Key Statistic
The FAR contains more than 600 individual clauses across 53 parts. The average federal solicitation for a complex services contract includes 40–80 FAR and agency supplement clauses. Small business contractors are responsible for understanding and complying with every clause in their specific contracts.
What are FAR and DFARS?
The Federal Acquisition Regulation (FAR) is the primary rulebook governing how the federal government buys goods and services. It covers everything from how agencies advertise contracts to how contractors get paid, how disputes are resolved, and what ethical standards apply. FAR is codified at Title 48 of the Code of Federal Regulations, Parts 1–53.
The Defense Federal Acquisition Regulation Supplement (DFARS) is an overlay that adds Department of Defense-specific requirements. When your contract is with DoD (Army, Navy, Air Force, DARPA, DLA, etc.), both FAR and DFARS apply. DFARS is at 48 CFR Parts 200–253. If FAR and DFARS ever conflict, DFARS controls for DoD contracts.
Every federal agency also has its own supplement (VA has VAAR, NASA has NFS, DHS has HSAR). These follow the same structure as FAR and DFARS but add agency-specific requirements on top.
FAR
Applies to all 90+ federal agencies. The foundation of federal acquisition law.
~600 clausesDFARS
DoD-specific overlay. Applies when contracting with any DoD component.
~200 clausesAgency Supplements
VA, NASA, DHS, GSA, etc. Agency-specific additions on top of FAR.
Varies by agencyHow FAR and DFARS Are Structured
FAR is organized into Parts (1–53), each covering a major topic. Parts contain Subparts, and subparts contain individual Clausesand Provisions. Clauses appear in contracts; provisions appear only in solicitations.
FAR clause numbers follow a pattern: 52.[Part].[Sequence]. So FAR 52.219-8 is in Part 52 (solicitation provisions and contract clauses), Part 219 (small business programs), sequence 8. DFARS clauses start at 252: DFARS 252.204-7012 is Part 252, subpart 204, sequence 7012.
| FAR Part | Topic | Why It Matters |
|---|---|---|
| Part 1–7 | Acquisition Planning | Defines competition requirements, market research, and acquisition strategy |
| Part 8–11 | Acquisition Schedules | GSA schedules (Part 8), simplified acquisition (Part 13), competition (Part 6) |
| Part 12 | Commercial Items | Streamlined rules for commercial products/services — critical for most small businesses |
| Part 19 | Small Business Programs | 8(a), HUBZone, SDVOSB, WOSB set-asides, subcontracting plans, mentor-protege |
| Part 22 | Labor Standards | Service Contract Act, Davis-Bacon, equal opportunity, workers' rights |
| Part 27–28 | IP & Bonds | Patent rights, technical data rights, performance bonds, payment bonds |
| Part 31 | Cost Principles | What costs are allowable on cost-type contracts — critical for cost-reimbursement work |
| Part 52 | Clauses & Provisions | The full text of all FAR clauses — what actually appears in your contracts |
The Most Important FAR Clauses for Small Contractors
You will encounter these clauses in the majority of federal contracts. Know what each requires before you sign. Click any clause for the full breakdown.
Basic Safeguarding of Covered Contractor Information Systems
15 basic security practices required for any system that processes federal information. The civilian-agency equivalent of NIST SP 800-171.
Contractor Code of Business Ethics and Conduct
Requires a written code of conduct, ethics awareness program, and internal reporting system for contracts over $6M with performance over 120 days.
Utilization of Small Business Concerns
Requires large business primes to use small businesses as subcontractors to the maximum practicable extent.
Small Business Subcontracting Plan
Large businesses with contracts over $750K must submit a subcontracting plan with percentage goals for each small business category.
Service Contract Labor Standards
Requires payment of prevailing wage rates and fringe benefits to service employees under the Service Contract Act. Applies to most service contracts over $2,500.
Equal Opportunity
Anti-discrimination requirements in employment. Flows down to subcontracts over $10,000. Requires affirmative action programs for contracts over $50,000.
Audit and Records — Negotiation
Requires maintaining contractor records and granting audit access to DCAA for the duration of the contract plus 3 years. Applies to cost-reimbursement contracts.
Reporting Executive Compensation and First-Tier Subcontract Awards
Contractors receiving awards over $30K must report subcontract awards to FSRS.gov and may need to report executive compensation.
Payments Under Time-and-Materials and Labor-Hour Contracts
Establishes payment terms for T&M and LH contracts including required timekeeping, labor category rates, and allowable material costs.
Anti-Kickback Procedures
Prohibits kickbacks between contractors and subcontractors. Requires procedures to detect and report violations. Applies to subcontracts over $150,000.
The Most Important DFARS Clauses
If you are bidding on DoD contracts, these five DFARS clauses are non-negotiable. Missing any of them can result in contract termination or debarment.
Safeguarding Covered Defense Information and Cyber Incident Reporting
NIST SP 800-171 implementation plus 72-hour cyber incident reporting to DC3. Applies to all DoD contracts involving CUI.
Cybersecurity Maturity Model Certification Requirements
Specifies the CMMC level required for contract award and performance. The enforcement mechanism for CMMC 2.0.
Rights in Technical Data — Noncommercial Items
Governs the government's rights to technical data you produce under DoD contracts. Determines what you can protect as proprietary.
Export-Controlled Items
Requires contractors to comply with all export control laws (ITAR, EAR) when performing DoD contracts. Liability rests with the contractor.
