and/or charges will be evaluated; ie., the formula to be used by the contracting officer to determine the lowest overall price quoted or offered. When multiple origins and/or destinations are involved, and the quantities or weights to be shipped between each origin and destination cannot be redetermined, estimated quantities or weights shall be established for the purpose of evaluating bids or proposals and an appropriate clause, in substantially the following language, shall be included:

ESTIMATED WEIGHT

For the purpose of evaluating bids, and for no other purpose, the following estimated quantities or weights will be considered as the quantities or weights to be shipped between each origin and destination listed: (Insert origin, destination, and estimated quantity or weight.)

(6) When procurement of transportation services is by negotiation, provision shall be made for accepting the most favorable proposal without further negotiation. A clause, in substantially the following language, shall be included:

ACCEPTANCE OF LOWEST OFFER

If it is determined by the Government that the most favorable proposal received in response to this request is fair and reasonable, award may be made to the carrier submitting such proposal without further negotiation. Accordingly, proposals should be submitted on the most favorable terms, from both a price and technical standpoint, which the offeror can initially submit to the Government.

(7) When it is anticipated that labor, in addition to that of the driver, will be required for loading or unloading shipments which, because of bulk or weight, are beyond the ability of the driver alone to handle, or when other circumstances will require services of the contractor which are not included in the basic rate, the conditions under which payment will be made for additional services shall be stated.

(b) When a solicitation involves multiple origins and/or destinations, detailed information shall be provided as to whether rates should be quoted for all origins and destinations or whether rates can be quoted for specific groups of origins and/or destinations.

(c) When multiple shipments will be tendered at one time from one origin to

two or more consignees at the same destination or to various destinations along the one route, provision shall be made for charging the rate applicable to the aggregate weight; and, if otherwise appropriate, when more than one destination is involved, provision shall be made for payment of a stopoff charge for each of the intermediate destinations. The following clauses shall be included. as applicable:

MULTIPLE SHIPMENTS

When multiple shipments are tendered at one time to the Contractor for movement from one origin to multiple consignees at the same destination, the rate charged for each shipment will be the rate applicable to the aggregate weight.

STOPPING IN TRANSIT FOR PARTIAL UNLOADING

When multiple shipments are tendered at one time to the Contratcor for movement from one origin to two or more consignees along the route between the origin and the last destination, the rate charged will be the rate applicable to the aggregate weight, plus a charge of $‒‒‒‒‒‒‒‒‒‒ for each shipment unloaded at an intermediate point en route to the last destination.

AUTHORITY: The provisions of this Part 1-20 issued under sec. 205(c), 63 Stat. 390; 40 U.S.C. 486 (c).

1-20.301 Retention periods.

1-20.301-1

Financial and cost accounting records.

1-20.301-2 Pay administration records. 1-20.301-3 Procurement and supply records.

AUTHORITY: Sec. 205 (c), 63 Stat. 390; 40 U.S.C. 486 (c).

SOURCE: 34 FR 7148, May 1, 1969, unless otherwise noted.

§ 1-20.000 Scope of part.

This Part 1-20 provides policies and procedures for the maintenance of records retained by contractors and subcontractors pursuant to specified contractual clauses included in contracts and subcontracts to satisfy certain statutory and administrative records review requirements of the Government.

Subpart 1-20.1-Purpose and
Applicability
Purpose.

§ 1-20.101

The provisions of this Part 1-20 are designed to relieve the burden of excessive records retention requirements on contractors and subcontractors while at the same time ensuring that the records review requirements of the Comptroller General of the United States and those of contracting agencies are fully met. § 1-20.102

Applicability.

§ 1-20.102-1 General.

This Part 1-20 applies to negotiated contracts, and to formally advertised contracts expected to exceed $100,000 which may entail certain changes or other modifications in excess of $100,000 (see § 1-3.814-2(b)), entered into on or after April 28, 1969, which contain records retention requirements set forth in the contractual clauses included in contracts and subcontracts as prescribed by the provisions of the Federal Procurement Regulations described and enumerated in § 1-20.201(a).

§ 1-20.102-2 Exemption of Atomic Energy Commission contracts.

The requirements of this Part 1-20 are not mandatory on the Atomic Energy Commission.

§ 1-20.102-3 Application to contracts entered into prior to April 28, 1969. Contractors and subcontractors may follow the provisions of this Part 1-20

with respect to contracts and subcontracts entered into prior to April 28, 1969, in complying with any of the following contractual clauses: (a) General Accounting Office records examination clauses pursuant to 41 U.S.C. 254 (c) and (b) records examination clauses relating to cost and pricing data pursuant to § 1-3.814-2.

Subpart 1-20.2-General Provisions § 1-20.201 General retention require

ments.

