The FAR is Not Far Away for Small Businesses
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, and who has time to think about FAR compliance? 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 “while undoubtedly extensive, permit the government to maintain fairly uniform contracting standards in the many contracts it enters into with parties located in the United States and around the world…To allow contractors and subcontractors, foreign or domestic, to evade the FAR provisions because a subcontractor was too unsophisticated or inexperienced to fully understand them would potentially cripple the government’s ability to contract with private entities and would violate controlling federal law.” Aspic Engineering and Construction Company v. ECC Centcom Constructors LLC; ECC International LLC, No. 17-16510, D.C. No. 4:17-cv-00224-YGR, 13 (9th Cir. Jan. 28, 2019) (“Aspic”).
In short, public policy wins.
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. 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”).
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.
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.
*There are Other Transactions Authorities that exist purposely to allow the federal government to pursue non-standard government contractors without the application of the FAR. There is good news! We know a great OTA Consortium Management group.