US Federal Acquisition Regulation


US Federal Acquisition Regulation










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US Federal Acquisition Regulation

by Jerri L. Ledford

Copyright 2017, Faulkner Information Services. All
Rights Reserved.

Docid: 00011439

Publication Date: 1705

Report Type: TUTORIAL

Preview

The US Federal Acquisition Regulation (FAR) is an extensive set of
regularly changing guidelines for federal procurement activities. These
guidelines are quite complex and apply to any organization that wishes to
sell products or services to the US government. In the current budgetary
and political climate, fewer contracts are being awarded and the guidelines often change based on market changes,
which adds to the
complexity. This report illustrates the current state of these guidelines
and makes recommendations for staying current and using the guidelines to
secure government contracts.

Report Contents:

Executive Summary

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In 1947, the Armed Services Procurement Regulation was established as a
set of guidelines for federal procurement activities.

The name of that set of regulations was later changed to the Federal
Acquisitions Regulation (FAR). It is a set of 1000 or more guidelines that
include 53 parts and two appendices, each dealing with a separate aspect
of the acquisition process. Each part is divided into subparts, sections,
and subsections.

The purpose of the FAR is to specify exactly how the government is to
acquire products and services and how to judge those products and services
in terms of quality and price. Additionally, the FAR also provides
guidelines to ensure the government does not reimburse for prohibited
practices such as the costs of lobbying, and it helps to prevent
kickbacks, undue influence, corruption, and other misconduct.
Socioeconomic requirements, including that certain items should be
purchased from US firms only and requirements for large organizations to
use smaller businesses – specifically small disadvantaged businesses, such
as woman- or minority-owned businesses – as subcontractors are also
included in FAR coverage. FAR is designed to be an all-encompassing
regulation that grows and changes as government agencies grow and change.

When a government agency issues a contract or a proposal, it will specify
a list of FAR provisions that apply to that contract. That list can
include numerous regulations and the bidder must either comply those with
those provisions or be able to comply with the provisions in order to be
awarded the contract. In some circumstances, the bidder can claim an
exemption from them due to special circumstances. An example of such an
exemption is the one for small businesses that is allowed by Part 30. Each
agency also has a set of provisions in addition to the guidelines
established by FAR. These additional provisions and requirements add
further complexity to the procurement process, both for government
agencies and for the vendors bidding to provide the need products or
services.

In many cases, once a contract is awarded, it can be challenged and set
aside if a challenger can prove that either the contracting agency and/or
the successful bidder did not comply with the contract solicitation
requirements. The challenger can then either be awarded the contract in
lieu of the original bidder’s award of the contract or can be given the
opportunity to re-bid on the contract. All of these factors combine to
make the FAR a complex set of guidelines that many vendors don’t even
attempt to overcome to do business with government agencies.

Description

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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 (previously referred to as small
purchases), large dollar value buys, labor laws, contract administration,
applicable clauses and forms. The FAR subchapter and part divisions look
like this:

