Summary: Currently, there are fifty three existing provisions under the Federal Acquisition Regulation. While the emphasis may be on the pricing policies, entrepreneurs should know the sections containing policies on contract termination, changes, payments and inspections.
With the highly competitive marketing arena for entrepreneurs, there is a must for strict implementation of policies to make procurement processes orderly. This is where the Federal Acquisition Regulation becomes a necessity.
The Federal Acquisition Regulation was established by the US government in order to have a governing body that issues set of guidelines for business owners to follow. Looking into the provisions of the Federal Acquisition Regulation can give an impression that federal contracts differ greatly from commercial contracts in terms of policies on termination, contract changes, payments, and inspections and testing procedures.
Termination
According to the Federal Acquisition Regulation, the government can nullify a contract with an enterprise with any of the following reasons:
- Failure to deliver within the agreed time in the contract
- Falling short in showing progress in the avoidance of endangering performance of the contract
- Inability to follow all (or most) of the provisions of the contract
Before the termination of the contract, however, the Federal Acquisition Regulation gives the contractor rights to:
- Demand chances for remedies
- Justify why the contract should not be cancelled
- Ask for payments for the items already acquired by the government, following the pricing stated in the contract
- Require written notice of termination prior to the preparation of termination settlement claim
- Demand instructions for the protection of properties at risk on becoming government-owned
Note that the government cannot terminate contracts when the delay of delivery and failures to comply with the contract is beyond the control of the contractor. Cancellation of contracts under these circumstances is considered “convenience of the government” under the Federal Regulation Law.
Contract Changes
The government is allowed to modify the contracts under the Federal Acquisition Regulation when:
- The changes are “within the general scope of the contract”
- The changes do not change the general nature of the contract
- The contractor agrees with the price adjustments and can still manage to comply with the changes in the schedule of the deliveries.
Payments
Enterprises, whether big or small scaled, thrive with the payments in exchange for the products and services offered. This is why the Federal Acquisition Regulation gives the government the responsibilities to:
- Make prompt payments for the goods rendered
- Formulate accurate invoices, and pay interest should the government fail to pay on time
- Pay the contract price in one single lump sum for cheaper contracts, and send progress payments upon costs incurred in the procurement process after several months for larger scaled contracts.
- Protect its interest by taking title from the contractors for their work-in-process after the progress payments have been made.
This is the reason why the Federal Acquisition Regulation requires the contractors to have an accounting system which can be effective in segregating contract costs, necessary for them to qualify for progress payments.
Testing and Inspection
Under the Federal Acquisition Regulation, the government has the right to refuse the acceptance of the products when these do not conform to the specifications and quality standards agreed in the federal contract.
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Understanding the Federal Acquisition Regulation by heart can lead a businessman who is new in the government procurement marketplace to have successful business ventures. To have more information about the FAR, visit headexposed.com