(a) Contractors and subcontractors are required to retain and make available books, records, documents, and other supporting evidence to satisfy contract negotiations, administration, and audit requirements of the contracting agency and the Comptroller General of the United States as set forth in the contract clauses prescribed under §§ 1-3.814-2, 1– 7.103-3, 1-7.103-18, 1-7.603-20, and 1-7.603-7.

(b) These contract clauses prior to April 28, 1969, require contractors and subcontractors to retain the records identified therein and make them available to the Comptroller General of the United States or the contracting officer, respectively, or their representatives, until the expiration of 3 years after final payment under the contract or subcontract. As revised effective April 28, 1969, the clauses also provide that certain of these records, enumerated under § 1-20.301, need only be retained until the expiration of the applicable records retention period authorized by this Part 1-20, if such period expires earlier than 3 years after final payment under the contract or subcontract.

(c) Section 1-20.301 identifies specific records and designates retention periods for each. These retention periods may be applied by contractors and subcontractors in complying with the general records retention requirements of §120.201 if longer retention periods are not otherwise required (see § 1-20.202).

[34 FR 7148, May 1, 1969, as amended at 38 FR 6675, Mar. 12, 1973; 41 FR 19317, May 12, 1976]

§ 1-20.202 Other record retention requirements.

(a) Compliance with the records retention requirements of the contract clauses set forth in the sections cited in § 1-20.201 does not relieve a contractor or subcontractor from retaining any

records for whatever longer periods may be required by any other clause of the contract or subcontract, or by other applicable statute or lawful requirement. (For example, contract clauses and related regulations issued by the Department of Labor require contractors and subcontractors to retain certain records for a stated period, such as 29 CFR 1516.3.)

(b) In this regard, contractors and subcontractors may find helpful the "Guide to Retention Requirements" published annually in the FEDERAL REGISTER and codified in 1 CFR, Appendix A. This Is a guide in digest form to the provisions of Federal laws and regulations relating to the keeping of records by the public. It tells the user what records must be kept, who must keep them, and how long they must be kept. The guide does not have the effect of law, but is published to point out legal requirements that appear to be in effect as of January 1 of the calendar year.

§ 1-20.203 Disposition of records after retention period.

At the conclusion of the applicable time period for which any records must be retained, destruction or other disposition of the records is at the discretion of the contractor or subcontractor, and requires no authorization from the contracting agency. However, nothing in this Part 1-20 shall be construed as:

or

(a) Authorizing the destruction other disposition of any records where, for any reason, the Comptroller General of the United States, the contracting officer, or their representative, requests the contractor or subcontractor to retain the records for a longer period than would otherwise be required; or

(b) Requiring the contractor or subcontractor to destroy or make other disposition of any records he may desire to retain for his own purposes (for example, in connection with submitting to the Government claims or requests for adjustments).

§ 1-20.204 Costs of certain retentions under cost-reimbursement contracts. With respect to cost-reimbursement type contracts, reimbursement for costs Incurred by the contractor in retaining for his own purposes any records beyond an applicable time period designated in this Part 1-20 shall be governed by the appropriate cost principles set forth in Part 1-15.

$1-20.205 Examination of records in special situations.

Where the contractor or subcontractor retains any records identified in § 120.301 beyond the retention periods applicable thereto (a) because of other records retention requirements, or (b) at the request of the Comptroller General of the United States, the contracting officer, or their representatives, or (c) for his own purposes, such records shall be available for examination by the Comptroller General of the United States or the contracting officer, respectively, or their representatives, for the extended period of retention up to the expiration of 3 years after final payment under the contract or subcontract.

§ 1-20.206 Identification of records.

Records are identified in this Part 1-20 primarily in terms of their purpose or use, and not by specific name or form number. The descriptive identifications may or may not conform to contractor or subcontractor usage or individual filing practices. Nevertheless, these identifications apply to all records kept by the contractor or subcontractor which come within the description.

§ 1-20.207 Interfiled records.

If two or more of the record categories described in § 1-20.201 are interfiled and screening for disposal is not practical, the contractor or subcontractor shall retain the entire record series for the longest period prescribed for any category of records filed within the series.

§ 1-20.208 Calculation of records reten. tion periods.

(a) The prescribed retention periods for the records described in § 1-20.201 shall be calculated from the end of the contractor's or subcontractor's fiscal year in which an entry is made charging or allocating a cost to a Government contract or a subcontract thereunder. Where there is a series of such entries involving a specific record, the retention period shall be calculated from the end of the contractor's or subcontractor's fiscal year in which the final entry is made. To apply these retention periods, the contractor or subcontractor should cut off the records in annual blocks and retain them for block disposal in accordance with the prescribed retention periods under the related contract or subcontract.

(b) An exception to the foregoing starting time for the retention periods shall be made where records generated during a prior contract are relied upon by a contractor for cost and pricing data In negotiation of a succeeding contract; here the 2- and 4-year periods shall run from the date of the succeeding contract. § 1-20.209 Duplicate copies of records

and intermediate data.

