The Federal Acquisition Regulation, known as the FAR, is the government-wide rulebook that controls how every executive branch agency buys goods and services in the United States. It is codified at Title 48 of the Code of Federal Regulations and carries the full force of federal administrative law.1eCFR. Title 48 of the CFR In fiscal year 2024, roughly $755 billion in federal spending flowed through contracts governed by this single framework.2U.S. Government Accountability Office. Federal Contracting The FAR exists so that agencies operate as a coordinated buyer instead of thousands of disconnected offices, and so that private businesses can plan around one consistent set of rules when they pursue federal work.
What the FAR Covers
The FAR’s stated purpose, at FAR 1.101, is the “codification and publication of uniform policies and procedures for acquisition by all executive agencies.”3Acquisition.GOV. FAR 1.101 Purpose It is organized into parts, subparts, sections, and subsections, each with a decimal number that lets practitioners cite a specific rule out of thousands of pages.
A handful of parts do most of the work in day-to-day practice:
- Part 6 sets the competition requirements, including the general mandate for full and open competition.
- Part 9 covers contractor qualifications, responsibility standards, and debarment.
- Part 12 provides streamlined procedures for buying commercial products and services.
- Part 16 defines contract types and how financial risk is allocated between the government and the contractor.
- Part 19 governs small business programs and set-asides.
- Part 52 holds the standard solicitation provisions and contract clauses that get incorporated into nearly every federal agreement.4Acquisition.GOV. Part 52 – Solicitation Provisions and Contract Clauses
Part 52 is where the FAR most directly touches contractors. Its prewritten clauses, covering things like termination for convenience and changes in scope, are incorporated by reference into individual contracts, which removes the need to negotiate basic legal terms on every deal. Updates take effect through Federal Acquisition Circulars published in the Federal Register, so the current clause text can shift from one award to the next.
Who Has to Follow It
The FAR applies to all executive agencies, from cabinet-level departments like Defense and Energy to independent establishments and the General Services Administration. Any company or individual that wants to sell to those agencies has to follow the FAR too, because its provisions land inside the contract itself.
Before a business can bid on or receive a federal contract, it must register in the System for Award Management at SAM.gov. Registration is free, assigns the company a Unique Entity Identifier, can take up to ten business days to become active, and must be renewed every 365 days.5SAM.gov. Entity Registration An agency cannot award a contract to an entity without an active SAM.gov record, and a lapsed registration is one of the most common self-inflicted problems in government contracting.
The Core Principles That Shape Every Buy
Full and Open Competition
The central rule is that agencies must obtain full and open competition when buying goods and services. That mandate comes from 41 U.S.C. 3301, which directs every executive agency to use competitive procedures unless a specific statutory exception applies.6Office of the Law Revision Counsel. 41 USC 3301 – Full and Open Competition FAR Part 6 implements it and lays out the narrow circumstances, such as urgent and compelling needs, in which a sole-source award is permitted.7Acquisition.GOV. FAR Part 6 – Competition Requirements Whenever an exception is used, the contracting officer must document the justification in writing.
Contractor Responsibility
Low price alone does not win a contract. Under FAR 9.104-1, the contracting officer cannot make an award unless the company qualifies as “responsible,” meaning it has adequate financial resources, a satisfactory performance record, a record of integrity and business ethics, the technical skills and equipment for the work, and the organizational controls to manage it.8Acquisition.GOV. FAR 9.104-1 General Standards
Dollar Thresholds
Two thresholds determine how much procedure surrounds a purchase. The micro-purchase threshold is $15,000, so buys below that amount can be made with a government purchase card and minimal competition. The simplified acquisition threshold is $350,000; buys between the two figures use faster, streamlined procedures. Above $350,000, agencies generally must run the full competition and evaluation process laid out in FAR Parts 14 and 15. Lower micro-purchase ceilings apply in specific contexts: $2,000 for construction subject to wage rate requirements and $2,500 for services subject to labor standards.9Acquisition.GOV. FAR 2.101 Definitions
Contract Types and Who Bears the Risk
The FAR offers a spectrum of contract types, and the choice among them is largely about deciding who absorbs the loss when costs exceed expectations.
A firm-fixed-price contract sets a price that does not change with the contractor’s actual costs. Savings stay with the contractor; overruns come out of the contractor’s pocket. It is the default type when the scope is well-defined.
Cost-reimbursement contracts pay the contractor’s allowable costs plus a fee. They are used when requirements cannot be defined precisely enough for a fixed price, but only if several conditions are met, including an adequate contractor accounting system and sufficient government oversight resources. Cost-reimbursement contracts are prohibited for commercial products and services.10GovInfo. Federal Acquisition Regulation 16.3
Time-and-materials contracts pay fixed hourly labor rates plus actual material costs and are a last resort, used only when no other type fits. The contracting officer must document that in writing, and the contract must carry a ceiling price the contractor exceeds at its own risk.11Acquisition.GOV. FAR 16.601 Time-and-Materials Contracts
Commercial Products and Small Business Set-Asides
When the government needs something already sold in the commercial marketplace, FAR Part 12 provides a streamlined path and establishes a preference for commercial products over custom builds. Part 12 acquisitions use simplified solicitation procedures and generally exempt contractors from submitting detailed cost or pricing data. For buys above the simplified acquisition threshold but not exceeding $9 million, agencies can use the simplified procedures in FAR Subpart 13.5.12Acquisition.GOV. Part 12 – Acquisition of Commercial Products and Commercial Services
The government also sets a statutory goal of awarding at least 23% of prime contract dollars to small businesses, with sub-goals of 5% for small disadvantaged businesses, 5% for women-owned small businesses, 5% for service-disabled veteran-owned small businesses, and 3% for HUBZone businesses.13U.S. Small Business Administration. HUBZone Program FAR Part 19 puts those goals into practice through set-asides. The most important mechanism is the “rule of two”: for contracts between the micro-purchase threshold and the simplified acquisition threshold, the contracting officer must set the procurement aside for small businesses if at least two responsible small firms are expected to submit competitive offers. Programs like the 8(a) Business Development Program reserve additional contracts for socially and economically disadvantaged owners who meet specific net worth and income thresholds.
