What parts of the FAR apply to me?

May take is the primary direction for prime contractors and higher tier subcontracts are provided in the contract. If there is a contractual clause citing a regulatory requirement then that section(s) of the regulation applies to the prime contractor and higher tier subcontractors.

I think the mistake that is often made in reading the regulations is substituting the term ?contractor? when the regulations use the term ?Contracting Officer?. It seems to me that the regulations reserve the term ?Contracting Officer? for U.S.G. personnel with authority to award or execute Government prime contracts. When the regulations place requirements on contractors, as opposed to the Contracting Officer, the regulations state such by using the terms ?contractor? or ?subcontractor. Using the terms ?contractor? and ?Contracting Officer? interchangeably lead to a confused and incoherent reading, and selective substitution is arbitrary.

Having said that there do appear to be statutory requirements that penetrate down to the contractor subcontractor relationship absent any contractual language. I am not real clear on the rule for that application.

The FAR does not apply to contractors. It applies to government personnel who conduct acquisitions. If the government wants to impose some part of FAR on a contractor, it does so by inserting provisions in solicitations, such as FAR 52.215-1, or clauses in contracts, such as FAR 52.215-12. Contractors are bound by the terms of their contracts. However, if a contracting officer enters into a contract that is not consistent with FAR, a board or court might impose the requirements of FAR in order to bring the contract into conformity with FAR, as under the Christian Doctrine. Alternatively, a board or court might declare a that a nonconforming contract is void ab initio.

FAR implements certain regulations that do apply to contractors, such as the Department of Labor's rules under the Service Contract Act of 1965, as amended, which are in 29 CFR Part 4. Those rules apply to the public and, unlike FAR, are promulgated under the authority of the Administrative Procedures Act. FAR, being internal rules that do not apply to the public, is promulgated under the authority of the Office of Federal Procurement Policy Act.

Government personnel often try to impose the FAR on contractors, demanding, for example, that they comply with FAR Part 15 when selecting subcontractors. They have no authority to do so unless a contract clause requires the contractor to comply. However, many contractors are intimidated by the government personnel and go along with their demands rather than assert their contractual rights. That's a business decision.

Contractors should know the rules in FAR so that they can understand what is required of government personnel and what government personnel must do in order to comply with the law, and to know what clauses COs must insert into their contracts.

Vern,

In your first sentence, didn't you mean to write "The FAR does not apply to contractors."

Vern,

In your first sentence, didn't you mean to write "The FAR does not apply to contractors."

Yes, Don. Thanks, I fixed it.

How is it we can state categorically the FAR in its entirety does not apply to contractors. If FAR has a provision that specifically requires some action of a contractor why would that not be controlling absent any contractual requirement?

How is it we can state categorically the FAR in its entirety does not apply to contractors. It FAR has a provision that specifically requires some action of a contractor why would that not be controlling absent any contractual requirement?

FAR was written to establish rules for "agencies." See FAR 1.101: "The Federal Acquisition Regulations System is established for the codification and publication of uniform policies and procedures for acquisition by all executive agencies."

By "agencies," not by contractors. Now see FAR 1.104, Applicability:

"The FAR applies to all acquisitions as defined in Part 2 of the FAR, except where expressly excluded."

Now see the definition of acquisition in FAR 2.101:

?'Acquisition' means the acquiring by contract with appropriated funds of supplies or services (including construction) by and for the use of the Federal Government...." Read the rest of the definition. It refers to the "award of contracts," but not to the award of subcontracts.

Private firms must comply with FAR only as imposed upon them by solicitation provisions and contract clauses, unless a rules is otherwise established in statute and in other rules in the Code of Federal Regulations which address members of the public and are promulgated pursuant to the authority of the Administrative Procedures Act, 5 USC ? 500 et seq., in which case it is the statute or other regulation with which they must comply. If a CO tells a contractor that it must comply with FAR Part this or that, an appropriate question is: Where does it say that in my contract, or where is it otherwise provided by law, or are you simply saying that if I don't go along with you, you will make trouble for us?

FAR addresses agencies.

Thanks Vern that helps. In light of that how do we read subparts like 27.304-3.

27.304-3 -- Subcontracts.

(a) The policies and procedures in this subpart apply to all subcontracts at any tier.

( Whenever a prime contractor or a subcontractor considers including a particular clause in a subcontract to be inappropriate or a subcontractor refuses to accept the clause, the contracting officer, in consultation with counsel, shall resolve the matter.

? It is Government policy that contractors shall not use their ability to award subcontracts as economic leverage to acquire rights for themselves in inventions resulting from subcontracts.

FAR 27.304-3 is nothing but a statement of government policy. It is a set of statements addressed to agency personnel. The policy is imposed upon contractors and subcontractors through the patents rights clauses. See FAR 52.227-11, Patent Rights - Ownership By The Contractor (DEC 2007), which reads in part as follows:

(k) Subcontracts.

(1) The Contractor shall include the substance of this clause, including this paragraph (k), in all subcontracts for experimental, developmental, or research work to be performed by a small business concern or nonprofit organization.

(2) The Contractor shall include in all other subcontracts for experimental, developmental, or research work the substance of the patent rights clause required by FAR Subpart 27.3.

(3) At all tiers, the patent rights clause must be modified to identify the parties as follows: references to the Government are not changed, and the subcontractor has all rights and obligations of the Contractor in the clause. The Contractor shall not, as part of the consideration for awarding the subcontract, obtain rights in the subcontractor?s subject inventions.

(4) In subcontracts, at any tier, the agency, the subcontractor, and the Contractor agree that the mutual obligations of the parties created by this clause constitute a contract between the subcontractor and the agency with respect to the matters covered by the clause; provided, however, that nothing in this paragraph is intended to confer any jurisdiction under the Contract Disputes Act in connection with proceedings under paragraph (h) of this clause.

See also the clause at FAR 52.227-13, Patent Rights - Ownership By The Government (DEC 2007), which reads in part as follows:

(i) Subcontracts.

(1) The Contractor shall include the substance of the patent rights clause required by FAR Subpart 27.3 in all subcontracts for experimental, developmental, or research work. The prescribed patent rights clause must be modified to identify the parties as follows: references to the Government are not changed, and the subcontractor has all rights and obligations of the Contractor in the clause. The Contractor shall not, as part of the consideration for awarding the subcontract, obtain rights in the subcontractor?s subject inventions.

(2) In the event of a refusal by a prospective subcontractor to accept the clause, the Contractor?

(i) Shall promptly submit a written notice to the Contracting Officer setting forth the subcontractor?s reasons for such refusal and other pertinent information that may expedite disposition of the matter; and

(ii) Shall not proceed with such subcontract without the written authorization of the Contracting Officer.

(3) In subcontracts at any tier, the agency, the subcontractor, and the Contractor agree that the mutual obligations of the parties created by the patent rights clause constitute a contract between the subcontractor and the agency with respect to those matters covered by this clause.

(4) The Contractor shall promptly notify the Contracting Officer in writing upon the award of any subcontract at any tier containing a patent rights clause by identifying the subcontractor, the applicable patent rights clause, the work to be performed under the subcontract, and the dates of award and estimated completion. Upon request of the Contracting Officer, the Contractor shall furnish a copy of such subcontract, and, no more frequently than annually, a listing of the subcontracts that have been awarded.

