FAR Compliance
We get it. You are a small shop, and the Federal Acquisition Regulations (FAR) is just another acronym in this hectic GovCon space. You are busy drumming up business. Who has time to think about FAR compliance updates?
You might think the FAR is far, far away from you since you are a small business. Wrong!
The applicability of the FAR to you as a government contractor (or subcontractor supporting a government contract) is not based on your business size. When it comes to the FAR, small businesses are just as likely to be audited as larger GovCons.
Why? Well, it all comes down to public policy.
In a recent case, the 9th Circuit summarized that the Federal Acquisition Regulation (FAR) provisions must maintain fair standards with GovCons worldwide. All contractors and subcontractors should follow the same rules and regulations.
In short, public policy wins.
How FAR Levels the Playing Field for Small Businesses
FAR Part 10 requires federal agencies to complete the following:
- Create exclusive contracts for small businesses: Federal agencies must allow small businesses to apply for contracts without competing against larger, more established companies.
- Evaluate the capabilities of small businesses: The government must fairly assess a small business’s ability to complete a project based on technical capabilities, financial resources and past performance.
- Conduct market research: Federal agencies must determine the availability of commercial products or services that can meet their needs and can’t exclude small businesses from the procurement process based on their size or lack of government contracting experience.
- Assist small businesses: Small businesses must have opportunities to access resources, training and mentoring so they can develop the necessary skills and capabilities to compete effectively for contracts.
The Reason for FAR Government Contract Changes
The government needs to be able to buy with a level of risk mitigation in place. Do you want your tax dollars going to a deal that turns bad because the guys building the new facility failed to follow their FAR flow downs? Not really.
Yes, it is challenging to compete in the GovCon space, but there is a sense of serving the public that makes the challenge worth it. However, that means you have to play by Uncle Sam’s rules.
Who Must Follow FAR Compliance?
Even the one-man-bands building souped-up servers with robots attached to them in their garages have flow downs to contend with if they are going to sell to the federal government under traditional acquisition mechanisms.
This means that no matter how small your business is, FAR is an important consideration for your operation.
In the name of public policy, even if certain FAR clauses are not “flowed” into your contract, a judge will find them applicable to your contract “by operation of law.” G.L. Christian & Assoc. v. United States, 160 Cl. Ct. 1 (Cl. Ct. 1965). The famous Christian Doctrine was applied to Federal subcontractors in UPMC Braddock et al., v. Harris, No. 1:09-cv-01210 (D.D.C. Mar. 30, 2013) (“UPMC”).
Are Small Business Subcontractors Affected?
One of the traditional avenues for small businesses to gain a foothold in the GovCon space is through subcontracting, often thinking it is easier because they do not have to follow all the same rules as their prime contractor counterparts.
However, based on UPMC, following the FAR is required no matter what. There is no free pass on FAR for small businesses.
How Does FAR Define a Small Business?
FAR defines a small business as an independently owned and operated firm with fewer than 500 employees and affiliates. The firm can’t dominate the industry where it bids for FAR government contracts.
To learn more about sizing for small business contractors, you should check out the standards listed in the latest North American Industry Classification Systems (NAICS).
Depending on the products and services best describing a subcontractor, you’ll find a code with more specific guidelines.
Tips for Understanding FAR Compliance
If you’re wondering how to become FAR compliant or just getting started, follow these tips:
1. Start With the Basics
Just like the alphabet, you have to learn the basics of FAR before you can understand the sentences and paragraphs. Generally, federal law falls into statutes and regulations. Congress writes the statutes, and rule-makers who have authority write the regulations.
The regulations are subordinate to statutes — basically, if a regulation conflicts with a statute, the statute wins. FAR falls into the regulations category. The FAR council consists of representatives who can write and make amendments in response to Congress. While complex, understanding FAR’s navigation can help you find information quickly.
2. Prepare for Audits and Reviews
It’s critical to schedule regular audits and reviews to remain compliant with FAR regulations. These audits and reviews allow you to identify aspects of your business that don’t meet FAR compliance. Maintaining records and documents for your regular audits and reviews also helps you prepare for external audits.
3. Learn How to Track Updates
You need to stay up-to-date with FAR updates so you can maintain compliance. Check FAR compliance requirements regularly so you can align your organization’s practices with any updates.
4. Seek Expert Assistance
Are you having trouble understanding FAR compliance? Working with an expert consultant can help you follow FAR contract requirements.
Work With Experts to Ensure You’re FAR Compliant
Even though we just threw a whole lot of legal ease at you, we don’t want you to be stressed about small business FAR compliance. If you need a plan to get your act in gear, BOOST LLC has experience setting small businesses up for success in the lean-and-mean style.
To learn about our exclusive services for GovCon businesses, contact our team today!
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