  • Subchapter A – General
    • Part 1 – Federal Acquisition Regulations System
    • Part 2 – Definitions of Words and Terms
    • Part 3 – Improper Business Practices and Personal Conflicts of
      Interest
    • Part 4 – Administrative Matters
  • Subchapter B – Competition and Acquisition Planning
    • Part 5 – Publicizing Contract Actions
    • Part 6 – Competition Requirements
    • Part 7 – Acquisition Planning
    • Part 8 – Required Sources of Supplies and Services
    • Part 9 – Contractor Qualifications
    • Part 10 – Market Research
    • Part 11 – Describing Agency Needs
    • Part 12 – Acquisition of Commercial Items
  • Subchapter C – Contracting Methods and Contract Types
    • Part 13 – Simplified Acquisition Procedures
    • Part 14 – Sealed Bidding
    • Part 15 – Contracting by Negotiation
    • Part 16 – Types of Contracts
    • Part 17 – Special Contracting Methods
    • Part 18 – Emergency Acquisitions
  • Subchapter D – Socioeconomic Programs
    • Part 19 – Small Business Programs
    • Part 20 – [RESERVED, not currently in use]
    • Part 21 – [RESERVED, not currently in use]
    • Part 22 – Application of Labor Laws to Government Acquisitions
    • Part 23 – Environment, Energy and Water Efficiency, Renewable Energy
      Technologies, Occupational Safety, and Drug-Free Workplace
    • Part 24 – Protection of Privacy and Freedom of Information
    • Part 25 – Foreign Acquisition
    • Part 26 – Other Socioeconomic Programs
  • Subchapter E – General Contracting Requirements
    • Part 27 – Patents, Data, and Copyrights
    • Part 28 – Bonds and Insurance
    • Part 29 – Taxes
    • Part 30 – Cost Accounting Standards Administration
    • Part 31 – Contract Cost Principles and Procedures
    • Part 32 – Contract Financing
    • Part 33 – Protests, Disputes, and Appeals
  • Subchapter F – Special Categories of Contracting
    • Part 34 – Major System Acquisition
    • Part 35 – Research and Development Contracting
    • Part 36 – Construction and Architect-Engineer Contracts
    • Part 37 – Service Contracting
    • Part 38 – Federal Supply Schedule Contracting
    • Part 39 – Acquisition of Information Technology
    • Part 40 – [RESERVED, not currently in use]
    • Part 41 – Acquisition of Utility Services
  • Subchapter G – Contract Management
    • Part 42 – Contract Administration and Audit Services
    • Part 43 – Contract Modifications
    • Part 44 – Subcontracting Policies and Procedures
    • Part 45 – Government Property
    • Part 46 – Quality Assurance
    • Part 47 – Transportation
    • Part 48 – Value Engineering
    • Part 49 – Termination of Contracts
    • Part 50 – Extraordinary Contractual Actions
    • Part 51 – Use of Government Sources by Contractors
  • Subchapter H – Clauses and Forms
    • Part 52 – Solicitation Provisions and Contract Clauses
    • Part 53 – Forms

Appendix 1 – Cost Accounting Preambles and Regulations

  • Administration
  • Procurement Practices and Accounting Standards
  • Cost Accounting Standards
  • Cost Accounting Standards for Educational Institutions

Appendix 2 – Cost Accounting Preambles and Regulations Continued

  • Preambles to the Cost Accounting Standards, Related Rules and
    Regulations, and the FAR System
  • Preambles to the Related Rules and Regulations Published by the Cost
    Accounting Standards Board
  • Preambles Published Under the FAR System

The parts of FAR that are relevant for small businesses include Part 19,
Small Business Programs, and Part 52, which contains the standard terms
and conditions contained in a government contract.

The original purpose of FAR was to consolidate the numerous individual
agency regulations into one comprehensive set of standards which would
apply government-wide. Individual agencies are discouraged from issuing
supplemental regulations, however, nearly every major cabinet-level
department as well as many agencies at lower levels, have issued such
regulations. These additional regulations often place further restrictions
or requirements on contractors, which makes it harder for those contracts
to do business with these agencies.

One of the best-known examples of an agency supplement is the Defense
Federal Acquisition Regulation Supplement (or DFARS),
which is used by the Department of Defense. This agency supplement sets
out requirements that are specific to the DoD, and must be met in addition
to the requirements set forth in FAR. Although the FAR is the primary
acquisition regulation for the federal government, each government agency
may issue an agency acquisition supplement to the FAR.

These supplements are not stand-alone documents, but must be read in
conjunction with the FAR. Therefore, when preparing a proposal or quote,
contractors should look at the relevant supplement, in addition to the
FAR, to make sure added requirements don’t apply. Supplements may add
another 1000 pages to the total length of requirements, however only a
relatively small portion is used in any single contract.

Current View

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When a government agency issues a contract or a proposal it will
generally specify a long list of FAR provisions that apply to that
contract. The FAR provisions typically cover hundreds of pages of
information, and specify certain conditions with which the contractor must
comply. Fortunately, of those hundreds of pages of information, only a few
pages will apply to the contractor. The key to working with FAR and
supplements is to stay current and understand the exact requirements that
must be met. In order to gain that understanding, however, the bidder must
request a list of the requirements that should be met in the bidding
process.