Those passages implement FAR 27.304-3. I say again: The FAR states policy and prescribes procedures to be followed by government agencies. Contractors do not have to comply with those policies or adhere to those procedures except as provided in solicitation provisions and binding contract clauses. If FAR applied directly to contractors and subcontractors, there would be no need to prescribe solicitation provisions or contract clauses--FAR would speak for itself. There are many places in FAR where the text seems to address contractors ("the contractor shall" "contractors shall"), but those are merely statements of policy telling contracting officers what they must impose upon contractors. Such statements are without effect unless and until included in a government solicitation or contract, except as otherwise imposed by statute or by a regulation with which the public must comply.

For an example of a regulation that applies directly to the public, see 33 CFR ? 66.01-5:

To establish and maintain, discontinue, change, or transfer ownership of a private aid to navigation, you must apply to the Commander of the Coast Guard District in which the aid is or will be located. You can find application form CG-2554 at http://www.uscgboating.org/safety/aton/aids.htm. You must complete all parts of the form applicable to the aid concerned, and must forward the application to the District Commander. You must include the following information....

Emphasis added.

Vern,

How about the provision in FAR 15.404-3 Subcontract pricing considerations that states:

?( The prime contractor or subcontractor shall?

(1) Conduct appropriate cost or price analyses to establish the reasonableness of proposed subcontract prices;

(2) Include the results of these analyses in the price proposal; and

(3) When required by paragraph c of this subsection, submit subcontractor cost or pricing data to the Government as part of its own cost or pricing data.

c Any contractor or subcontractor that is required to submit cost or pricing data also shall obtain and analyze cost or pricing data before awarding any subcontract, purchase order, or modification expected to exceed the cost or pricing data threshold, unless an exception in 15.403-1( applies to that action.?

This seems to read as directing prime contractors or subcontractors to perform specific actions over and above the TINA statute and what is contractually required.

Vern,

How about the provision in FAR 15.404-3 Subcontract pricing considerations that states:

?( The prime contractor or subcontractor shall?

(1) Conduct appropriate cost or price analyses to establish the reasonableness of proposed subcontract prices;

(2) Include the results of these analyses in the price proposal; and

(3) When required by paragraph c of this subsection, submit subcontractor cost or pricing data to the Government as part of its own cost or pricing data.

c Any contractor or subcontractor that is required to submit cost or pricing data also shall obtain and analyze cost or pricing data before awarding any subcontract, purchase order, or modification expected to exceed the cost or pricing data threshold, unless an exception in 15.403-1( applies to that action.?

This seems to read as directing prime contractors or subcontractors to perform specific actions over and above the TINA statute and what is contractually required.

Notwithstanding the wording of FAR 15.404-3, a prime contractor must do only what its contract requires it to do. The government's only remedy for refusal to comply is through contract enforcement. The government cannot enforce the FAR provisions that you cite except through enforcement of a contract clause or by rejection of a proposal from a prime contractor for legitimate reasons.

Thanks!

Vern,

How about the provision in FAR 15.404-3 Subcontract pricing considerations that states:

?( The prime contractor or subcontractor shall?

(1) Conduct appropriate cost or price analyses to establish the reasonableness of proposed subcontract prices;

(2) Include the results of these analyses in the price proposal; and

(3) When required by paragraph c of this subsection, submit subcontractor cost or pricing data to the Government as part of its own cost or pricing data.

c Any contractor or subcontractor that is required to submit cost or pricing data also shall obtain and analyze cost or pricing data before awarding any subcontract, purchase order, or modification expected to exceed the cost or pricing data threshold, unless an exception in 15.403-1( applies to that action.?

This seems to read as directing prime contractors or subcontractors to perform specific actions over and above the TINA statute and what is contractually required.

See FAR 52.215-20, which references Table 15-2, then read the Table. This solicitation provision addresses this pre-award requirement.

Note that 15.404-3 applies to "prime contractors and subcontractors," i.e., firms that already have contracts or subcontracts. It applies when the prime submits a "price proposal." The question is, under what circumstance does a prime submit a "price proposal." That would happen if the government is adding new work. What about a request for equitable adjustment following a change order? Is an REA a "proposal"? I would think that depends on how the REA is worded. If it is worded as a claim, i.e., as a demand or assertion for a sum certain, then one might argue that it is not a "proposal." I would make that argument, since the boards and courts have made a distinction between a claim and a proposal for adjustment. On the other hand, if the CO is contemplating making a within scope change, he or she might ask the contractor to propose the price of the adjustment, in which case the submission is almost certainly a proposal.

I read 15.404-3 as nothing more than an instruction to contracting officers to make primes support their proposals when the proposals include subcontract costs. The idea is that the prime should evaluate proposed subcontract prices instead of merely passing them on to the government to evaluate.

Thanks ReTreadFed. It makes a little more sense now.

In light of that, I guess 15.404-3( can be read ? as Vern stated ? as guidance to the contracting office as to what is required of the prime contractor in the prime proposal process. As the contracting officer has the option of including Alternate 1 to 52.215-20/21 - specifying a format other than Table 15-2 - 15.404-3( could be interpreted as requiring the contracting officer to require the prime contractor to perform an analysis on their subcontractors proposal and include that analysis in the prime proposal, if an alternate format is specified .

But how is the requirement placed on higher tiered subcontractors? 15.404-3( requires not only the prime to perform an analysis and included that analysis in their proposals, but it places the same requirement on subcontractors. It does not appear that 52.215-20/21 are required flowdowns and 15.404-3c allows for a subcontractors format to be in something other than 15-2.

So with regard with the requirement being place on subcontractors doesn?t it still seems to go beyond what is required by the contact or statutes?

If the CO cannot get the cooperation of a prime or sub, the only ultimate remedy is to reject the proposal.

Look, if the prime is proposing something to the government, that must mean that there is business in the air. Unless the prime is being compelled to submit a proposal that it does not want to submit, why would the prime, or the sub, refuse?

Ok, here is another one. This seems to attempt to place the requirement of following the FAR Part 31 cost principles on a contractor or subcontractor in pricing FFP proposals whenever a cost analysis is required OR a contract clause is included.

And I was not able to find a standard solicitation provision or contract clause that requires contractors or subs to follow the cost principles in pricing FFP contracts.

31.102 Fixed-price contracts.

The applicable subparts of Part 31 shall be used in the pricing of fixed-price contracts, subcontracts, and modifications to contracts and subcontracts whenever (a) cost analysis is performed, or ( a fixed-price contract clause requires the determination or negotiation of costs.

Ok, here is another one. This seems to attempt to place the requirement of following the FAR Part 31 cost principles on a contractor or subcontractor in pricing FFP proposals whenever a cost analysis is required OR a contract clause is included.

And I was not able to find a standard solicitation provision or contract clause that requires contractors or subs to follow the cost principles in pricing FFP contracts.

31.102 Fixed-price contracts.

The applicable subparts of Part 31 shall be used in the pricing of fixed-price contracts, subcontracts, and modifications to contracts and subcontracts whenever (a) cost analysis is performed, or ( a fixed-price contract clause requires the determination or negotiation of costs.

Cost analysis is done by the government. See FAR 15.404-1©(2)(iv). You are correct that there is no FAR solicitation provision that requires a contractor to price a proposal for an FFP contract in accordance with the cost principles.