Agency Supplements to the FAR
The FAR is the baseline, but many agencies layer on their own supplements with implementation details or agency-specific requirements. A supplement cannot contradict the FAR’s core mandates; the base FAR generally controls unless a formal deviation has been approved.
The Department of Defense publishes the Defense Federal Acquisition Regulation Supplement, or DFARS, for military procurement.14Defense Acquisition Regulations System. Defense Federal Acquisition Regulation Supplement and Procedures, Guidance, and Information One of its most consequential recent additions is the Cybersecurity Maturity Model Certification program, or CMMC. Under DFARS clause 252.204-7021, defense contractors must achieve and maintain a specific CMMC level for the life of any contract involving controlled information.15Acquisition.GOV. Contractor Compliance With the Cybersecurity Maturity Model Certification Level Requirements The General Services Administration publishes the General Services Acquisition Regulation, or GSAR, which governs GSA’s own contracting relationships and, because GSA runs government-wide supply schedules, touches a disproportionate share of commercial vendors.16Acquisition.GOV. Part 501 – General Services Administration Acquisition Regulation System
Who Writes and Updates the FAR
The Federal Acquisition Regulatory Council maintains the FAR. Its members are the Secretary of Defense, the Administrator of NASA, the Administrator of General Services, and the Administrator for Federal Procurement Policy, who sits within the Office of Management and Budget.17Acquisition.GOV. Federal Acquisition Regulatory Council The Administrator for Federal Procurement Policy oversees the process and keeps agency procurement rules consistent with the FAR.18Office of the Law Revision Counsel. 41 USC 1303 – Functions and Authority When Congress passes legislation affecting federal purchasing, the Council drafts the implementing language, publishes it for public comment, and reviews the feedback before issuing a final rule.
What Happens If You Break the Rules
Violations of the FAR carry consequences that range from losing federal work to criminal prosecution.
An agency’s suspending and debarring official can bar a contractor from all federal work based on convictions for fraud, antitrust violations, embezzlement, bribery, false statements, or tax evasion, along with other causes such as a pattern of unsatisfactory performance, delinquent federal taxes exceeding $10,000, or knowing failure to disclose credible evidence of fraud or significant overpayments.19Acquisition.GOV. FAR 9.406-2 Causes for Debarment Debarment must be proportionate to the seriousness of the conduct and generally should not exceed three years, though Drug-Free Workplace Act violations can support up to five years.20Acquisition.GOV. FAR 9.406-4 Period of Debarment Debarment is framed as a protective measure for the government rather than a punishment, but it locks a company out of the federal market entirely.
A contractor that knowingly submits a false claim for payment faces liability under the False Claims Act for three times the government’s damages plus a per-violation civil penalty adjusted annually for inflation.21Department of Justice. The False Claims Act “Knowingly” does not require proof of intent to defraud; deliberate ignorance and reckless disregard for truth both qualify, and because each invoice can count as a separate violation, exposure on a single contract can climb into the millions.
For major fraud involving a contract, grant, or other federal assistance valued at $1 million or more, 18 U.S.C. 1031 authorizes fines up to $1 million, imprisonment for up to ten years, or both.22Office of the Law Revision Counsel. 18 USC 1031 – Major Fraud Against the United States Fraud on smaller contracts is still prosecutable under other federal statutes.
Challenging an Award Through a Bid Protest
A company that believes an agency violated the FAR during a procurement can file a bid protest. The deadlines are short, and missing them is usually fatal.
An agency-level protest is filed directly with the contracting agency. The FAR expects the protester to try informal resolution with the contracting officer first, and the protest itself must be filed no later than 10 days after the protester knew or should have known the basis for the challenge. Agencies are directed to make their best efforts to resolve protests within 35 days, and a timely protest generally suspends contract performance unless the agency documents urgent and compelling reasons to continue.23Acquisition.GOV. FAR 33.103 Protests to the Agency
The Government Accountability Office also hears protests, under 4 CFR Part 21. The same 10-calendar-day filing window applies, and when a required debriefing is requested, the clock starts on the date of the debriefing.24eCFR. 4 CFR 21.2 – Time for Filing A timely GAO protest triggers an automatic stay, so the agency generally cannot proceed with contract performance while the protest is pending.25Office of the Law Revision Counsel. 31 USC 3553 – Review of Protests; Effect on Contracts Untimely filings are dismissed on their face.