FAR/DFARS Compliance Guide

Navigate Federal Acquisition Regulations and Defense Supplement requirements with confidence

Understanding FAR and DFARS

Federal Acquisition Regulation (FAR)

The FAR is the primary regulation for use by all federal executive agencies in their acquisition of supplies and services with appropriated funds.

  • 53 Parts covering the entire acquisition process
  • Applies to all federal agencies
  • Updated regularly through Federal Register
  • Incorporates statutory requirements

Defense FAR Supplement (DFARS)

The DFARS provides DoD-specific acquisition regulations that supplement the FAR when purchasing goods and services for defense purposes.

  • DoD-specific requirements and procedures
  • Additional cybersecurity requirements
  • Foreign sourcing restrictions
  • Unique cost and pricing requirements

Critical FAR Clauses Every Contractor Must Know

Clause Number Title Key Requirements Applies To
FAR 52.203-13 Contractor Code of Business Ethics Written code of conduct, ethics training, internal controls Contracts >$6M & >120 days
FAR 52.215-2 Audit and Records Maintain records for 3 years, allow government audits Negotiated contracts
FAR 52.219-8 Small Business Subcontracting Plan Submit subcontracting plan with goals Contracts >$750,000
FAR 52.222-50 Combating Trafficking in Persons Compliance plan, awareness program, reporting All contracts
FAR 52.225-1 Buy American Act Use of domestic end products Supply contracts in US
FAR 52.227-14 Rights in Data Government data rights, marking requirements R&D contracts

Essential DFARS Clauses for DoD Contracts

DFARS 252.204-7012

Safeguarding Covered Defense Information

  • Implement NIST SP 800-171 controls
  • Report cyber incidents within 72 hours
  • Support damage assessments
  • Preserve images of affected systems
  • Flow down to subcontractors

DFARS 252.204-7020

NIST SP 800-171 DoD Assessment

  • Complete basic assessment
  • Submit score to SPRS
  • Medium/High assessments by DoD
  • POA&M for deficiencies
  • Annual score updates

DFARS 252.225-7001

Buy American and Balance of Payments

  • Domestic specialty metals requirement
  • Qualifying country exceptions
  • Commercial item exceptions
  • De minimis content allowed
  • Certification requirements

FAR/DFARS Compliance Checklist

  • Review all solicitation clauses and provisions
  • Verify SAM registration and representations
  • Assess ability to comply with flow-down requirements
  • Determine cost accounting standards applicability
  • Confirm required business systems are adequate
  • Validate subcontractor compliance capabilities
  • Flow down mandatory clauses to subcontractors
  • Submit required compliance certifications
  • Establish contract-specific compliance procedures
  • Brief team on contract requirements
  • Set up required reporting mechanisms
  • Document compliance framework
  • Monitor regulatory changes and updates
  • Submit required reports on schedule
  • Maintain audit-ready documentation
  • Conduct internal compliance reviews
  • Update policies and procedures as needed
  • Train new employees on requirements

Common FAR/DFARS Violations to Avoid

Warning: These violations can result in contract termination, suspension, debarment, and False Claims Act liability.

Documentation Failures

  • Inadequate cost/price documentation
  • Missing subcontractor consent requests
  • Incomplete certified payroll records
  • Lacking audit trail for changes

Compliance Failures

  • Organizational conflicts of interest
  • Improper cost charging/allocation
  • Buy American Act violations
  • Labor standards non-compliance

Reporting Failures

  • Late subcontracting reports
  • Unreported cyber incidents
  • Missing ethics disclosures
  • Incomplete EEO reporting

System Failures

  • Inadequate accounting system
  • Deficient purchasing system
  • Non-compliant timekeeping
  • Weak internal controls

Best Practices for FAR/DFARS Compliance

1. Establish Robust Systems

Implement government-compliant business systems including accounting, purchasing, property management, and earned value management systems that meet DCAA and DCMA requirements.

2. Create Compliance Matrix

Develop a comprehensive matrix mapping all contract clauses to responsible parties, compliance procedures, and verification methods. Update for each new contract.

3. Regular Training Program

Conduct quarterly training on FAR/DFARS requirements, focusing on high-risk areas and recent changes. Document all training attendance and comprehension.

4. Internal Audit Function

Establish regular internal audits to identify compliance gaps before external audits. Use findings to continuously improve processes and procedures.

5. Subcontractor Management

Implement formal processes for flowing down requirements, verifying subcontractor compliance, and monitoring performance throughout the contract.

6. Documentation Standards

Maintain detailed records of all compliance activities, decisions, and communications. Implement retention policies that exceed minimum requirements.

FAR/DFARS Resources

Essential References

  • acquisition.gov: Official FAR website with current regulations
  • acq.osd.mil: DFARS and PGI resources
  • DCAA Website: Audit guidance and compliance resources
  • DCMA Website: Contract administration resources
  • SBA.gov: Small business compliance assistance
  • SAM.gov: System for Award Management