COs "price" contracts, not contractors. Such pricing includes consideration of proposed subcontract costs. FAR 31.102 does not tell contractors what they can and can't propose. It tells COs what they must consider when analyzing proposals. But see FAR 31.103( about incorporating the cost principles into contracts for post-award pricing purposes. The go read DFARS 252.243-7001 Pricing of Contract Modifications. Other agencies have such clauses of their own.

How long are you gonna keep coming back on this, garth?

Contractual disputes are best resolved by applying specific facts to specific contract terms and (occasionally) specific rules. To say the FAR does not apply to a contractor--while true--is not to say that there aren't several decisions by boards and courts whose outcome hinged on whether a contractor's action conformed with language contained in the FAR.

That said (and at the risk of rephrasing points already made by others), perhaps this might be instructive:

A variety of clauses incorporate rules by reference, obligating contractors to act in compliance with those rules. For instance, FAR 52.230-2(a) incorporates the Cost Accounting Standards. (Even absent the Christian doctrine, a decent argument can be made that a contractor must comply with applicable CAS even in the absence of FAR 52.230-2. See, 48 CFR 9901.306 (CAS mandatory for use by all executive agencies and by contractors and subcontractors); 48 CFR 9901.305(e) (properly promulgated CAS have the force and effect of law).) For DoD contracts, DFARS 252.243-7001 make the cost principles applicable to any cost adjustment under the contract. It is not surprising, then, we see "contractor shall" language in Part 31 or in the CAS.

Certifications can effectly incorporate FAR requirements by reference. For instance, FAR 52.243-4 the Certification of Final Indirect Costs (52.242-4) includes a certification that the "proposal does not include any costs which are expressly unallowable under applicable cost principles of the FAR or its supplements."

Several rules require a CO to consider things within the contractor's control, e.g., in negotiating or granting an approval, and a contractor who ignores the rules that inform a CO's judgment shouldn't expect prompt action on those requests (to say the least). See, e.g., partial release of security (FAR 28.204(), advance payments (FAR 32.408), novations (FAR Subpart 42.12). Other clauses expressly permit certain contractor actions with CO approval, and leave the considerations that inform that approval decision to the FAR. For instance, FAR 52.228-7 permits self-insurance with CO approval, and FAR 28.308 calls out what the contractor has to do in order for the CO to approve. Even when a contractor is entitled to relief as a matter of right, a contract clause can require the contractor to provide information in a form required by the Contracting Officer or in conformity with the FAR. See, e.g., FAR 52.249-2, Termination for Convenience of the Government (Fixed-Price) (May 2004), at para (e) (final termination settlement agreement in the form prescribed by the Contracting Officer). The CO's judgment, again, would be informed by the FAR.

Finally, as already noted, if a regulation requires a clause, or forbids its use, if the contracting officer fails to follow the regulation, and either includes a forbidden clause, or omits a required one, the government CO is acting beyond his authority. If the clause is "important" enough, and the rule was properly promulgated, the boards and courts can in certain circumstances impose the proper clause or omit the improperly included clause. See both Christian and Charles Beseler Co., 78-2 BCA P 13483, Sept. 22, 1978. (Excuse the oversimplification.)

Jacques:

One thing. You wrote:

To say the FAR does not apply to a contractor--while true--is not to say that there aren't several decisions by boards and courts whose outcome hinged on whether a contractor's action conformed with language contained in the FAR.

What does that mean? Would you clarify things by discussing one of the "several decisions"? That would help us understand your point.

Also, what does this mean?

Even absent the Christian doctrine, a decent argument can be made that a contractor must comply with applicable CAS even in the absence of FAR 52.230-2. See, 48 CFR 9901.306 (CAS mandatory for use by all executive agencies and by contractors and subcontractors); 48 CFR 9901.305(e) (properly promulgated CAS have the force and effect of law).

Don't tantalize us! Please make that "decent argument," absent the Christian Doctrine, so we can know what you're talking about.

Also, please decipher this sentence of yours:

For instance, FAR 52.243-4 the Certification of Final Indirect Costs (52.242-4) includes a certification that the "proposal does not include any costs which are expressly unallowable under applicable cost principles of the FAR or its supplements."

I'm confused. FAR 52.243-4 is a changes clause and makes no mention of certification of final indirect costs. Typo? As for FAR 52.242-4, which you mention in parentheses, my response is: So? Isn't that simply an instance of a clause implementing a policy? Hasn't it already been said that policies are imposed on contractors through solicitation provisions and contract clauses? Are you making an additional point? If so, would you tell us what it is?

A suggestion: Slow down. Think through what you want to say. Write it in Word, and then, when you're sure you've got it right, copy it and paste it into a post. You don't help if you post something that is not clear or leaves arguments hanging in the air unfinished.

Jacques, you are really working overtime to establish a rep at Wifcon Forum in as short a time as possible. Good for you. If you made things clearer to garth, more power to you.

Welcome to a bold new voice. Too bad that you've chosen to post anonymously.

Vern, I appreciate your patience with me on this, and Jacques thanks for those citations.

Notwithstanding Vern?s argument outlining the authority (OFPP Act) under which the FAR system was created and operates, and the statements of applicability in the Part 1, what I continue to struggle with is the concept that if a statement in the FAR requires a contractor or subcontractor to ?do something? it is not enforceable absent a contractual clause.

I agree with Vern that CO's price contracts, but I would argue that contractors price subcontracts and 31.102 reads to me as in the pricing of new fixed-price contracts and subcontracts (not just modifications) the contractor shall follow the cost principles. This seems to be placing a requirement on the subcontractor to price the proposal honoring the cost principles and a requirement on the contractor to ensure as much. This is all prior to the award of a contact, outside the scope of the COs task and independent of the negotiation of FPRAs or final indirect cost.

Whereas some of the previous example provided in this discussion could be interpreted as direction to the CO to place a requirement on the contractor by inserting a clause, Part 31.102 appears to be different in that it is placing a requirement on the contractor and subcontractor if one of two conditions exits, and only the second condition is the presences of a contract clause - the first condition being a FFP contract or subcontract requiring cost analysis.

If this reading is correct I guess one could argue that the drafters exceed their authority under the OFPP Act?

Garth, I'd encourage you to take a look at Nash & Cibinic, Formation of Government Contracts (3d Ed. 1998), at 59-63.

what I continue to struggle with is the concept that if a statement in the FAR requires a contractor or subcontractor to “do something” it is not enforceable absent a contractual clause.

The short answer is that contractual rights and remedies should be grounded in contract (and the agreement of the parties).

The longer answer is that an agency has to have authority to promulgate the rules that it does, and the primary statutory basis for the FAR is as has been previously stated. While there is not unanimity in the decisions, some have held where a rule directly relates to the congressional purpose of achieving an "economical and efficient system" of procurement (a reference to FPASA, the primary civilian procurement authority), then there is a sufficient nexus between the rule and the statute that the rule has the force and effect of law, and is binds a class of folks called "contractors" without regard to the terms of any specific contract. However, even under that standard, the nexus must be incredibly direct. See Chamber of Commerce v. Reich, 74 F.3d 1322 (D.C. Cir. 1996). The government avoids all this heartburn by using a clause and generally grounding its requirements and remedies in contract. The Councils also try, near as I can tell, to avoid having a hodge-podge of rules, some having their basis in mutual assent of the parties, others in regulating a class of businesses. Should COs be regulators, charged with enforcing Department of Labor (Part 22), Small Business Administration (Part 19, etc.), Commerce/State export control rules, etc.? Or should a contractor's violation of these rules provide a basis for an adverse action related to the contract (in addition to any action by the regulator)? I would suggest the scale generally tips to the later.