To further increase the difficulties associated with FAR and agency
supplements to far, regulations and guidelines change frequently. For
example, newly revised amendments to FAR subpart 52 (section (4.19), new
clause (52.204-21) went into effect on July 15, 2016, that requires
all contractors to improve the security of information systems that
process, store, or transmit federal contract information. These new rules
apply to all contractors except suppliers of commercial-off-the-shelf
(COTS) products, and suppliers are warned that more widely application
security changes are currently being considered. In the near future, it’s
expected that these additional requirements will apply to all unclassified
information, as well. Additional amendments that apply to the Equal
Employment Opportunities Act were, also implemented in April 2015.

A new president means further changes are likely to happen over the next
36 months. One piece of legislation that will have far-reaching impact on
existing FAR regulations is the Buy American, Hire American Executive
Order (EO 13788) signed by President Trump in April 2017. Though still
unclear the impact the order will have on FAR regulations, agencies are
scrambling to review supply chains and sources to ensure they are prepared
for whatever changes the legislation may bring about.

As is evident, proposed changes can affect both FAR and the supplements
that many agencies opt to include as requirements in the bidding process.
For example, current proposed legislation would change the lowest priced
technically acceptable (LPTA) criteria that is used in the Defense Federal
Acquisition Regulation Supplement. Furthermore, those changes could also
affect FAR on a larger scale, as the need to improve technological
advancements as a means of remaining globally competitive grows. FAR
25 is another set of the FAR guidelines that is updated frequently,
usually on a two-year schedule, and includes changes to the Trade
Agreement thresholds. This constantly changing nature of government
procurement further contributes to the difficulties that many contractors
face when bidding on government procurement projects.

Outlook

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Both FAR requirements and the supplemental requirements for government
acquisitions and procurement change constantly. Each year, new changes and
updates are added to FAR and the supplements that agencies require. To
keep up with these changes, many contractors subscribe to regular FAR
updates. On the agency level, changes should be requested at the time the
bidding process begins.

It’s not likely that the pace of these changes will slow in the foreseeable
future due to the rate of technological change and the technological
requirements of the US Government. There have recently been calls among
politicians for changes that will likely reduce the number of outsourcing
contracts awarded in an effort to reduce government spending. These
changes could also make it more difficult for some organizations to be
awarded available contracts. This is just an example of how market and
economic climate can affect FAR requirements. Furthermore, the constantly
changing nature of legislation in general lends to the dynamic nature of
FAR requirements.

Recommendations

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Meeting the requirements of FAR can be overwhelming to some
organizations. The sheer number of pages of information that a contractor
must wade through to learn the requirements for any given project is
enough to keep many vendors from even attempting to participate in the
federal acquisition process. To overcome these difficulties, contractors
should first recognize that FAR is a set of guidelines, not a set of
requirements. The contractor must be able to show proof that it can adhere
to the guidelines set forth in these requirements. Demonstrating the
ability to meet these requirements is only one step in the process, and,
in many cases, requirements can be overlooked if special circumstances are
met.

Another issue that many organizations face is the rate at which FAR and
agency supplements to FAR change. To overcome this challenge, vendors
should subscribe to the FAR legislation updates. Each time an issue within
the program is updated, the contractor is then sent notification of the
change in the form of loose leaf additions to the existing FAR policy. It
is essential that contractors keep up with these changes or face penalties
and possibly the loss of awarded contracts if the requirements are not
met, even if they are requirements set forth in the most recent update or
change to FAR or the supplements that agencies issue.

One last tactic that contracts can use to navigate the FAR requirements
or the requirements that are specific to each agency is to participate in
group training that outlines the requirements and illustrates how those
requirements should be met. Many training courses are available and most
are conducted by an instructor that has successfully navigated the FAR
process in past procurement activities.

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About the Author

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Jerri L. Ledford, a regular contributor to Faulkner
Information Services, is an independent consultant. Ms. Ledford has
covered the high tech industry for the past fifteen years and written for
publications including Intelligent Enterprise, ITToolbox.com, Network
World, Outsourcing Journal, and Technology Decisions
Magazine.

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