By Brian Wilbourn
As all of us are likely painfully aware, the volume of emails, correspondence and other documents that we generate and receive, whether we’re at home or at work, seem to grow at an ever-increasing rate. At home, we can often dispose of unwanted papers and files with little worry.
In business, however—and for government contractors in particular—disposing of the wrong documents can have serious consequences. On the other hand, while contractors do not want to delete the wrong documents, it is neither practical nor desirable to keep every single document for all of eternity. This is where document retention policies come into play. All businesses, and government contractors especially, should have a document retention policy that ensures compliance with legal requirements for the maintenance of records, while at the same time allowing for reduction in unnecessary paper and data in storage.
For government contractors, any document retention policy should generally begin with an understanding of FAR Subpart 4.7, Contractor Record Retention, which applies to all contracts that contain either of the following clauses: (i) Audit and Records-Sealed Bidding (52.214–26) or (ii) Audit and Records-Negotiation (52.215–2). Subpart 4.7 generally provides that contractors must maintain all records necessary to satisfy any contract negotiation, administration and audit requirements for three years after the final payment under a contract.
The general three-year retention period may be extended, however, if a particular contract specifies a longer period, or if the contractor, for its own purposes, retains the records and supporting evidence for a longer period. In addition, there are certain specific types of records for which Subpart 4.7 specifies a longer retention period (as detailed in FAR 4.705-1 through 4.705-3). For example, FAR 4.705-2 specifies that payroll sheets, registers, or their equivalent, of salaries and wages paid to individual employees for each payroll period should be retained for four years.
While an understanding of FAR Subpart 4.7 is an excellent starting point for any document retention policy, depending on the size and type of businesses, other laws with document retention requirements may also be applicable, such as the Service Contract Act, the Davis-Bacon Act, the Fair Labor Standards Act, or the Contract Work Hours and Safety Act. Accordingly, businesses should perform a comprehensive review of applicable laws in order to ensure that their document retention policies meet applicable requirements.
Finally, while understanding what documents to keep is important, it is equally critical that contractors give careful consideration to organizing stored documents in a manner that permits efficient identification and retrieval of documents. As any company that has been subject to audits, litigation or government investigation is likely aware, retrieving and compiling requested documents can be a costly and time-consuming process. By implementing a document retention policy that includes an efficient system for organizing and storing documents, contractors can assure themselves not only that they are maintaining important records, but that they will also be able to retrieve those record without incurring unnecessary efforts and expenses.
About the Author: Brian Wilbourn is an associate with PilieroMazza in the Government Contracts Group. He may be reached at firstname.lastname@example.org.