FAR Parts and Why They Matter to Government Contractors

If you have Government contracts, you probably heard of the Federal Acquisition Regulation, or FAR, but how much do you know of its parts? Why is it important to know? How could it possibly impact me?

What is the FAR’s Purpose?

Well, FAR, included in Title 48 of the Code of Federal Regulations, is the uniform set of acquisition regulations used by all executive agencies. Its comprehensive guidelines provide consistent procurement policies/procedures in the acquiring the government’s needed goods and services. The FAR is the primary document and DoD and other agencies have supplements to the FAR, that add additional regulations for that agency, but does not change it. The FAR is governed jointly by the Department of Defense, the General Services Administration, and the NASA. The ultimate goal for the Government is obtaining needed supplies and services at a “fair and reasonable” price. To do that contracting officers use the FAR or an allowed exemption for all those contracts.

Why is the FAR Important to Know?

So, if contracts include the FAR requirements, then knowing and complying with FAR would be important. Compliance with the FAR is important for contractors considering doing business or continuing its existing contracts. By adhering to the regulations found in the FAR, the chances to win contracts, avoid legal encounters, and preserve long-term associations with federal agencies increase. In other words, understanding the FAR will help you maintain compliance with the regulations in proposals, performance of contracts, and closing contracts. Underlying this is knowing the FAR.

The FAR is written for all those involved in procurement from the requestor of the goods and services to the contracting officer and their team to contractors fulfilling the needs of the requestor and operating at the direction of the contracting officer. But where do you begin? Perhaps, knowing the FAR organization is a good place to start.

Overall, the FAR is organized in 8 Subparts (A-H) that are subject matter areas in 53 parts. Each part has its importance. Parts 1 through 51 of the FAR are instructions for the contracting officers on contract requirements and how to implement them. Part 52 is a listing of clauses that a contracting officer could include in a contract based on the direction in Parts 1-51. Part 53 is a collection of forms used during the contracting award and administration process. Some of the more important parts are mentioned below:

• A: General - Parts 1- 4

  • Part 2 are words and terms definitions.
  • Part 3 are improper business practices and conflicts of interest.

• B: Competition and Acquisition Planning - Parts 5 – 12

  • Part 9 are contractor qualifications and associated responsibilities.
  • Part 12 prescribes the acquisition of commercial products, including commercial components, and commercial services.

• C: Contracting Methods and Types - Parts 13 – 18

  • Part 15.204-2, 3, 4, 5 delineate the Uniform Contract Format and contract clauses, documents, exhibits, attachments and representations and instructions.
  • Part 15.404-1(b)(2) shows the seven price techniques for fair & reasonable price determination.
  • Part 16 are the contract types and details of contractor’s contract risk.

• D: Socioeconomic Programs - Parts 19 – 26

  • Part 19 relates to small business programs and its implementation.
  • Part 22 prescribes the application of labor laws requirements to Government Contracts.

• E: Contracting Requirements (Cost Principles) - Parts 27 – 33

  • Part 30 describes policies and procedures for applying the Cost Accounting Standards Board rules and regulations to negotiated contracts/subcontracts.
  • Part 31 are contract cost principles.
  • Part 32 relates to contract financing.

• F: Special Categories of Contracts - Parts 34 – 41

  • Part 34 relates to major system acquisitions.
  • Part 37 prescribes policy and procedures that are specific to the acquisition and management of services by contract.

• G: Contract Management - Parts 42 – 51

  • Part 42 relates to contract management and its requirements.
  • Part 44 prescribes policies and procedures for consent to subcontracts or advance notification of subcontracts, and for review, evaluation, and approval of contractor’s purchasing systems (if required).
  • Part 45 prescribes policies and procedures for providing, managing, reporting, and disposing Government property to contractors.

• H: Clauses and Forms - Parts 52 – 53

  • Part 52 are contract clauses and solicitation provisions.
  • Part 53 provides the forms used during award and performance of a contract.

As you can see, the FAR is rather comprehensive. It impacts your business and its operations through contract clauses and its requirements placed on you. It is the contactor’s responsibility to comply with the FAR Part 52 contract clauses and requirements and the other referenced FAR Parts, for example FAR Part 31 cost principles when applicable. You do not have to be alone in knowing what you need and where to start. The Redstone Government consulting team can provide support and training to you and your team to not only make you more familiar with FAR, but to know it and its importance.

Redstone Government Consulting, Inc, with its experienced accountants and lawyers, can assist contractors through the facts and evidence collection, preparing a rebuttal to an audit finding, as well as Government contracting discussions. Make us part of your team!