The Rulebook and Bible: the FAR

April 13, 2006

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No discussion of government procedures and rules is complete without talking about the basic rulebook for government contracts: the Federal Acquisition Regulation, commonly known as "the FAR."

The FAR, which had its beginnings in the Armed Services Procurement Regulation established in 1947, is considered the Bible for federal government contracting. The FAR contains all the rules governing the contracting process as well as all the forms and clauses used in contracts.

The FAR has recently gone through a significant rewrite to reflect and implement all of the changes made by all the recent laws. In order to do business with the federal government, you definitely need to have a basic knowledge of what is in the FAR and how to use it.

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The FAR is designed to be a guide, not a limiting rulebook. Under recent changes in the law, contracting officers can use "good business practices" that make sense in making decisions and in negotiating terms instead of having to consult a rulebook on each decision.

The FAR is divided into 53 parts, each part dealing with a separate aspect of the acquisition process. The first six parts deal with general government acquisition matters and the next six parts deal with aspects of acquisition planning. The rest of the FAR deals with other topics, such as simplified acquisition threshold (formerly known as small purchases), large dollar value buys, labor laws, contract administration, applicable clauses and forms.

Relevant parts for small businesses include Part 19, Small Business Programs, and Part 52, which contains the standard terms and conditions contained in a government contract.

Although the FAR is the primary acquisition regulation for the federal government, each government agency may issue an agency acquisition supplement to the FAR. We therefore have the Defense Federal Acquisition Regulation Supplement (DFARS), the General Services Acquisition Regulation Supplement (GSARS), and the National Aeronautics Space Administration FAR Supplement (NASFARS), just to name a few. Many of these are on the Internet at the agency's web site.

These supplements are not stand-alone documents, but must be read in conjunction with the FAR. Therefore, when preparing a proposal or quote, remember to look at the relevant supplement, in addition to the FAR, to make sure added requirements don't apply. The FAR has more than 1000 pages and a supplement may be another 1000 pages, but only a relatively small portion is used in any single contract. That is why it's important, when dealing with a government office, to ask which regulation governs their acquisition procedures. Make sure that you read any changes to the rule before you quote. Don't assume, ask!

Warning

Congress gave the Federal Aviation Agency (FAA) the authority to develop its own acquisition regulations; therefore it is not bound by the FAR. Although the FAA has chosen to adopt or adapt many parts of the FAR, don't assume that its provisions are all just like those in the FAR. Some quasi-government agencies, like the Tennessee Valley Authority or United States Postal Service, are not bound by the FAR, but many of their acquisition regulations are adaptations of FAR provisions.

You can buy a copy of the FAR in hard copy from the Government Printing Office (GPO), read it on the Internet or buy it from a third party like CCH, Tax and Accounting.

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If you order the FAR from the Government Printing Office, make sure that the price includes all updates, as they occur, so you will always have current information when you prepare a proposal. Updates are important because of the potential impact on the way you will bid. It could change the cost and therefore your quote!

When you view the FAR on the Internet, make sure that you check the update date for the same reason. The softbound type is current until the next update.

Just remember that the government is ready to do business, on a competitive basis, with competent, qualified companies that can supply the products or services it requires at a reasonable price. You, the new contractor, must know what their game plan is. Once you have some understanding of the federal buying process, you can enter this market with greater confidence and be successful and profitable.

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The Department of Defense is transforming a significant portion of the DFARS to the DFARS Procedures, Guidance and Information (PGI). The PGI is a companion resource to the DFARS. DFARS PGI is a new, web-based tool so the entire acquisition community can simply and rapidly access non-regulatory Department of Defense (DoD) procedures, and guidance and information relevant to FAR and DFARS topics.

The DFARS still remains the source for regulation and implementation of laws, as well as DoD-wide contracting policies, authorities and delegations. In other words, DFARS will answer the questions, "What is the policy?" and "What are the rules?" DFARS PGI will connect the acquisition community to the available background, procedures and guidance, answering the questions, "How can I execute the policy?" and "Why does this policy exist?"

It is believed DFARS PGI will not only provide a rapid method of disseminating non-regulatory material to contracting officers and the entire acquisition community, it will also serve as a real-time training tool by making relevant information available on your topic of interest. DFARS PGI is new and will be evolving in the months ahead. It'll be in simpler language, in an easy-to-follow format, and with new tools for searching and retrieving current and past information on FAR and DFARS requirements.