I'll respond to Vern's comments when I have a couple more minutes.

See below.

Jacques, Thanks, I will go read that.

Vern, For contractors subject to CPSRs, I think the concern is that if an extra-contractual requirement exist, and it is not followed, then a contractors? purchasing system could be disapproved.

Vern, For contractors subject to CPSRs, I think the concern is that if an extra-contractual requirement exist, and it is not followed, then a contractors? purchasing system could be disapproved.

garth:

I have done everything I can to explain to you in plain English. What you're getting now from Jacques reads like a rather dense legal treatise, and I can feel myself being sucked under by his prose. I'm going to have to let this conversation go, since it doesn't really matter to me and I'm not making any money out of it. I feel that I have done all I can to fulfill by brotherly obligation to you. Why don't you and Jacque play together for a while? So long, partner.

Jacques, you don't have to respond to me. Please don't bother.

Vern,

I appreciated you spending so much of your time on this topic and your patience with my struggles. I place a great value on your input on this and all the WIFCON discussions.

Thanks,

Garth

Notwithstanding Vern?s argument outlining the authority (OFPP Act) under which the FAR system was created and operates, and the statements of applicability in the Part 1, what I continue to struggle with is the concept that if a statement in the FAR requires a contractor or subcontractor to ?do something? it is not enforceable absent a contractual clause.

Garth,

Please look at the tables of contents of the FAR Parts. Most of them contain sections and subsections entitled Contract Clause(s), Solicitation Provision(s), or Contract Clauses and Solicitation Provisions. FAR Part 52 -

Quote

(a) Gives instructions for using provisions and clauses in solicitations and/or contracts;

( Sets forth the solicitation provisions and contract clauses prescribed by this regulation; and

? Presents a matrix listing the FAR provisions and clauses applicable to each principal contract type and/or purpose (e.g., fixed-price supply, cost-reimbursement research and development).

Unquote

If, as you suggest, the relationship between the Government and contractor is defined in the nearly 2 thousand pages of FAR text, why are provisions and clauses prescribed? Why do not contracts merely contain signature blocks, prices, specs, schedules and the statement "Both parties to this contract are obligated to comply with the FAR"?

The solicitation, with its provisions, and the contract, with its clauses, define the pre and post award relationship between the government and the contractor.

If you think about it, the Christian Doctrine confirms the point. Why bother to read a clause into a contract if the FAR applies to the contractor without the clause?

Contractual disputes are best resolved by applying specific facts to specific contract terms and (occasionally) specific rules. To say the FAR does not apply to a contractor--while true--is not to say that there aren't several decisions by boards and courts whose outcome hinged on whether a contractor's action conformed with language contained in the FAR.

That said (and at the risk of rephrasing points already made by others), perhaps this might be instructive:

A variety of clauses incorporate rules by reference, obligating contractors to act in compliance with those rules. For instance, FAR 52.230-2(a) incorporates the Cost Accounting Standards. (Even absent the Christian doctrine, a decent argument can be made that a contractor must comply with applicable CAS even in the absence of FAR 52.230-2. See, 48 CFR 9901.306 (CAS mandatory for use by all executive agencies and by contractors and subcontractors); 48 CFR 9901.305(e) (properly promulgated CAS have the force and effect of law).) For DoD contracts, DFARS 252.243-7001 make the cost principles applicable to any cost adjustment under the contract. It is not surprising, then, we see "contractor shall" language in Part 31 or in the CAS.

Certifications can effectly incorporate FAR requirements by reference. For instance, FAR 52.243-4 the Certification of Final Indirect Costs (52.242-4) includes a certification that the "proposal does not include any costs which are expressly unallowable under applicable cost principles of the FAR or its supplements."

Several rules require a CO to consider things within the contractor's control, e.g., in negotiating or granting an approval, and a contractor who ignores the rules that inform a CO's judgment shouldn't expect prompt action on those requests (to say the least). See, e.g., partial release of security (FAR 28.204(), advance payments (FAR 32.408), novations (FAR Subpart 42.12). Other clauses expressly permit certain contractor actions with CO approval, and leave the considerations that inform that approval decision to the FAR. For instance, FAR 52.228-7 permits self-insurance with CO approval, and FAR 28.308 calls out what the contractor has to do in order for the CO to approve. Even when a contractor is entitled to relief as a matter of right, a contract clause can require the contractor to provide information in a form required by the Contracting Officer or in conformity with the FAR. See, e.g., FAR 52.249-2, Termination for Convenience of the Government (Fixed-Price) (May 2004), at para (e) (final termination settlement agreement in the form prescribed by the Contracting Officer). The CO's judgment, again, would be informed by the FAR.

Finally, as already noted, if a regulation requires a clause, or forbids its use, if the contracting officer fails to follow the regulation, and either includes a forbidden clause, or omits a required one, the government CO is acting beyond his authority. If the clause is "important" enough, and the rule was properly promulgated, the boards and courts can in certain circumstances impose the proper clause or omit the improperly included clause. See both Christian and Charles Beseler Co., 78-2 BCA P 13483, Sept. 22, 1978. (Excuse the oversimplification.)

Jacques--You are hard to understand sometimes. I cannot quite put my finger on why that is, but it is. I want to understand what you are saying. Is there any way you can write more plainly? Your paragraph beginning "Several rules" is so dense, I find myself lost halfway through it. I sense that you are saying something interesting, but I cannot quite figure out what it is. This is a chat room. I cannot devote the time to reading here that I would give to a textbook or a serious treatise. Do you understand what I am saying? Whether I agree with Vern or not, I always know what he's talking about. I hope this helps.

Regrets, Seeker. I was just trying to give a list of different ways the FAR might apply indirectly to a contractor. I'm going to take Vern's advice and compose in Word. Hopefully I'll be able to catch more poor word choice that way. Blame it on the translation from French to English, even though I don't speak French.

Ordinarily, I believe in keeping it simple, but that hasn't worked for me with garth. The most direct support I can give for my assertion that FAR does not apply to contractors is FAR 1.101 and 1.104, which say that FAR applies to the conduct of acquisitions, see the definition in FAR 2.101. Agencies conduct acquisitions, not contractors. But I've provided that support already and it hasn't worked. I have run out of ideas. Maybe Jacques' more complex arguments will work better than my simple ones.

On a different note, the best way to understand the Christian Doctrine is this: COs have only the authority delegated to them. They do not have authority to enter into contracts in violation of regulations that were promulgated to implement statutes. See FAR 1.602-1. When contractors enter into government contracts they must do so with the understanding that COs must obey the law in order for a contract to be enforceable against the Government.

Like other individuals who deal with the Federal Government (see, e.g., Federal Crop Insurance Corp. v. Merrill, 332 U.S. 380, 68 S.Ct. 1, 92 L.Ed. 10 (1947)), potential contractors can validly be bound to discover the published directives telling them the limits and the scope of the agreements the Government can make.

