What is the Federal Acquisition Regulation

FAR Structure and Organization

Subchapter A (Parts 1-4): General guidance including FAR system overview, definitions, improper business practices, and administrative matters. Part 2 definitions are particularly important for understanding FAR terminology.
Subchapter B (Parts 5-12): Acquisition planning covering competition requirements, publicizing opportunities, acquisition planning, market research, and commercial item procedures.
Subchapter C (Parts 13-18): Contract methods including simplified acquisition, sealed bidding, contracting by negotiation, and various special contracting methods.
Subchapter D (Parts 19-26): Socioeconomic programs including small business, labor standards, environmental requirements, and foreign acquisition.
Subchapter E (Parts 27-34): General contracting requirements covering patents, bonds, taxes, labor standards, and contract financing.
Subchapter F (Parts 35-41): Special categories including research and development, construction, service contracts, and utility services.
Subchapter G (Parts 42-51): Contract management including administration, quality assurance, termination, and value engineering.
Subchapter H (Parts 52-53): Clauses and forms including the FAR clause matrix and standard forms used in federal contracting.

1
Learn fundamental clauses
Certain clauses appear in virtually all federal contracts including Changes, Termination, Inspection, Disputes, and Payment clauses. Understanding these fundamental clauses provides foundation for contract performance regardless of specific contract type.
2
Identify contract-type-specific clauses
Different contract types incorporate different clause packages. Fixed-price contracts include different clauses than cost-reimbursement contracts. Commercial item contracts use streamlined clause sets. Know which clauses apply to your contract types.
3
Understand flow-down requirements
Many FAR clauses require flow-down to subcontractors. Subcontract management requires understanding which clauses must be included in subcontracts and ensuring subcontractor compliance.
4
Monitor clause updates
FAR clauses are updated through the rulemaking process. Contract clauses reflect FAR provisions at the time of contract award but may require updating through modifications for regulatory changes. Stay current on clause changes affecting your contracts.
5
Review clause prescriptions
Each clause in FAR Part 52 has a prescription elsewhere in the FAR explaining when the clause applies. Reading prescriptions helps understand why clauses are included and their intended application.

Fixed-Price Contracts: Provide maximum contractor risk but also maximum profit potential if costs are controlled. Types include firm-fixed-price, fixed-price with economic price adjustment, and fixed-price incentive contracts.
Cost-Reimbursement Contracts: Government reimburses allowable costs plus negotiated fee. Used when requirements cannot be defined precisely enough for fixed-price contracting. Types include cost-plus-fixed-fee, cost-plus-incentive-fee, and cost-plus-award-fee.
Time-and-Materials and Labor-Hour Contracts: Payment based on actual hours worked at specified rates plus materials. Used when scope cannot be defined precisely but fixed-price contracting is not appropriate.
Indefinite-Delivery Contracts: Establish terms for future orders without committing to specific quantities. Include indefinite-quantity, requirements, and definite-quantity contracts.
Letter Contracts: Preliminary contracts authorizing work before final terms are negotiated. Used only in urgent situations with specific limitations on scope and duration.

Maintain accounting systems appropriate for your contract types. Cost-reimbursement contracts require systems capable of accumulating and segregating costs properly.
Implement ethics and compliance programs addressing federal contracting requirements. Training employees on procurement integrity and other requirements reduces violation risk.
Establish processes for required certifications and representations. Many FAR requirements involve affirmative certifications that must be accurate.
Track regulatory changes affecting your compliance obligations. FAR updates may create new requirements or modify existing obligations.
Seek professional guidance for complex compliance questions. Attorneys and consultants specializing in government contracts can help navigate complicated situations.