FAR

The FAR is the rulebook for federal procurement. It covers everything from how agencies solicit proposals to how contracts are structured, modified, and closed out. All federal contracts reference FAR clauses, and understanding the key clauses relevant to your contract type is essential.

The FAR is organized into 53 parts. Key sections for small businesses include Part 15 (Contracting by Negotiation), Part 16 (Types of Contracts), Part 19 (Small Business Programs), and Part 31 (Contract Cost Principles — what costs are allowable and unallowable).

FAR Part 31 is particularly important because it defines which costs the government will reimburse under cost-type contracts. Unallowable costs include entertainment, alcohol, bad debts, donations, fines, and lobbying. Charging an unallowable cost to a government contract can result in penalties.

Each agency can supplement the FAR with its own rules (DFARS for DoD, GSAM for GSA, etc.). When you see a contract clause cited as "FAR 52.xxx," it comes from the base regulation. When it is cited as "DFARS 252.xxx" or similar, it comes from an agency supplement.