320 F.2d 345, 351.

A contract or a provision of a contract entered into by a CO in violation of the law is ordinarily not enforceable against the Government, unless someone with authority is able and willing to ratify the CO's unauthorized act. In creating the Christian Doctrine, the courts have adopted a practical compromise between ignoring a CO's unauthorized act and declaring the contract to be void, which would be drastic.

Invalidation of the contract is not a necessary consequence when a statute or regulation has been contravened, but must be considered in light of the statutory or regulatory purpose, with recognition of the strong policy of supporting the integrity of contracts made by and with the United States.

177 F.3d 1368, 1373 (which contains a very interesting discussion of the consequences of entering into a contract in violation of statute or regulation).

The courts justify the compromise on the ground that the contractor should know the limits of CO authority. The courts, in recognition of the fact that they have forged a practical compromise, have limited Christian's application to clauses that implement important and long-standing policies.

nder the Christian Doctrine a court may insert a clause into a government contract by operation of law if that clause is required under applicable federal administrative regulations. However, the Christian Doctrine does not permit the automatic incorporation of every required contract clause.

991 F.2d 775, 779.

The Christian Doctrine does not stand for the proposition that FAR applies to contractors. Quite the contrary. It stands for the proposition (a) that FAR applies to COs, ( that contractors must understand that COs must obey the law, and ( c) that if they enter into a contract with the Government, the courts will interpret the contract as it should have been written and adjudicate accordingly. It's either that or throw out the baby with the bath water.

Jacques thanks for the direction to pages 59-63 of Formation of Government Contract.

My take away from those pages is that regulations can have the full force and effect of law if: (1) the regulations are authorized by statute, (2) one can reasonably conclude that the statute contemplated the regulations issued or (3) if the regulations further the congressional purpose of achieving an ?economical and efficient system? of procurement.

The argument that FAR 1.101 and 1.104, state that FAR applies to the conduct of acquisitions, and Agencies conduct acquisitions, not contractors seem convincing, but other references like 15.404-3 and 31.102 introduce ambiguity.

In discussions with various folks there seems to be three broad categories that people fall into: (1) the FAR applies to private industry and federal agencies equally ? where the regulations state contracting officer one can selectively insert ?contractor? or ?subcontractor?, (2) the FAR applies to contractors only to the extent specific provisions are incorporated into a contract, and (3) the FAR applies to contractors if incorporated into a contract OR if there is a provision that expressly states it applies to ?contractors? or? subcontractors?.

(Just as an aside it is our USG customers taking the position (1) that raised this as an issue.)

As a practical matter I think I find myself settling in on number (3). While one may be able to demonstrate in a court of law that a specific provision of the FAR placing a requirement on a ?contractor? or ?subcontractor? does not have a sufficient connection to ?congressional intent? to be enforceable, it ? at least to me ? is uncertain enough that following approach (3) a practical interpretation to work under.

As a practical matter I think I find myself settling in on number (3). While one may be able to demonstrate in a court of law that a specific provision of the FAR placing a requirement on a ?contractor? or ?subcontractor? does not have a sufficient connection to ?congressional intent? to be enforceable, it ? at least to me ? is uncertain enough that following approach (3) a practical interpretation to work under.

Good luck!

Please advise us the first time you get to the BCA in defense of your attempt to force contractor compliance, absent a contract clause, with a rule or guidance in FAR Parts 1 to 51 because to do so furthers the congressional purpose of achieving an "economical and efficient system" of procurement.

As a practical matter I think I find myself settling in on number (3). While one may be able to demonstrate in a court of law that a specific provision of the FAR placing a requirement on a ?contractor? or ?subcontractor? does not have a sufficient connection to ?congressional intent? to be enforceable, it ? at least to me ? is uncertain enough that following approach (3) a practical interpretation to work under.

So you award a firm-fixed-price contract and after award the contractor decides to subcontract part of the work. According to FAR, cost analysis is required, and according to your theory FAR 31.102 applies to the contractor. But the contractor does not apply the cost principles when pricing the subcontract.

Okay, what court is the CO going to go to? U.S. District Court? Does that court have jurisdiction? Under what law? U.S. Court of Federal Claims? On what basis does that court have jurisdiction? What remedy is the CO going to seek? Does the court have the power to grant that remedy?

Absurd.

What if a prime contractor negotiates FFP subcontracts with a number of their suppliers prior to negotiation of the prime contract. In pricing the subcontracts, the prime contractor includes the cost of boarding the CEOs pet, trips for their spouses the Bahamas, etc.

Then in negotiating the prime's proposal - requiring cost analysis - with the government the prime includes the FFPs subs ? including the presumed unallowable cost. The prime contractor subsequently receives payment for the work performed under the prime contract.

If the theory is correct and that portion of the FAR has the full force and effect of law, could the argument be made that it was a false claim to the Government?

What if a prime contractor negotiates FFP subcontracts with a number of their supplier prior to negotiation of the prime contract. In pricing the subcontracts, the prime contractor includes the cost of boarding the CEOs pet, trips for their spouses the Bahamas, etc.

Then in negotiating the prime's proposal - requiring cost analysis - with the government the prime includes the FFPs subs ? including the presumed unallowable cost. The prime contractor subsequently receives payment for the work performed under the prime contract.

If the theory is correct and that portion of the FAR has the full force and effect of law, could the argument be made that it was a false claim to the Government?

Garth, what is your understanding of what "force and effect of law" means?

Not that I have a high confidence in my understanding, but in this context it is that it places a requirement on a private entity independent of any contractual obligation, similar to the Walsh-Healy Act and the payment of a minimum wage, or the anti Kickback laws.

Garth, sometimes authors use it that way. Often, though, what it means is that courts should give effect to the regulation as a reasonable implementation of the statute upon which it is based. If the regulation (or, really, the statute being implemented) is not directed at regulating the conduct of an industry, or if the regulation lacks any sanctions for failing to follow it, etc., then more often than not the meaning is limited to the judicial deference meaning. Hope this helps.

"What does the rule that an agency regulation has the legal effect of a statute mean in practice? Simply, that 'an agency issuing a legislative rule is itself bound by the rule until that rule is amended or revoked.' National Family Planning v. Sullivan, 979 F.3d 227 (D.C. Cir. 1992)." Bernard Schwartz, Administrative Law (4th Ed. 1994), at 270.

The impact on industry (or the regulated) occurs though an agency's authority to license, set rates, or approve or prohibit practices employed in business. That authority comes from a statute. To repeat what has been repeated several times here, the FAR generally implements procurement statutes; statutes that don't give individual agencies the three types of authority listed above.

Not that I have a high confidence in my understanding, but in this context it is that it places a requirement on a private entity independent of any contractual obligation, similar to the Walsh-Healy Act and the payment of a minimum wage, or the anti Kickback laws.

The meaning of "force and effect of law" depends on whether a regulation is a "legislative rule," promulgated under the authority of the Administrative Procedures Act, 5 USC Ch. 5, or a nonlegislative rule. The Department of Labor's regulations for the Walsh-Healey Public Contracts Act in 29 CFR are legislative rules. If you are talking about a legislative rule, then read the Supreme Court's decision in U.S. v. Mead, 533 U.S. 218 (2001).

