Redstone Government Consulting Blog | Federal Acquisition Regulation (FAR)

The Federal Acquisition Regulatory (FAR) Council, consisting of the Office of Federal Procurement Policy (OFPP), DoD, GSA, and NASA, has finalized changes to acquisition-related thresholds in the FAR to account for inflation. Published in the Federal Register on August 27, 2025, and effective October 1, 2025, this rule (FAR Case 2024-001, FAC 2025-06) fulfills the statutory requirement under 41 U.S.C. 1908 to review and adjust thresholds every five years using the Consumer Price Index (CPI) for all urban consumers.

Topics: Contracts & Subcontracts Administration, DFARS Business Systems, Government Regulations, Federal Acquisition Regulation (FAR)

The Department of Defense (DoD) has finalized a rule that will significantly impact contractors providing management, scientific, and technical consulting services. Published in the Federal Register on August 25, 2025, and effective October 24, 2025, the rule (DFARS Case 2024-D007) implements section 812 of the FY 2024 National Defense Authorization Act (NDAA). Under the new requirement, contracting officers cannot award contracts assigned to NAICS codes beginning with 5416 if the offeror, or its subsidiaries or affiliates, holds a contract for consulting services with certain covered foreign entities, unless an approved conflict-of-interest mitigation plan is in place.

Topics: Contracts & Subcontracts Administration, DFARS Business Systems, Government Regulations, Federal Acquisition Regulation (FAR)

The Department of Defense (DoD) has finalized changes to acquisition-related thresholds in the Defense Federal Acquisition Regulation Supplement (DFARS) to reflect inflation. Published in the Federal Register on August 25, 2025, and effective October 1, 2025, this rule (DFARS Case 2024-D002) fulfills the statutory requirement under 41 U.S.C. 1908 to review and adjust thresholds every five years using the Consumer Price Index (CPI) for all urban consumers.

Topics: Contracts & Subcontracts Administration, DFARS Business Systems, Government Regulations, Federal Acquisition Regulation (FAR)

Recently, we conducted research related to some incurred cost audit findings for a client and came across an Armed Services Board of Contract Appeals (ASBCA) case that highlighted key information every contractor, especially small businesses, should know. The Technology Systems, Inc. ASBCA No. 59577 reads like a soap opera. It starts with some ups and downs. There were audit findings in Fiscal Year (FY) 2001, which the contractor and the Administrative Contracting Officer (ACO) negotiated. For FY 2002 to 2006, the contractor’s indirect rates were accepted as proposed. This was followed by relationship issues during the FY 2007 audit between the Defense Contract Audit Agency (DCAA) auditor and the contractor (No surprise to most of us). Then, a period of separation occurred, from FY 2009 to 2013, when DCAA decided that proposal pricing supporting new contract awards was the priority. During this time, the contractor’s FY 2007 incurred cost audit was shelved, along with significant potential questioned costs. Then, in an act of desperation, the ACO issued a Contracting Officer’s Final Decision (COFD) based on a DCAA memorandum for the FY 2007, which questioned costs to avoid the statute of limitations running out. Ok, enough of the soap opera, let’s go through the things you need to know.

Topics: Compliant Accounting Infrastructure, Proposal Cost Volume Development & Pricing, Litigation Consulting Support, Incurred Cost Proposal Submission (ICP/ICE), DFARS Business Systems, DCAA Audit Support, Government Regulations, Federal Acquisition Regulation (FAR)

This is a myth. Let’s review the commercial definition:

FAR 2.101 Commercial Product definition Paragraph 1 states:

(1)  A product, other than real property, that is of a type customarily used by the general public or by nongovernmental entities for purposes other than governmental purposes, and–

(i) Has been sold, leased, or licensed to the general public; or

(ii) Has been offered for sale, lease, or license to the general public;

Topics: Contracts & Subcontracts Administration, DFARS Business Systems, Government Regulations, Federal Acquisition Regulation (FAR), Commercial Item Determination

A little background – On April 15, 2025, Executive Order 14275, Restoring Common Sense to Federal Procurement, was issued. The intent of this order was to make revolutionary changes to the Federal Acquisition Regulations (FAR) to make the federal acquisition process more efficient and cost-effective. Section 2 states, “It is the policy of the United States to create the most agile, effective, and efficient procurement system possible. Removing undue barriers, such as unnecessary regulations, while simultaneously allowing for the expansion of the national and defense industrial bases is paramount. Accordingly, the FAR should contain only provisions required by statute or essential to sound procurement, and any FAR provisions that do not advance these objectives should be removed.”

Topics: Compliant Accounting Infrastructure, Proposal Cost Volume Development & Pricing, Contracts & Subcontracts Administration, DFARS Business Systems, DCAA Audit Support, Contractor Purchasing System Review (CPSR), Government Regulations, Federal Acquisition Regulation (FAR), Commercial Item Determination

The de minimis rate is an indirect rate that can be elected by Non-federal entities (State, local government, Indian Tribe, Institution of Higher Education or non-profit) that do not have a current negotiated indirect cost rate agreement (NICRA). The de minimis rate is addressed in 2 Code of Federal Regulations (CFR) 200 Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, specifically 200.414(f).

Topics: Compliant Accounting Infrastructure, DCAA Audit Support, Government Regulations, Federal Acquisition Regulation (FAR), Grants & Cooperative Agreements (2 CFR 200)

Revenue recognition is a very critical and highly scrutinized aspect of accounting for government contractors. Whether you're working on cost-plus contracts, time and materials, or firm fixed price agreements, how and when you recognize revenue can significantly impact your financial reporting and compliance with government regulations.

Topics: Compliant Accounting Infrastructure, DCAA Audit Support, Government Regulations, Cost Accounting Standards (CAS), Federal Acquisition Regulation (FAR)

The Good

Ok, finding some good is going to be a challenge. Let's start with the fact that the Defense Contract Audit Agency (DCAA) receives approximately 3,500 incurred cost proposals annually, but only audits around 500 of them. And even though DCAA is still auditing about 75% of the dollars submitted ($193B), only .3% is questioned ($760M), and only 31% of that is likely to be sustained by contracting officers. This comes from the DCAA Report to Congress for 2024.

See, we did find some good.

Topics: Compliant Accounting Infrastructure, Incurred Cost Proposal Submission (ICP/ICE), DCAA Audit Support, Government Regulations, Federal Acquisition Regulation (FAR)

If only the Government made this an easy answer. There are some representations and certifications that you need to get from your subcontractors. However, many in both industry and the Government think the requirement for “Reps and Certs” flows down in all cases.

Topics: Contracts & Subcontracts Administration, DFARS Business Systems, DCAA Audit Support, Contractor Purchasing System Review (CPSR), Government Regulations, Federal Acquisition Regulation (FAR)