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Is the door closed? I’m going to share one of the biggest secrets in government contracts.
Everyone in the government contracts industry has heard of the Federal Acquisition Regulation (FAR). Some call it “the Bible” for government contracts.
Are you sitting down? Take a deep breath, because I’ve got some shocking news for you.
The FAR does not apply to federal contractors. Of the thousands of contracting officers, proposal managers, attorneys, business executives, and sales professionals I’ve taught or advised, only a handful knew this critical fact.
I wrote a full-length article on this topic, and I’m happy to email it to you. But here’s the crisp summary for the busy executive.
The FAR applies to the federal employees involved in acquisition, namely, the contracting officers. Think of the FAR as the cookbook of recipes, instructing contracting officers as to which FAR clauses should be included in the contract.
Do you want proof? Read FAR 1.104, which explains that the FAR applies to all acquisitions. “Acquisition,” according to FAR 2.101, means “the acquiring by contract…by and for the use of the Federal Government.”
Case closed. The FAR applies to acquisitions conducted by the federal government. Therefore, the FAR only applies to federal employees, not to federal contractors.
Not so fast! You’re not off the hook. The FAR is extremely important to federal contractors, but only insofar as certain FAR clauses are included in the contract.
FAR clauses are the connecting tissue between the government and contractors. As such, individual FAR clauses must be included in the contract, or they’re not relevant (saving complicating factors like the Christian doctrine for another article). This clears up another myth about the FAR.
The entire FAR is not incorporated into your federal contract. That’s not how it works. Individual clauses are included on a case-by-case basis, depending on your contract type.
For example, FAR Part 12, Acquisition of Commercial Items, prescribes clauses for commercial items contracts. FAR Part 19, Small Business Programs, prescribes clauses for small business set-aside contracts.
Don’t fall for the bluff of a FAR citation that is not in your contract! This is a common trick that both the government and your private-sector business partners will try to use, but you won’t fall for it. You read this article, and you now know better!
When you get a FAR citation, immediately check to see if that clause is in your contract. If it is not in your contract, why should you care about it?
Is there a portion of your contract that incorporates that section of the FAR? Is there a direct FAR clause? If not, the other side is blowing smoke.
Government contracting officers are famous for doing this. They’ll hit you with a FAR citation, and say “The FAR requires that you do this. Please comply.” Now you know how to handle this.
You are bound by your individual contract terms, not the FAR. As a corollary, be careful about reviewing your contracts and subcontracts before signature.
If your draft contract or subcontract has clauses that don’t belong, strike them and renegotiate. This negotiation process is called “redlining” because you trade a series of Microsoft Word documents using tracked changes. “Redlining” the business deal is your government contracts expert’s time to shine. You need to have a skilled negotiator on your side.
Look out for a future article on the “flow-down clauses” included in federal subcontracts, which are always a point of contention in negotiations. There are tricky aspects to “redlining” subcontract clauses. Knowing how to avoid these problems can save you lots of time and money!
Until then, remember that the FAR does not apply to federal contractors. Your main concern is your contract and its specific clauses. For more information about the FAR and government contracts, please contact me at Christoph@ChristophLLC.com.
Christoph Mlinarchik, JD, CFCM, PMP is the owner of www.ChristophLLC.com, providing expert advice in government contracts: consulting, professional instruction, and expert witness services. Contact Christoph at Christoph@ChristophLLC.com.