27 Dec Federal Acquisition Regulations for Dummies
If you want to do business with the government, there’s one place you need to start. That’s getting familiar with federal acquisition regulations (FAR.) After all, this set of regulations outlines and governs when and how the government can purchase contracts with outside businesses. Not having a working knowledge of FAR is not only shortsighted when competing for government contracts, but it can also be dangerous to the project and your business!
History of the FAR
The Federal Acquisition Regulation (FAR) can trace its humble beginnings to the Armed Services Procurement Regulation (1947.) It was combined into the Code of Federal Regulations in 1984 to create a uniform structure across federal agencies.
In recent years, it’s gone through a large rewrite in order to reflect changes caused by new legislation.
Which Government Agencies Does FAR Apply to
Most agencies in the executive branch are required to follow FAR. While FAR doesn’t apply to the legislative or judicial branch, often these branches will abide by it as well. In addition to the main documentation, the executive branch agencies often issue supplemental regulations that apply only to that agency.
What’s Covered in the FAR?
The FAR is comprised of 53 sections that each deal with part of an acquisition. Here’s the breakdown:
- The first six parts cover general government acquisition matters
- The following six parts cover acquisition planning
- The remaining sections covers other relevant topics like thresholds, large dollar value buys, labor laws and more.
How Do Acquisitions Happen Under FAR?
There are two main ways to acquire a contract through FAR. These include sealed bidding and competitive negotiation.
Sealed bidding emphasizes equal opportunity, and the contract is awarded to the lowest priced bid. No other entrants are aware of what the other parties are bidding on the contract, and the committee must select the lowest price (with assurance the company can follow through on the project.) No other factors besides cost are considered, and the Contracting Party does not have discussions with the offeror.
In contrast, competitive negotiation allows the Contracting party to discuss with the offeror and consider other factors besides cost when selecting a bid. This can include things like managerial experience, previous project management experience, and relevant skill, to name a few.
Entrants answer a Request for Proposal with a bid containing the specified information the government party needs to make its decision. The contracting party then selects and enters into a contract.
If you’ve never obtained a government contract before, there are at least three clauses that are completely unique to FAR and federal agency contracts:
- Termination for Convenience Clause– This allows the government to terminate the contract at any time and for any reason that is in the government’s best interests.
- Changes Clause– As long as changes fall within the scope of the project, the government can make changes to the contract at any time.
- Default Clause– The government can terminate a contract if the contractor fails to deliver or make meaningful progress on the project.
Socioeconomic Obligations Under FAR
FAR also imposes important socioeconomic obligations on each of its agencies when requesting proposals. When pursuing contracts with a value of more than $10,000, the contracting party must implement equal opportunity and affirmative action to promote diversity and avoid discrimination.
Contractors working with the government have these obligations as well. If the contractor plans to subcontract out any work on contracts worth $500,000, or $1,000,000 for construction (with the opportunity to subcontract), they must submit a plan to the government. This plan outlines efforts that will be made when selecting subcontractors to ensure that the following are given an equal opportunity to compete:
- Small businesses
- Small disadvantaged businesses
- Women-owned small businesses
- Historically underutilized business zones
To compete for, and earn government contracts, you don’t have to be a legal expert. It is wise, however, to familiarize yourself with FAR – particularly where the contracting agency references it. After all, failure to have a working knowledge of FAR, the socioeconomic obligations, and the unique clauses, could cost you and your company a lot of time and money.
Working with the government can be a rewarding and lucrative arrangement for your business, but it’s important to keep in mind that working with the government is very different than working in the private sector.
You can find the most recent versions of FAR on the Acquisitions website here. Brush up on your skills and a basic understanding of FARs concepts, and you’ll be prepared to land RFPs with the best of them!