A Beginner’s Guide to Federal Acquisition Regulation (FAR) and How it Effects Government Contracting

A Beginner’s Guide to Federal Acquisition Regulation (FAR) and How it Effects Government Contracting

A Beginner’s Guide to Federal Acquisition Regulation (FAR) and How it Effects Government Contracting

The Federal Acquisition Regulation (FAR) covers all aspects of contracting with the Federal Government. In this blog, we’ll delve into what FAR is, its importance in government contracting, and why it matters to federal contractors and businesses aiming to work with the federal government.

What is FAR?

The full form of FAR is the Federal Acquisition Regulation. As evident, this means a set of rules and regulations that govern the federal government’s acquisition process. As a federal contractor, you will be required to comply with these regulations to provide goods or services to federal agencies. Select federal agencies provide agency-specific guidelines/requirements and these are published in agency supplements to the FAR such as the Defense Federal Acquisition Regulations or DFARS.

How is FAR relevant to Government Contracting?

The US government is funded by taxpayer money, and Congress sets the conditions for the use and appropriation of those funds. Congress sets the statutes, regulations, and policies concerning the use of the funds and the FAR is the set of guidelines and regulatory framework for federal agencies to follow for the purchase of goods and services to ensure a fair and competitive process for acquiring those goods and services.

FAR is specific to the United States government and its agencies. Every federal contractor – big or small – needs to be compliant with FAR regulations if they intend to work on government contracts. Why? Because FAR promotes competition among vendors, encourages ethical conduct in government contracting.

Here are some more reasons as to why government contractors need to be compliant with FAR:

  1. Contracting Procedures: FAR provides standardized procedures for the acquisition of goods and services by federal agencies. Government contracting businesses must follow these procedures when competing for and executing contracts with the government.
  2. Contract Administration: FAR governs the administration of government contracts, including contract formation, performance, and termination.
  3. Risk Mitigation: FAR includes provisions aimed at mitigating risks associated with government contracting, such as fraud, waste, and abuse.
  4. Ethical Standards: FAR includes ethics and integrity requirements that contractors must adhere to when doing business with the government.

Government contracting businesses must ensure compliance with FAR regulations throughout the contract lifecycle to maintain high ethical standards and avoid penalties and legal disputes.

Who makes FAR?

The US Congress working through the General Services Administration (GSA), publishes the FAR and maintains updates to the FAR as directed by Congress.  Federal agencies can include agency-specific requirements, and these are published in agency supplements to the FAR.

Insight!
To help government contractors stay compliant with such regulations, there are end-to-end government contracting solutions that help ensure compliance but also help streamline contracts, and improve visibility across the value chain. CIS-GovCon, together with SAP S/4HANA, is one such government contracting solution that offers a ready-to-deploy platform while ensuring DCAA, DCMA, FAR, and CAS compliance, simplifying adherence in an ever-changing regulatory landscape.
Structure of FAR

The FAR is divided into 8 subchapters (A-H) and consists of 53 total parts. The parts are then divided into subparts, sections, and subsections.

Description Subchapter Part
General Information Subchapter A Part 1 – 4
Acquisition Planning Subchapter B Part 5 – 12
Contract Methods and Contract Types Subchapter C Part 13 – 18
Socioeconomic Programs Subchapter D Part 19 – 26
General Contract Requirements Subchapter E Part 27 – 33
Special Categories of Contracting Subchapter F Part 34 – 41
Contract Management Subchapter G Part 42 – 51
Clauses and Forms Subchapter H Part 52 – 53

The first 18 Parts deal with general government acquisition matters and planning. The remaining 35 Parts comprehensively cover topics that include acquisition methods, Socioeconomic Programs, Major Systems Acquisition, Patents, Data, and Copyrights, and many others.

What is DFARS?

The Defense Federal Acquisition Regulation Supplement (DFARS) is the Department of Defense (DOD) agency supplement to the FAR and it includes DOD-specific requirements applicable to DOD acquisitions and contracts. DFARS contains additional requirements, clauses, and procedures that contractors must adhere to when doing business with the DoD. DFARS addresses unique procurement requirements and regulations specific to defense contracts, such as cost accounting standards, cybersecurity, counterfeit electronic parts detection and avoidance, and other DOD-specific requirements.

DFARS compliance can be more complex and rigorous compared to FAR compliance due to the specialized nature of defense contracts. Contractors working with the DoD must navigate a broader range of regulations and requirements, including those related to national security, classified information, and defense-specific technology.

It is very important for those involved in the Government Contracting industry to be aware of these regulations and be compliant with them. Noncompliance may lead to penalties and even cancellation of contracts.

How can Cognitus Help?

Cognitus’ Industry Solution for Government Contractors (CIS-GovCon) addresses the unique compliance challenges of Government contractors, by empowering businesses with the power of data, analytics, and end-to-end compliance. Trusted by the world’s leading Government contractors, CIS-Govcon is a comprehensive and robust solution that integrates rapidly with SAP S/4HANA and helps maintain compliance with DCAA/DCMA, FAR, DFARS, and CAS standards. The cutting-edge solution combined with our years of expertise and proven implementation methodology, makes us the preferred SAP partner for helping businesses gain a competitive.

CIS-GovCon for A&D Cognitus

Conclusion

Government contracting businesses can and must implement controls and oversight mechanisms to ensure FAR and DFARS compliance. Government contracting software like CIS-GovCon is being deployed by leading businesses to ensure end-to-end compliance with government mandates and clauses to ensure a smooth contract lifecycle. Remember, as a federal contractor, it’s always best to know the compliance requirements before you enter any contract with the government to avoid penalties or contract cancellation.

Credits: The inputs for this article are taken from acquisition.gov

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