FAR 4.703 lets you image your records and throw the paper away. It also says you must keep the originals for a minimum of one year after imaging, and that your indexing has to allow timely access. Most contractors do the first part.

Record retention is the least interesting obligation a government contractor has and the one that decides whether every other article in this series goes well or badly. Audits, claims, terminations, pricing allegations and disclosures are all won or lost on records that either exist or do not.

The baseline

Under FAR 4.703(a)(1), contractors must make available records and supporting evidence and keep them for 3 years after final payment. Under 4.703(a)(2), certain records are instead kept for the periods specified in FAR 4.705 through 4.705-3, whichever expires first.

Where a contract clause sets a longer retention period than FAR 4.703 cites, that longer period governs under 4.703(b)(1). So the three-year rule is a floor subject to your clauses, not a ceiling.

One provision almost nobody knows about

FAR 4.703(b)(3) provides that if a contractor does not meet the original due date for a final indirect cost rate proposal under paragraph (d)(2) of FAR 52.216-7, the retention periods in FAR 4.705 are automatically extended one day for each day the proposal is late.

A late submission does not just delay the audit. It silently lengthens how long you are required to hold the records, by exactly as long as you were late.

Imaging, and the conditions attached to it

FAR 4.703(c) permits a contractor or subcontractor to duplicate or store original records electronically, unless they contain significant information not shown on the record copy. Photographic or electronic images may substitute for originals — but only if three conditions are met:

• Under 4.703(c)(1), the contractor has established procedures to ensure that the imaging process preserves the accuracy, reliability and security of the original
• Under 4.703(c)(2), the contractor maintains an effective indexing system to permit timely and convenient access
• Under 4.703(c)(3), the contractor retains the original records for a minimum of one year after imaging to permit periodic validation of the imaging systems

That third condition is the one that gets missed. Scanning is not the moment the paper can go. The paper goes a year later, and only if the first two conditions actually hold.

And the second condition is a real requirement, not a nicety. An image library with no usable index does not satisfy 4.703(c)(2), which means the substitution of images for originals was never valid.

Electronic data

FAR 4.703(d) requires that computer records be retained on a reliable medium, that transfers preserve integrity, reliability and security, and that an audit trail of the transfer be maintained. It also provides that contractors shall not destroy, discard, delete or write over such records during the retention period.

Write over is worth noting. A system that overwrites in the ordinary course — a scheduling tool keeping only the current version, a database that updates in place — can breach that without anyone deciding to delete anything.

What this means practically

• Index as you scan, to the standard in 4.703(c)(2), not as a later project
• Hold originals for the full year after imaging, documented, rather than destroying on delivery of the images
• Document the imaging procedures themselves, because 4.703(c)(1) requires established procedures and an auditor may ask to see them
• Identify systems that overwrite rather than append, and deal with them before a retention obligation attaches
• Track final payment dates per contract, because the clock runs from them and nobody has them in one place
• Track late indirect cost rate proposals, because of the day-for-day extension

Where we fit

We do the digitization to a documented, indexed standard — structured indexing that satisfies timely and convenient access, documented procedures, and a retention schedule tied to final payment dates per contract. We hold originals for the required period in our Arlington facility where you want us to, and return or dispose of them on your instruction.

We do not give legal advice on retention obligations. The schedule is yours and your counsel’s; we build and run the system that complies with it.

What we do

Pro-Legal Services, Inc. supports government contract record retention from Arlington, Virginia — imaging to a documented procedure, structured indexing built for access, original retention for the required period, and a schedule keyed to final payment per contract.

Small business, minority-owned, SAM registered, prime or subcontractor.

Related: government document digitization, litigation hold services, DCAA audit document support, defective pricing audit support, paper to ESI conversion, bibliographic coding services, document scanning services Arlington VA.

Pro-Legal Services, Inc. digitizes and stores from Arlington, Virginia, with courier pickup across the District of Columbia, Maryland and Northern Virginia.

Scanning a contract archive and planning to destroy the paper? Not for a year, and only if the index holds. Send us the volume and we will build it to the rule. Pro-Legal Services, Inc. · 1550 Wilson Blvd, Suite 250, Arlington, VA 22209 · 202-955-9400 · info@pro-legal.com