insert a clause containing all the terms of this clause, including this paragraph (g), in all subcontracts under this contract. The clause may be altered only as necessary to identify properly the contracting parties and the Contracting Officer under the Government prime contract. (2) The authority of the Inspector General under paragraph (d)(1)(ii) of this clause does not flow down to subcontracts. Alternate II (Aug 2016) . As prescribed in 15.209 (b)(3), add the following paragraph (h) to the basic clause: (h) The provisions of the OMB Uniform Guidance at 2 CFR part 200 , subpart F apply to this contract. Alternate III (June1999). As prescribed in 15.209 (b)(4), delete paragraph (d) of the basic clause and redesignate the remaining paragraphs accordingly, and substitute the following paragraph (e) for the redesignated paragraph (e) of the basic clause: (e) Availability . The Contractor shall make available at its office at all reasonable times the records, materials, and other evidence described in paragraphs (a), (b), (c), and (d) of this clause, for examination, audit, or reproduction, until 3 years after final payment under this contract or for any shorter period specified in subpart 4.7 , Contractor Records Retention, of the Federal Acquisition Regulation (FAR), or for any longer period required by statute or by other clauses of this contract. In addition- (1) If this contract is completely or partially terminated, the Contractor shall make available the records relating to the work terminated until 3 years after any resulting final termination settlement; and (2) The Contractor shall make available records relating to appeals under the Disputes clause or to litigation or the settlement of claims arising under or relating to this contract until such appeals, litigation, or claims are finally resolved.