Cloud Computing Services
Requires DoD cloud deployments to meet FedRAMP Moderate authorization at minimum. Data must remain in US government-owned or authorized facilities.
Flow-Down Requirements: What Subcontractors Need to Know
Many FAR and DFARS clauses "flow down" from prime contractors to their subcontractors — meaning if you are a sub, you inherit the compliance obligations whether or not you are a party to the prime contract. Prime contractors are legally responsible for ensuring their subs comply with required flow-down clauses.
Flow-down obligations are not optional. A prime that fails to include required clauses in a subcontract, or fails to verify sub compliance, can face contract termination and liability for the sub's non-compliance.
Critical Flow-Down Clauses
- DFARS 252.204-7012 — flows to all subs with CUI access, at every tier
- FAR 52.222-26 — Equal Opportunity — flows to all subs over $10,000
- FAR 52.222-41 — Service Contract Act — flows to all service subcontracts
- FAR 52.203-13 — Code of Ethics — flows to subs over $6M, 120+ days
- FAR 52.204-21 — Basic Safeguarding — flows to subs that process federal information
As a subcontractor, always request a copy of the prime's contract clauses before signing your subcontract agreement. As a prime, use a compliance matrix to track which clauses require flow-down and verify that your subcontracts include them.
FAR Compliance Categories at a Glance
Cybersecurity
CriticalFAR 52.204-21, DFARS 252.204-7012, 252.204-7021
Information system safeguarding, CUI protection, incident reporting, CMMC certification. The fastest-growing compliance area.
Labor & Employment
HighFAR 52.222-41, 52.222-26, 52.222-36
Prevailing wages (Service Contract Act), equal opportunity, anti-discrimination, section 503 for disability. Applies broadly to service contractors.
Ethics & Anti-Corruption
HighFAR 52.203-13, 52.203-7, 52.203-12
Written ethics code, anti-kickback procedures, whistleblower protections. Violations can result in debarment and criminal prosecution.
Small Business
HighFAR 52.219-8, 52.219-9, 52.219-14
Subcontracting plans, limitations on subcontracting for set-aside winners, mentor-protege requirements. Critical for set-aside compliance.
Intellectual Property
HighDFARS 252.227-7013, 252.227-7014
Government rights in technical data and software developed under contracts. Negotiate data rights carefully — they are difficult to recover post-award.
Export Control
CriticalDFARS 252.225-7048, ITAR/EAR
Compliance with International Traffic in Arms Regulations and Export Administration Regulations. Particularly critical for defense manufacturers and R&D firms.
How to Read an RFP for FAR/DFARS Requirements
When a solicitation lands, the FAR/DFARS compliance work starts immediately. Here is the systematic approach experienced contractors use.
Go straight to Section I — Contract Clauses
Section I lists every FAR and agency supplement clause incorporated into the contract. This is your compliance checklist. Print it or export it and review every clause.
Identify clauses incorporated by reference
Many clauses are "incorporated by reference" — only the title and date appear, not the full text. Look up each referenced clause at acquisition.gov or in our clause library. You are bound by the full text regardless.
Flag high-risk and unfamiliar clauses
Highlight any clause related to cybersecurity, IP rights, cost accounting, or labor standards. These are the most common sources of compliance failures and disputes.
Check Section H for contract-specific requirements
Section H contains special contract requirements not covered by standard clauses — agency-specific reporting, security clearance requirements, key personnel designations, and CMMC levels. These vary by contract.
Map flow-down obligations
Before signing, identify every clause that flows down to subcontractors and verify you can pass those obligations along. Surprises here can make a contract unprofitable.
Build your compliance matrix
Create a spreadsheet mapping each material clause to: what it requires, who is responsible, what evidence demonstrates compliance, and the deadline. Review it quarterly.
Frequently Asked Questions
FAR (Federal Acquisition Regulation) applies to all federal agencies — civilian and defense. DFARS (Defense Federal Acquisition Regulation Supplement) adds DoD-specific requirements on top of FAR. When you have a DoD contract, both apply simultaneously. Non-DoD agency contracts (VA, DHS, NASA, etc.) use FAR plus their own agency supplement (VAAR, HSAR, NFS, etc.).
No. Focus on the clauses actually included in your contracts. Contracting officers list applicable clauses in Sections I and J of every solicitation. Learn the clauses in your contracts deeply rather than the entire regulation broadly. BidStride's clause library lets you look up any specific clause.
Consequences range from corrective action requests (minor) to contract termination for default, suspension, or debarment from federal contracting (severe). The government can also recover payments through False Claims Act actions if non-compliance was knowing or deliberate. Read every clause, ask questions before you sign, and document your compliance actions.
FAR 52.222-26 (Equal Opportunity), FAR 52.222-41 (Service Contract Labor Standards), FAR 52.203-13 (Contractor Code of Business Ethics), FAR 52.204-21 (Basic Safeguarding of CII), and cybersecurity clauses like DFARS 252.204-7012 flow down mandatorily. Your prime contract specifies which clauses must be included in subcontracts.
Section L lists the Instructions to Offerors — how to format and submit your proposal. Section M describes the Evaluation Criteria — how the government will judge proposals. You must respond to every Section L requirement and structure your response to demonstrate Section M criteria. Missing a Section L requirement can disqualify your proposal.
The official source is acquisition.gov, which publishes the complete FAR and all supplements. BidStride's clause library provides plain-English summaries, key requirements, flow-down rules, and FAQ for the most commonly encountered clauses.