Fall 2010 issue of Horizons

Government contracting is governed by a web of statues and regulations. For example, these statutory and regulatory provisions dictate items such as: • Which method or process an agency must use to solicit a contract. • How the agency is to negotiate or award a contract. • Which costs are allowable. • How a contractor must account for those costs. The Federal Acquisition Regulation (FAR) The Federal Acquisition Regulation (FAR) contains the uniform policies and procedures for acquisitions by all federal agencies. The FAR contains standard contract clauses and sets forth extensive guidance to the federal agencies and their personnel regarding the award and administration of government construction contracts. In addition to the basic FAR, many of the federal agencies have their own unique supplements to the FAR. For example, the DFARS is the Defense Federal Acquisition Regulation Supplement. These supplements, however, may not conflict with or supersede relevant FAR provisions. Most federal contracts for construction activity are awarded as a result of a competitive bid process. In the Request For Proposals (RFP), the FAR provisions that govern the performance of the work are either included or referenced in the contract. An important part of performing work for the government is having an effective ethics and compliance program. FAR part 52 governs the Contractor Code of Business Ethics and Conduct. The basic requirements include having a written business ethics and compliance program, having a system of internal controls in place that will prevent and detect violations of federal rules and regulations, and a program for disclosing violations

including fraud, conflict of interest, bribery or gratuity, and substantial overpayment on contracts. These provisions are required for all federal contracts that exceed $5 million and are more than 120 days in duration. There are substantial penalties for noncompliance including suspension and debarment from future government contracts. FAR Cost Principles The FAR cost principles contain detailed guidance on the allowability of approximately 46 categories of selected costs under government contracts. These costs principles, set forth in FAR part 31, define when and to what extent costs can be recovered under a government contract.

www.rubinbrown.com

58