The Federal Acquisition Regulation (FAR) is the principal set of rules regarding government procurement in the United States. The document describes the procedures executive branch agencies use for acquiring products and services. The FAR is part of the Federal Acquisition System, which seeks to obtain the best value for agencies, minimize administrative costs and time required for acquisition, and promote fair competition for the suppliers of the products and services. The FAR is issued by the FAR Council, a body composed of the secretary of defense, the GSA administrator, and the NASA administrator. This council meets quarterly or more frequently as needed, and the FAR may be updated multiple times per year. The earliest regulation of US government procurement dates from 1792. Much of the FAR used today dates to 1984. It is codified at Chapter 1 of Title 48 of the Code of Federal Regulations.
Core Objectives of the FAR
The regulation serves as a codified set of procedures that governs the entire acquisition process from planning to contract closeout. Its primary purpose is to ensure that the government receives the best value for taxpayers while maintaining a fair and competitive environment for private sector entities. The framework is built upon several foundational principles that guide agency behavior:
- Uniformity: A standardized approach ensures that contractors face consistent requirements regardless of the executive agency they serve.
- Integrity: Strict ethical standards are maintained to prevent conflicts of interest and to ensure public trust is protected throughout the bidding process.
- Competition: The system is designed to promote full and open competition to drive innovation and reduce overall costs for federal programs.
- Fairness: Every potential vendor is provided an equal opportunity to compete for awards based on objective evaluation criteria.
Structure and Applicability
The FAR is organized into various subchapters that address specific aspects of the procurement lifecycle. While the core regulation applies broadly, individual agencies often have their own unique supplements that add specific requirements to the base rules. Key areas covered within the regulatory text include the following components:
- Acquisition Planning: The phase where agencies identify needs and determine the most appropriate contract type for a specific requirement.
- Contracting Methods: The rules governing different procurement vehicles, such as simplified acquisition procedures, sealed bidding, and competitive proposals.
- Contract Management: Guidelines for overseeing performance, processing payments, and handling modifications or disputes during the life of the agreement.
Compliance and Risk Management
For any commercial entity, compliance with the FAR is a prerequisite for participating in the federal supply chain. Failure to adhere to these regulations can lead to significant legal risks, including contract termination or suspension from future bidding opportunities. Organizations should prioritize the following compliance areas to mitigate operational risk:
- Cost Accounting: Maintaining rigorous financial records that meet federal standards for transparency and auditability.
- Ethics Programs: Implementing internal policies that prevent bribery, kickbacks, and other prohibited practices defined by the regulation.
- Data Rights: Identifying and protecting proprietary information and intellectual property when entering into agreements with government entities.
- Reporting Requirements: Fulfilling mandates for disclosing subcontracting activities and performance milestones to the contracting officer.