Federal Acquisition Regulation
The Federal Acquisition Regulation (FAR) is the principal set of rules in the Federal Acquisition Regulation System. This system consists of sets of regulations issued by agencies of the federal government of the United States to govern what is called the "acquisition process"; this is the process through which the government purchases ("acquires") goods and services. That process consists of three phases: (1) need recognition and acquisition planning, (2) contract formation, and (3) contract administration. The FAR System regulates the activities of government personnel in carrying out that process. It does not regulate the purchasing activities of private sector firms, except to the extent that parts of it are incorporated into government solicitations and contracts by reference.
The FAR is codified in Title 48 of the United States Code of Federal Regulations. It is issued pursuant to the Office of Federal Procurement Policy Act of 1974 (Pub. L. 93-400 and Title 41 of the United States Code), Chapter 7. Statutory authority to issue and maintain the FAR resides with the Secretary of Defense, the Administrator of General Services, and the Administrator, National Aeronautics and Space Administration, 41 U.S.C. § 421(c)(1), subject to the approval of the Administrator of Federal Procurement Policy, 41 U.S.C. § 405.
The largest single part of the FAR is Part 52, which contains standard contract clauses and "solicitation provisions." Solicitation provisions are certifications, notices, and instructions for firms that plan to compete for a specific contract. Many contract clauses incorporate parts of the FAR into government contracts by reference, by which means they impose FAR rules on contractors. If the FAR requires that a clause which addresses an important topic be included in a government contract, and if the government's acquisition personnel omit the clause without authorization, the agency boards of contract appeals and the Federal courts may interpret the contract as though the clause were, in fact, included. This is done pursuant to a legal doctrine known as the Christian Doctrine, which is based on the underlying principle that government regulations have the force and effect of law, and government personnel may not deviate from the law without proper authorization. The boards and courts charge prospective contractors with knowing what the law requires and knowing the limitations of the authority of government acquisition personnel.
The single most heavily regulated aspect of acquisition is contract pricing, which is addressed throughout the FAR, but especially in Subpart 15.4, Parts 30 and 31, and Subparts 42.7, 42.8, and 42.17. A large part of the FAR, Subchapter D, describes various socio-economic programs, such as the various small business programs, purchases from foreign sources, and laws written to protect laborers and professionals working under government contracts.
The FAR and its agency supplements are said by the federal courts to have "the force and effect of law," see Davies Precision Machining, Inc. v. U.S., 35 Fed. Cl. 651 (1995). Nearly all government agencies are required to comply with the FAR. However, some agencies are exempt (e.g., the Central Intelligence Agency, the United States Postal Service, the Tennessee Valley Authority, the Federal Aviation Administration, and the Bonneville Power Administration); in those cases, the agency promulgates its own specific procurement rules.
The purpose of the FAR is to provide "uniform policies and procedures for acquisition." Among its guiding principles is to have an acquisition system that satisfies customer's needs in terms of cost, quality, and timeliness; minimize administrative operating costs; conduct business with integrity, fairness, and openness; and fulfill other public policy objectives.
The FAR also includes socioeconomic requirements, such as for certain items to be required to be purchased from United States firms only and for large organizations to use smaller businesses as subcontractors.
When a government agency issues a contract or a proposal, it will specify a list of FAR provisions that apply to that contract, which may be numerous. In order to be awarded a contract, a bidder must either comply with the provisions, demonstrate that it will be able to comply with them at the time of award, and/or claim an exemption from them. As an example, Part 30 (which references Cost Accounting Standards) allows for small businesses to be exempt from those requirements; if the bidder can demonstrate that it meets the small business criteria, Part 30 would then not apply.
In many cases, a contract award 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, usually so that the challenger can either be awarded the contract in lieu of the original bidder's award of the contract or get another shot at a bid (or, in cases where ceasing contract performance and rebidding would not be practical, to be awarded bid and proposal costs).
The Federal Acquisition Regulation is contained within Chapter 1 of Title 48, appropriately titled "Federal Acquisition Regulation." Chapter 1 is divided into Subchapters A-H, which encompass Parts 1-53 (with Parts 54-99 being reserved). Chapter 1 appears in Volumes 1 and 2 of Title 48, with Subchapters A-G appearing in Volume 1 while Subchapter H occupies all of Volume 2.
The proper way to cite a regulation within the FAR is by part, section, and subsection, without respect to volume, chapter, or subchapter. For instance, the FAR clause on lobbying costs is FAR Part 31, Section 205, Subsection 22 (referenced as FAR 31.205-22).
In Volume 1:
- 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: 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
- Parts 20-21. Reserved
- 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
- 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 and the Safety Act
- Part 51. Use of Government Sources by Contractors
In Volume 2:
- Subchapter H: Clauses and Forms
- Part 52. Solicitation Provisions and Contract Clauses
- Part 53. Forms
- Parts 54-99. Reserved
As the original purpose of the FAR was to consolidate the numerous individual agency regulations into one comprehensive set of standards which would apply government-wide, officially individual agencies are discouraged from issuing supplemental regulations. However, nearly every major cabinet-level department (and many agencies below them) has issued such regulations, which often place further restrictions or requirements on contractors and contracting officers.
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.
The most common format for agency FAR supplements is to follow the basic FAR format. To continue the example above, the companion DFARS section on lobbying costs is DFARS Subpart 231, Section 205, Subsection 22 (referenced as DFARS 231.205-22).
Some have suggested that the complexity of complying with the FAR discourages competition, especially by small companies. See, e.g., Government Accountability Office, Managing the Supplier Base in the 21st Century (Report GAO-06-533SP) at 7.