FAR is not promulgated under the Administrative Procedures Act, but under the Office of Federal Procurement Policy Act. In the case of the FAR, "force and effect of law" means that courts must base their rulings on its terms. It does not mean that "the contractor shall" or "contractors shall" imposes a positive duty on a contractor independent of a solicitation provision or contract clause. It does mean that offerors and contractors are on notice of how a court or board must rule if an issue of compliance arises.

I learn more from this forum... For those interested in the public contracts exemption to the APA's rulemaking requirements, see 5 USC 553(a)(2). It has been interpreted in, e.g., Essex Electro Eng'rs, Inc. v. United States, 960 F.2d 1576 (Fed. Cir. 1992). More importantly, if the rule is procedural, housekeeping, or interpretative, it also is not subject to the procedures on promulgating rules; but these three types of rules are not given as much deference as substantive (or legislative) rules. A useful primer on this stuff is Nash & Cibinic, Legal Status of Government Manuals and Instructions: Putting the Fox in Charge of the Chickens, 1 N&CR ? 77 (Oct. 1987).

As I understand it, though, one shouldn't confuse the Christian Doctrine with the discussion of legislative rules. The distinction between substantive (legislative) rules and housekeeping rules is, as I understand it, a product of the APA. Christian was decided before the APA, and, as interpreted, has been applied to clauses that implement a significant or deeply engrained procurement policy. A clause can be read into a contract even if that clause is the result of a housekeeping rule. Hope I'm stating this fairly.

If you would like to learn more about the distinction between legislative rules and nonlegislative rules, see Gersen, Legislative Rules Revisited, University of Chicago Law Review, 2007, Special; 74 UCHILR 1705; 74 U. Chi. L. Rev. 1705. See also the decision by the great Judge Richard Posner in Hoctor v. U.S. Dept. of Agriculture, 82 F.3d 165 (7th Cir. 1996).

If you would like to learn more about the distinction between legislative rules and nonlegislative rules, see Gersen, Legislative Rules Revisited, University of Chicago Law Review, 2007, Special; 74 UCHILR 1705; 74 U. Chi. L. Rev. 1705. See also the decision by the great Judge Richard Posner in Hoctor v. U.S. Dept. of Agriculture, 82 F.3d 165 (7th Cir. 1996).

?Even Big Cats are not safe outside their compounds, and with a lawyer?s ingenuity the Deparment?s able counsel reminded us??

??though one might have supposed the Big Cats able to protect themselves against the native Indiana fauna.?

?The Department?s counsel made the wonderful lawyer?s argument??

?But our task in the case is not to plumb the mysteries of legal theory??

?But we attach no weight to the Department?s inconsistency??

Thank you! Thank you! Thank you! for introducing me to this Judge!

Judge Posner is one of the most brilliant men in this country. He is the author of many books and articles and the leader of the Law and Economics movement. Some of his titles are:

Law and Economics

The Crisis of Capitalist Democracy

How Judges Think

Breaking the Deadlock: The 2000 Election, the Constitution, and the Courts

Sex and Reason

Not A Suicide Pact: The Constitution in a Time of National Emergency

Preventing Surprise Attacks: Intelligence Reform in the Wake of 9/11

There are many, many more. He teaches at the University of Chicago Law School. He and Nobel Prize Winning economist Gary Becker maintain a blog at http://www.becker-posner-blog.com/.

I agree with Vern that CO's price contracts, but I would argue that contractors price subcontracts and 31.102 reads to me as in the pricing of new fixed-price contracts and subcontracts (not just modifications) the contractor shall follow the cost principles. This seems to be placing a requirement on the subcontractor to price the proposal honoring the cost principles and a requirement on the contractor to ensure as much. This is all prior to the award of a contact, outside the scope of the COs task and independent of the negotiation of FPRAs or final indirect cost.

garth,

I think that you are misinterpreting FAR 31.102. Here's what it says:

The applicable subparts of Part 31 shall be used in the pricing of fixed-price contracts, subcontracts, and modifications to contracts and subcontracts whenever (a) cost analysis is performed, or ( a fixed-price contract clause requires the determination or negotiation of costs.

In accordance with FAR 1.108(f), the contracting officer is responsible for this action. See FAR 1.108(f):

Imperative sentences. When an imperative sentence directs action, the contracting officer is responsible for the action, unless another party is expressly cited.

Applying the requirement at FAR 31.102 to a contractor would not be interpreting the FAR in accordance with FAR 1.108(f).

Jacques, are you reading that exemption under 5 USC 553(a)(2) as exempting the FAR from APA or just the portion addressing Rule Making?

If you would like to learn more about the distinction between legislative rules and nonlegislative rules, see Gersen, Legislative Rules Revisited, University of Chicago Law Review, 2007, Special; 74 UCHILR 1705; 74 U. Chi. L. Rev. 1705. See also the decision by the great Judge Richard Posner in Hoctor v. U.S. Dept. of Agriculture, 82 F.3d 165 (7th Cir. 1996).

Vern, can you explain to me again why this would not apply the Title 48 of the CFR?

Don, If a CO priced an action would it not be a contract - as opposed to a subcontract?

Vern, can you explain to me again why this would not apply the Title 48 of the CFR?

Yes, but I won't.

Don, If a CO priced an action would it not be a contract - as opposed to a subcontract?

garth,

COs price contracts and subcontracts. FAR 15.404-3 contains the COs responsibilities pertaining to subcontract pricing:

15.404-3 Subcontract pricing considerations.

(a) The contracting officer is responsible for the determination of price reasonableness for the prime contract, including subcontracting costs. The contracting officer should consider whether a contractor or subcontractor has an approved purchasing system, has performed cost or price analysis of proposed subcontractor prices, or has negotiated the subcontract prices before negotiation of the prime contract, in determining the reasonableness of the prime contract price. This does not relieve the contracting officer from the responsibility to analyze the contractor?s submission, including subcontractor?s cost or pricing data.

Jacques, are you reading that exemption under 5 USC 553(a)(2) as exempting the FAR from APA or just the portion addressing Rule Making?

All I had in mind was rulemaking, since 553(a)(2) only exempts matters relating to contract from the section, and the section is about rulemaking. Garth, please don't miss the forest for the trees. The fact section 553 does not require the same formality in issuing substantive rules regarding contracts doesn't change the fact the rule would have to implement some authority delegated to the agency by statute.

Notwithstanding the FAR was promulgated under the OFPP Act (thanks Vern), it implements a number of statutes, TINA, CICA, etc.

If I am reading Cibinic and Nash's Formation of Government Contracts (thanks Jacques) correctly it seems to say that there is great uncertainty regarding the legal status of specific provisions in the FAR.

That various courts have ruled that regulations have the full force and effect of law if:

(1) a court can reasonably conclude that the grant of authority contemplated the regulations issued (Chrysler Corp v. Brown),

(2) if not specifically authorized by statute, to the extent the rule was adopted to further the congressional purpose of achieving an ?economical and efficient? procurement system (Liberty Mut. Ins. V. Friedman), or

(3) regulations not implementing a specific statue may have the force and effect of law if supported by the general authority of the Agency and the importance of the Government policy (G. L. Christian & Asscos. v United States)

Given this uncertainty, where the FAR states that the ?contractor shall? or ?subcontractor shall? do something, then as a practical matter it still seems to me that a contractor should regard these provisions as prescriptive.

