Federal Acquisition Regulation FAR compliance(Failure to Understand the Basics Can Cost You Hundreds of Thousands in Litigation or Criminal Liability?

What are the Federal Acquisition Regulations ( FAR)?

The  Federal Acquisition Regulations ( FAR) are codified in Title 48 of the United States Code of Federal RegulationsIt 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.

Executive agencies consider the Federal Acquisition Regulation (FAR) is the “bible” for government procurement of goods and services and commercial items. Contracting Officers from federal agencies refer to this regulation for the guidance of virtually every aspect of the government procurement process.

As a contractor, you are required to understand the critical clauses that impact your performance. For example, terminations for convenience and default are common clauses that you must be familiar with FAR 19 regulates small business matters; other areas such as pricing and negotiated procurements are also covered under the Federal Acquisition Regulations. In recent cases, contracting officers are known to issue a termination for default or suspension and department referrals for failure to meet contractual obligations or follow the FAR. This is one reason why you should periodically get federal acquisition regulation legal review.

Legal Impact of the Federal Acquisition Regulations

Federal Circuit courts have made it clear that the FAR and its agency supplements have “the force and effect of law,” see Davies Precision Machining, Inc. v. U.S., 35 Fed. Cl. 651 (1995).

Not all agencies follow the FAR.  You must be aware that some government contracting agencies have their own procurement regulation. For example, the FAA and the U.S. Mint generate their own rules.

You are subject to the FAR in virtually all aspects of government procurement. As a company doing business with the federal government, you are subject to Federal Acquisition Regulations in all aspects. When you submit proposals and you enter into a negotiated bidding process, then you are subjecting yourself to the guidelines of FAR 15. Why is this important? Because should have to file a bid protest, your government contracts attorney should understand the issues that can arise.

If you are a small business, then your company is subject to FAR 19. This area covers a vast array of issues that can arise including; Contracting with 8(a) companies, setting aside projects for small businesses and more.

You can be subject to breach of contract. Many companies only worry about the contents of the FAR when an adverse action arises. By then it’s probably too late. The reality is that most FAR clauses are incorporated by reference into your existing contract.

Failure to understand and follow important FAR clause can have serious implications to include breach of contract allegations and even suspension or debarment. You want to stay as proactive as possible in order to avoid such grave impacts on your company.

Important FAR Clauses

Change Orders

This clause in the Federal Acquisition Regulations often applies when the Government initiates changes to your contract. The contracting officer can make unilateral changes, in designated areas, within the general scope of the contract. You always want to ensure that you receive a written change before commencing work. In the event that you cannot get immediate written change orders, you at least want to get an email from the contracting officer for your records. See information about Commercial Off the Shelf Items in Government COTS Contracts.

Termination for Convenience ( FAR Part 49)

FAR Part 49.5 of the Federal Acquisition Regulations allows the government to terminate your contract when it is in the best interest of the government. Regardless of fault, the contracting officer has a unilateral right to terminate. This FAR clause is important because you are then entitled to statutory damages. You should know what they are.

FAR Termination for Default Clause

Another important FAR clause that federal contractors should be mindful of is the FAR termination for default clause. The contracting officer has the power to use this clause when your company has not performed under the terms and conditions of the contract, has acted contrary to procurement law, provided unsatisfactory performance, or even committed criminal acts. See also, Government’s Wrongful Termination Construction Contract for Default and Responding to Government Cure Notice Letter.

Ensure that Your Company is Familiar with and In Compliance With FAR Clauses

As stated earlier, virtually all federal government contracting agencies follow the Federal Acquisition Regulations as guidance from the initial stage of federal procurement all the way to contract closeout. To avoid termination, or to reduce unnecessary litigation and appeal costs, make sure that you have someone on your team that understands your legal obligations and what the government can, and cannot do under the FAR.

You want to ensure that you either have people that are trained internally or you should have at least legal counsel for immediate access.

For help with federal acquisition regulation legal review and FAR compliance, call Watson & Associates’ government contract attorneys at 1-866-601-5518.

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