Small Businesses and the Use of the Federal Acquisition Regulation


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Small companies are in the same boat as larger corporations when it applies to the Federal Acquisition Regulation System. This process governs the obtaining of goods and services through a contract where there is a need, in acquisition planning and when contracts in administration are possible, and the business owner must understand these processes to follow them accordingly.

The FAR is important when connected to businesses because the acquisition of goods and services is important to most companies. If the deal occurs with a contract, it is imperative the owner knows what this process entails so that he or she does not violate federal mandate. It is when expanding the company’s revenue through federal contracts and opportunities that the FAR becomes more important to the organization. This is because even though the federal contract may be lucrative, there are many laws, regulations and stipulations in place with these deals. If they are not followed, the owner could be facing severe penalties.

When contracting with the federal government, some of these dealings mean signing various contractual agreements that require secrecy. The details of the arrangement may not be provided to anyone outside the company. However, many business owners are experienced with that due to other aspects such as intellectual property and various projects. For purchasing procedures, these must be standard and consistent throughout the life of the deal. This means understanding everything in the FAR to include fair and impartial situations with obtaining materials, handling employees and manufacturing and distributing products. Other actions and documentation may be necessary based on the specific venture with the federal government.

Procurement Regulations Explained

When applying the Federal Acquisition Regulation, this is issued and maintained through the Secretary of Defense, Administrator of General Services and the Administrator, National Aeronautics and Space Administration as well as statutory authorities. These agencies and persons issue and then edit the FAR through these agencies with the small business that has the contract. Because the government contractual deals are different from the usual commercial agreements, there are many and specific provisions in place. These may change the scope of the work involved, lead to terminated contracts, have different types of payments than standard and be subject to inspections and examinations that are not usually part of a contracted deal.

It is crucial to familiarize those in the small business with these provisions, and it is important to know what the arrangement will entail. This means researching and understanding the particulars with the federal contracts and the responsibilities of the company, which terms and conditions apply based on the contract awarded to the business, and what online courses and training are needed in order to fulfill the arrangement. Sometimes this means creating new products or maintaining services that are not standard with the commercial services and products usually manufactured or distributed. In some instances, it is important to contact other agencies and officials to know what certain terms and conditions mean with the federal contract.

The Government Contracts

There are many different types of government contracts that require the need for FAR stipulations. However, when these are defense related, there are additional security matters that must be considered such as clearance, access to restricted areas and the need for secrecy. This means that additional paperwork may be filed and signed by those in the small business to ensure these matters are confidential and not disseminated to others. The contract may be with the Executive Branch of the United States government. While the Judicial and Legislative branches are not required to follow the FAR in contracting concerns, they often do.

It is important to know which agency is being contracted with so that the FAR system is understood fully. This means that if the matter is between a small business and the Executive branch but with a smaller agency, there may be fewer regulations in place than if the organization has more persons and a greater need for security and secrecy. When the arrangement is with a smaller business, there may only be one or two owners, and this means that some work could be contracted out to others with similar contracted agreements signed and in place. It may be important to contact a lawyer before these deals are accepted.

The Legal Considerations

Any contract signed should be analyzed by a lawyer prior to the agreement taking place. This means that a lawyer should be hired or on retainer to assist with knowing whether the small business should proceed.

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Disclaimer: While every effort has been made to ensure the accuracy of this publication, it is not intended to provide legal advice as individual situations will differ and should be discussed with an expert and/or lawyer.

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