As a government contractor responsible for procurement or sales in the aerospace and defense industry, you are tasked with understanding many different acronyms that represent government procurement and trade regulations. It is a daunting task to remember what each stands for, and even more, discern the rules contained within each.
In this article, we will highlight ITAR, FAR, DFAR, and TINA. These are four procurement trade regulation standards that a Procurement Officer, Senior Buyer, or a Contract Administrator are expected to know in order to ensure their company’s compliance. A more in-depth understanding of each of these can be found in the free infographic available at the bottom of this post.
ITAR, FAR, DFAR, TINA: four important trade regulations
ITAR stands for International Traffic in Arms Regulations. It controls the export and import of defense-related articles and services on the United States Munitions List (USML). The USML contains categories for firearms, ammunition, explosives, ground vehicles and aircraft, electronics, software, documentation and more. ITAR states that information and material dealing with defense and military related technologies listed on the USML may only be shared with U.S. Persons unless authorization from the Department of State is received or a special exemption is used. Only the State Department has the authority to make determinations concerning ITAR and USML.
The Federal Acquisition Regulation, or FAR, is the basic rulebook for government contracts. Considered the Bible for federal government contracting, the FAR’s primary purpose is to provide uniform policies and procedures for acquisition by which the U.S. federal government acquires goods and services.
FARs are divided into 53 parts. Sections 1-51 of the FAR establish policies, requirements, exceptions, practices and procedures to guide the acquisition workforce to perform their duties. The last two sections provide standard solicitation and contract clauses and forms.
The Department of Defense has a supplement to the FARs designated DFARS, or Defense Federal Acquisition Regulation Supplement. Many government agencies like the DoD have their own agency-specific regulations guided by their Non-FAR supplement. Like the DFAR, their supplements must be accompanied with a FAR. The DFARS contains requirements of law, DoD-wide policies, delegations of FAR authorities, deviations from FAR requirements, and policies and procedures that have a significant effect on the public.
A couple of other examples of Non-FAR supplements are HSAR, which is the Department of Homeland Security Acquisition Regulation, and NASA’s NFS, which stands for National Aeronautics and Space Administration Federal Acquisition Regulations Supplement.
The Truth in Negotiations Act (TINA) requires a government contractor to provide the government with the cost or pricing data that supports their proposals for certain contracts worth more than $750,000 (2015). This act was passed by Congress to protect the Government from paying inflated prices in contracts that lack adequate price competition.
TINA places the Government on equal footing with the contractor during contract negotiations. Throughout the negotiations, the contractor must submit updated data, ensuring that the information is accurate at the close of negotiations. However, the Truth and Negotiations Act does not create an equal position between the government and the contractor. There is no obligation on the part of the Government to disclose anything to the contractor during the negotiations.
Contractors and Subcontractors
The government needs competent and qualified companies to supply the products and services it requires to remain operational. As you read through Request for Proposals (RFP), Non-disclosure Agreements (NDA), and other contracts proposed by government entities or a prime contractor in the aerospace and defense industry, you will find that they require compliance to many of these trade regulations. If you are currently conducting business as a government contractor, you already adhere to certain regulations set forth by these four and other government trade regulations. If you are a new contractor or subcontractor, learning, understanding, and following government trade requirements can give you a competitive edge and spell success for your small company when trying to win a contract. On the other hand, not following these trade regulations can lead to the revocation of your company’s export and import privileges. Failure to do so can also mean the loss of privileges to do business with the U.S. Government.
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