Jacques, if you were a contractor how would you set your internal policies regarding these types of provision.

Dear Forum Readers, please allow me to apologize for all of my posts to date. Clear writing is a reflection of clear thinking, and I apparently don't think clearly. The shoe is now on the other foot, and I'm being asked to decipher a post that looks remarkably like the stuff I've posted in haste to attempt to make my point. Hopefully I'll remember in the future that haste makes waste, and that stream of consciousness makes the job of figuring out my point difficult for my fellow readers. Thanks, Garth.

I agree that it's indecipherable. Don't try to decipher it. Say that you don't understand it. Let the poster clarify. Better yet, ignore it. You're not going to get anywhere with the poster.

Jacques, my apologies for the lack of clarity.

How about just to the question, if you were a contractor how would you set your internal policies regarding provisions in the FAR that state a contractor or subcontractor shall do something absent any supporting contractual provision?

I would use the Christian Doctrine as my guide.

I would use the Christian Doctrine as my guide.

Thanks Jacques. Can you spoon feed me just a little more here. I am reading that as to take them as prescriptive. Is that correct?

Two scenarios:

(1) The absence of the contractual provision is because the CO omitted a required clause that implements a significant or deeply engrained public policy.

(2) The absence of the contractual provision is either because the CO omitted a clause that doesn't meet this test; or because there is no provision.

For Scenario #1, I'm not going to be surprised when the court reads the clause into my contract, because the government CO acted beyond his authority in omitting it. For Scenarios #2, I'm not contractually bound.

Everything else is "gee wizz."

Yes, but I won't.

Vern - After re-reading the discussion from the start I appreciate your lack of interest in restating something you have already said three times.

Jacques,

I think the lack of comfort I have with yours and Vern?s position ? I read them as substantial the same at this point ? and the inability to defend mine, stems from a lack of understanding of the underlying statutes. I need to better familiarize myself with the various authorities under which the regulations were promulgated and how they interrelate. How the grant of procurement authority to the armed services (ASPA) plays against the authority to promulgate the regulations (OFPP Act), how that authority plays against the rule making process (APA), and how those relate to the underling authority granted each agency and the various statutes they are charged with implementing (e.g., TINA, CICA, FARA, FASA, WSARA?)

After I attempt to remedy my ignorance on administrative law - if my position still holds water - I will try to make a more pointed defense.

It would help if you would clarify the question for yourself.

You gave this thread the name, "What parts of the FAR apply to me?" Now, what do you mean by "apply"? Apply how?

Suppose that a prospective prime contractor is negotiating a sole source contract with the government and plans to subcontract some of the work. FAR 15.404-3( says that the prime contractor "shall" conduct appropriate cost or price analysis of proposed subcontract prices. The CO asks the prospective prime contractor to comply. The prospective prime contractor tells the CO to get lost and to accept its proposal or reject it--take it or leave it as is.

What can the CO do to the prospective prime contractor beside refusing to do business with it? If that's all the CO can do, then in what sense can it be said that FAR "applies" to the prospective prime contractor? The government cannot force the firm to do what it says. It cannot fine them or imprison their management for refusing to comply, like it could if the firm refused to file a tax return. There are no civil or criminal sanctions for refusal. Thus, from my perspective, it makes no sense to say that FAR 15.404-3( "applies" to contractors when it says "The prime contractor shall... . Despite the language, FAR is really telling the CO to get the contractor to do it, if possible.

Bottom line: What do you mean by "apply"? What is your question, really? What do you want to know, exactly? Answer those questions before you start doing any research.

Point taken.

Any thoughts on the following except from the new DoD Business Systems Rule affect the comments in this thread?

DFARS 252.244-7001 Contractor Purchasing System Administration

The Contractor's purchasing system shall--

(1) Have an adequate system description including policies, procedures, and purchasing practices that comply with the Federal Acquisition Regulation (FAR) and the Defense Federal Acquisition Regulation Supplement (DFARS);

Interesting question. My old answer would have been the parts of the FAR that are within the funky four corners of the contract we signed. Now, those four corners have roped in not only the whole FAR but also the DFARS.

Contractor purchasing systems used to have to follow FAR principles with wide latitude to use commercial best practices. Now they must "comply" with the FAR and DFARS, a much higher standard.

May as well throw out all the old policies, procedures, and practices (except for a few such as Disputes, Prompt Payment, etc that cannot flow down as is, and must be adapted) and just use the FAR and DFARS for everything else.

No longer can a contractor limit a bidders list to enough proven performers to maximize the likelihood of adequate price competition. Now it appears that a contractor must comply with those portions of the FAR and DFARS that implement CICA. Our company's procedures require a justification for non-competitive procurement. Now it looks like we will need a justification for anything other than full and open. Does FAR/DFARS compliance include posting subcontract requirements on FedBizOpps? Or some similar contractor web page?

How far does this compliance requirement go? Every last detail? Literal compliance with every piece of FAR and DFARS will be a practical impossibility for contractors.

It's times like this when I'm glad I work the prime contract side of the contractor house, and not the subcontract and procurement side.

After further analysis I think my original post is valid. If the FAR places a requirement on a contractor or subcontractor then, even absent any contractual language, it should be given deference as having the full force and affect as law. I think the argument that there is not sufficient statutory basis to allow the FAR to place requirements on contractors lacks support.

Here is what you said in your first ("original") post.

May take is the primary direction for prime contractors and higher tier subcontracts are provided in the contract. If there is a contractual clause citing a regulatory requirement then that section(s) of the regulation applies to the prime contractor and higher tier subcontractors.

I think the mistake that is often made in reading the regulations is substituting the term ?contractor? when the regulations use the term ?Contracting Officer?. It seems to me that the regulations reserve the term ?Contracting Officer? for U.S.G. personnel with authority to award or execute Government prime contracts. When the regulations place requirements on contractors, as opposed to the Contracting Officer, the regulations state such by using the terms ?contractor? or ?subcontractor. Using the terms ?contractor? and ?Contracting Officer? interchangeably lead to a confused and incoherent reading, and selective substitution is arbitrary.

Having said that there do appear to be statutory requirements that penetrate down to the contractor subcontractor relationship absent any contractual language. I am not real clear on the rule for that application.

Now, just what part of that do you think is valid? The part that you weren't "real clear" about? Tell us about your "further analysis." Give us the details.

For sure that part! But I think the others as well.

I offer these two cases ...

CHEVRON U. S. A. INC. v. NATURAL RESOURCES DEFENSE COUNCIL

When a court reviews an agency's construction of the statute which it administers, it is confronted with two questions. First, always, is the question whether Congress has directly spoken to the precise question at issue. If the intent of Congress is clear, that is the end of the matter; for the court, 843*843 as well as the agency, must give effect to the unambiguously expressed intent of Congress. If, however, the court determines Congress has not directly addressed the precise question at issue, the court does not simply impose its own construction on the statute, as would be necessary in the absence of an administrative interpretation. Rather, if the statute is silent or ambiguous with respect to the specific issue, the question for the court is whether the agency's answer is based on a permissible construction of the statute.

