Hunton Retail Law Resource

The 2,000 page Federal Acquisition Regulation (the “FAR”) has guided and dictated federal procurement for more than forty years.  Periodically, the FAR has been updated to make procurement more efficient and simpler. The Trump administration is now undertaking its own effort with the rollout of an executive order entitled “Restoring Common Sense to Federal Procurement.”  It goes without saying that significant changes to the FAR will impact how federal contractors and their subcontractors do business with the federal government.

While changes to the FAR could take some time (though the Executive Order lays out an aggressive timeline, as discussed further below), some changes may come sooner through class deviations.  Class deviations can be issued at any time without public comments and may have immediate effect.

What is Staying in the FAR?

The Executive Order provides that the only provisions that should be in the FAR are those required by statute or “or essential to sound procurement.”  What falls in the latter category remains to be seen, but will probably be shaped by existing Administration priorities that have been signaled through already-released executive orders impacting procurement.

Recent previous efforts, such as the Section 809 Panel established by the 2016 National Defense Authorization Act (NDAA), proposed comprehensive changes to the FAR, many of which were not adopted because they required Acts of Congress.  It remains to be seen how much of this effort will impact Congressionally-required FAR clauses (though the Executive Order seems to explicitly carve those out from consideration for removal).

Congressionally mandated FAR clauses include efforts to protect the supply chain (such as FAR 52.204-25 “Prohibition on Contracting for Certain Telecommunications and Video Surveillance Services or Equipment” implementing Section 889 of the 2019 NDAA) and domestic preferences (such as FAR 52.225-1 “Buy American-Supplies” implementing the Buy American Act).  The origins of other familiar clauses are murkier – such as the ability of the Government to terminate for convenience (see 52.249-2), but will probably fall under a clause that is “essential to sound procurement.” 

What is Next?

The Executive Order requires that “Federal Acquisition Regulatory Council (FAR Council), the heads of agencies, and appropriate senior acquisition and procurement officials from agencies” amend the FAR within 180 days to include only provisions that are required by statute “or that are otherwise necessary to support simplicity and usability, strengthen the efficacy of the procurement system, or protect economic or national security interests.”  This will be a massive effort with far-reaching consequences.

Agency supplemental regulations will also be getting a closer look.  As government contractors know well, the FAR overlays the entire regulatory system, but individual agencies are able to issue their own regulatory supplements so long as they do not contradict the FAR.  See FAR 1.304(B)(2).  Designated agency leads will work the FAR effort to identify and streamline agency-specific regulations.  This includes, for example, the Defense Federal Acquisition Regulation Supplement, which is almost as lengthy as the FAR in its own right. 

The Executive Order also contains a subset provision aimed at any regulatory clauses not required by statute.  That provision suggests amending the FAR to subset those regulations unless specifically renewed by the FAR Council (or the individual regulations themselves).  If this comes to fruition, contractors and their supply chains will have to pay close attention to a regulatory environment that will be more dynamic with significant changes coming more frequently as provisions are considered for renewal.

The Executive Order may have far-reaching impacts on companies, including retailers, supporting the nearly $1 trillion government marketplace.  We will continue to monitor developments and provide updates when appropriate.