(a) Duplicate copies of records or supporting documents need not be retained. However, if a duplicate copy contains significant information not shown on the record copy maintained by the contractor or subcontractor, it shall be retained as if it were the record copy.

(b) Intermediate data records consisting of punched cards, electronic tape, or comparable media need not be retained if printouts or listings are prepared and maintained showing the details of the transactions charged or allocated to individual Government contracts and identifying the supporting source documents.

Subpart 1-20.3-Retention
Requirements

§ 1-20.301 Retention periods.

The records listed in this Subpart 120.3 shall be retained by contractors and subcontractors for the periods designated, provided retention is required under § 1-20.201. The designated retention periods shall be calculated as shown in §§ 1-20.207 and 1-20.208.

§ 1-20.301-1 Financial and cost accounting records.

(a) Accounts receivable invoices, adjustments to the accounts, invoice regIsters, carrier freight bills, shipping orders, or other documents which detail the material or services billed on the related invoices: Retain 4 years.

(b) Material, work order, or service order files, consisting of purchase requisitions or purchase orders for material or services, or orders for transfer of material or supplies: Retain 4 years.

(c) Cash advance recapitulations, prepared as posting entries to accounts receivable ledgers for amounts of expense vouchers prepared for employees' travel and related expenses: Retain 4 years.

(d) Paid, canceled, and voided checks, other than those issued for the payment of salary and wages: Retain 4 years.

(e) Accounts payable records to support disbursements of funds for materials, equipment, supplies, and services, containing originals or copies of the following and related documents; remittance advices and statements, vendors' invoices, invoice audits and distribution slips, receiving and inspection reports or comparabie certifications of receipt and inspection of material or services, and debit and credit memoranda: Retain 4 years.

(f) Labor cost distribution cards or equivalent documents: Retain 2 years.

(g) Petty cash records showing description of expenditures, to whom paid, name of person authorizing payment, and date, including copies of vouchers and other supporting documents: Retain 2 years.

(a) Stores requisitions for materials, supplies, equipment, and services: Retain 2 years.

(b) Work orders for maintenance and other services: Retain 4 years.

(c) Equipment records, consisting of equipment utilization and status reports and equipment repair orders: Retain 4 years.

(d) Expendable property records, reflecting accountability for the receipt and use of material in the performance of a contract: Retain 4 years.

(e) Receiving and inspection report records, consisting of reports reflecting receipt and inspection of supplies, equipment, and materials: Retain 4 years.

(f) Purchase order files for supplies, equipment, materials, or services, to be used in the performance of a contract or subcontract: Retain 4 years.

(g) Production records of quality control, reliability, and inspection: Retain 4 years.

§ 1-26.402 Agreement to recognize a successor in interest.

(a) The transfer of a Government contract is prohibited by law (41 U.S.C. 15). However, the Government may, if it is in its best interest, recognize a third party as the successor in interest to a Government contract when the third party's interest in the contract arises out of the transfer either of all the assets of the contractor or of all of that part of the contractor's assets involved in the performance of the contract (see § 1-2.4042(h) regarding the effect of novation agreements after bid opening but before award). Examples include, but are not limited to:

(1) Sale of such assets, with appropriate provision for assumption of liabilities:

(2) Transfer of such assets pursuant to a merger or a consolidation of a corporation; and

(3) Incorporation of a proprietorship or partnership, or formation of a partnership.

The portion of the Act which prohibits the transfer of contracts is intended for the Government's protection, thus giving an agency discretion in acting to ensure that protection. The Government is generally not so much interested in what assets are transferred or in what manner the transfer of property or interest therein is accomplished. When requested to concur in a novation agreement, the Government's main concerns are (1) whether the proposed transferee is, in fact, a successor in interest to the Government contract, and (2) whether it is consistent with the Government's interest to concur in the novation agreement. Accordingly, the Government has the discretion to either (i) treat the contract as annulled by the assignment or (ii) recognize the assignment if it is in the Government's best interests (see Comptroller General decision B-174314, August 28, 1973).

(b) A novation agreement is the legal instrument executed by the contractor (transferor), the successor in interest (transferee), and the Government by which, among other things, the transferor guarantees performance of the contract, the transferee assumes all obligations under the contract, and the Government recognizes the transfer of assets. The Government's recognition of a third party as the successor in interest to a Government contract is signified by the contracting officer's execution of the novation agreement which sets forth the obligations of the parties as the result of transferring the assets related to the Government contract. The transferee's assumption of the obligation to perform a given contract is further set forth in a supplemental agreement to that con

tract.

(c) When a contractor requests that the Government recognize a successor in interest, the contractor shall be required to provide three signed copies of the proposed novation agreement to the agency and one copy of any of the following that the contracting officer deems appropriate:

(1) A properly authenticated copy of the instrument by which the transfer of assets was effected; for example, bill of