"The power of an administrative agency to administer a congressionally created . . . program necessarily requires the formulation of policy and the making of rules to fill any gap left, implicitly or explicitly, by Congress." If Congress has explicitly left a gap for the agency to fill, there is an express delegation 844*844 of authority to the agency to elucidate a specific provision of the statute by regulation. Such legislative regulations are given controlling weight unless they are arbitrary, capricious, or manifestly contrary to the statute. Sometimes the legislative delegation to an agency on a particular question is implicit rather than explicit. In such a case, a court may not substitute its own construction of a statutory provision for a reasonable interpretation made by the administrator of an agency.

Note the wording indicating the standard necessary for a nexus between the statute and regulation does not appear to be particularly high: ?Such legislative regulations are given controlling weight unless they are arbitrary, capricious, or manifestly contrary to the statute?

CHRYSLER CORP. v. BROWN, SECRETARY OF DEFENSE, ET AL

In order for a regulation to have the "force and effect of law," it must have certain substantive characteristics and be the product of certain procedural requisites. The central distinction among agency regulations found in the APA is that between "substantive rules" on the one hand and "interpretive rules, general statements of policy, or rules of agency organization, procedure, or practice" on the other. A "substantive 302*302 rule" is not defined in the APA, and other authoritative sources essentially offer definitions by negative inference. But in Morton v. Ruiz, 415 U. S. 199 (1974), we noted a characteristic inherent in the concept of a "substantive rule." We described a substantive rule?or a "legislative-type rule," id., at 236?as one "affecting individual rights and obligations." Id., at 232. This characteristic is an important touchstone for distinguishing those rules that may be "binding" or have the "force of law." Id., at 235, 236.

That an agency regulation is "substantive," however, does not by itself give it the "force and effect of law." The legislative power of the United States is vested in the Congress, and the exercise of quasi-legislative authority by governmental departments and agencies must be rooted in a grant of such power by the Congress and subject to limitations which that body imposes. As this Court noted in Batterton v. Francis, 432 U. S. 416, 425 n. 9 (1977):

"Legislative, or substantive, regulations are `issued by an agency pursuant to statutory authority and . . . implement 303*303 the statute, as, for example, the proxy rules issued by the Securities and Exchange Commission . . . . Such rules have the force and effect of law.

Neither of those cases supports your argument, which, as I understand it, is that when a passage of the FAR, such as FAR 15.404-3( , says that a contractor "shall" do something it must do so even when FAR does not prescribe a contract clause to that effect. I know of no clause that requires a prime to perform an analysis of proposed subcontract costs. Absent a required clause, the contractor is not contractually bound, and the government has no contractual remedy if the contractor refuses. At most the CO can say that the prime has not proved its subcontract costs and negotiate accordingly. FAR prescribes no sanction if a contractor refuses to analyze subcontract proposals, and there is no express contractual remedy. The only thing a CO could do is deny a claim, if there is one, and see what happens.

You really shouldn't just grab cases off a shelf and throw them at me. It's pointless.

By the way, as a matter of common sense the prime would do an analysis, but we're not talking about that.

garth,

Your argument ignores FAR 1.104, which states "The FAR applies to all acquisitions as defined in Part 2 of the FAR, except where expressly excluded." The definition of "acquisition" in FAR Part 2 only includes contracts that are made "by and for the use of the Federal Government." Except in the rare circumstance where a contractor is acting as the Government's purchasing agent, contractors do not make "acquisitions" as defined in FAR Part 2. In order for your argument to be valid, you need to prove that FAR 1.104 doesn't mean what it says.

I agree with Vern regarding the effect of FAR 15.404-3( b ). It is not that paragraph that requires a contractor to perform an analysis of subcontract costs. If the CO uses a provision or clause requiring submission of price proposals in accordance with FAR Table 15-2, the table instructions require an analysis of subcontract costs.

Garth, you need to understand what Chevron and Chrysler are about. The significance of Chevron is that if an agency is charged with implementing a statute and issues regulations that represent a reasonable interpretation of the statute, courts are bound by the agency's interpretation of the statute and regulation although the court may interpret the statute or regulation a different way. Chevron really does not apply to the FAR because no single agency is charged with promulgation of the FAR.

As for Chrysler, while it has been held that the FAR is a regulation having the force and effect of law, exactly what that phrase means has to be examined. In Chrylser, the significance of that phrase related to whether regulations issued to implement an executive order could authorize a government employee to release information that may fall within 18 U.S.C. 1905. Frequently, that term is used to describe the interpretation that courts must give to regulations and the analytical approach to be used by courts when interpreting regulaitons having the force and effect of law.

"Force and effect of law" means that a court will credit a regulation lawfully promulgated by an executive agency with the same authority as a statute enacted by Congress pursuant to the Constitution. That does not mean that the regulation applies to any particular party. it means that if a regulation does apply to a particular party the courts will enforce it.

The argument is not specific any particular requirment in the FAR. The argument is if the legal status of the regulations makes them binding on persons, including Government contractors and subcontractors, regardless of contractual agreement.

The argument is that the FAR impliments many statutes (e.g., TINA, CICA, FARA, FASA, WSARA) over and above the statute providing their origianl authority. If there is sufficient nexus in regulations to the statutes they have the full force and effect of law. To that point i still content the cases are relevent.

It seems Nash & Cibinic interpret Chrysler Corp. v. Brown, 441 U.S. 281 (1979) have a similar interpratation in their report Legal Status of Government Manuals and Instructions: Putting the Fox in Charge of the Chickens, 1 N&CR ? 77 (Oct. 1987).

"The Supreme Court held that for a regulation to have the force and effect of law it must be:

1. Promulgated pursuant to a statute which can be reasonably said to contemplate the regulations, and

2. Published in accordance with the prior notice and hearing requirements of Administrative Procured Act, 5 U.S.C. 553.

The Court held that such regulations are, in effect, the result of Congress' delegation of its legislative powers to the executive agencies. Their legal status makes them binding on persons, including Government contractors and subcontractors, regardless of contractual agreement."

You are making the classic rookie mistake of interpreting a regulation based on an isolated sentence. You have to read FAR 15.404-3 in the context of the entire regulation. See Lengerich v. Department of Interior, 454 F.3d 1367 (Fed. Cir. 2006):

In interpreting a regulatory provision, we examine the text of the regulation as a whole, reconciling the section in question with sections related to it. See Reflectone, 60 F.3d 1577-78 (holding that the proper interpretation of the plain language of the regulation “examines and reconciles the text of the entire regulation, not simply isolated sentences”).

Taken in the context of the entire FAR, which at 1.104 and 2.101 expressly states that the FAR applies to acquisitions and that acquisitions are government actions, and reconciling 15.404-3 to the rest of it, all it means is that the contracting officer must demand that primes and subs perform analyses of subcontractor proposals. The language stating that the "prime contractor or subcontractor shall" analyze subcontractor proposals does not command prime contractors or subcontractors to do anything, because the FAR, unlike the tax regulations in Title 26 of the CFR, does not apply to the public. If the government wants to make an offeror or a prime or sub do something that the FAR requires, it must include a provision in a solicitation or a clause in a contract.

If the FAR applies directly to offerors and contractors irrespective of contract language, why do we need solicitation provisions and contract clauses? Why not just say that in submitting a proposal or performing a contract the offeror or contractor shall comply with the FAR?

But look, since I'm not getting paid to teach you, I encourage you to go on believing what you like.

Neither one of us is getting paid are we.

Nope. And I'll go on believing what I like.