The FAR and How It Came About Where It Went

» Posted by on Mar 13, 2014 in Business Practices, Contracting for Travel Services, History and Overview, Travel Professional Resources | 0 comments

To understand how the FAR (Federal Acquisition Regulations) came into being you have to remember how our country lived in its earlier years. Those who ran the country were predominately plantation owners, small manufacturers or were involved in shipping. When they needed to buy something they simply went to the source and made the purchase. They may or may not have gotten pricing from several sources, but knew where their dollar went the furthest.

Now introduce a new element, the Federal Government Employee. Their basic method of being paid and running an administration was based on the British Colonial model which resembled the British Federal Systems, but with a few changes. Remember that initially being sent to “The Colonies” was not always a reward and many times those who came here were actually not the individual who was intended for the position. It was quite common in the British Federal System for people to be appointed to positions of significant authority and/or political position.  Usually what you would see is the individual who actually arrived here was probably the third to five person in a pyramid set up. Basically someone who had been appointed to a position in the Colonies would offer half of their salary to someone else if they would take the appointed position. Usually that individual would then do the same offering half of what they would make to someone else. The line continued until someone actually looked at America as an opportunity to grow or to escape.

In the early stages of the US Federal Government, there were a few Senior Executives, know has Secretaries and about 20 clerks, most of who were owed back wages. Most of the income the Federal Government received was based on tariffs or other import duties. So as you can, see the administration started and continued for quite a while to be small. It later became not uncommon that those in clerical positions now were making purchases for the government. We had a small standing army of less than 1000 to provide for and a slowly increasing demand for the Federal Government to do more.

When a purchase was made it was quite common for a clerk to write the requirements down, put them in an envelope and gave it to some one they knew could provide what was needed. The idea of getting three bids was not part of the process. Later as the Federal Government grew from more tariff income the purchases became larger. The process though of purchasing did not change until the 19th century when many merchants complained they were being excluded from the purchasing process. Thus the requirement for purchasing had a new element introduced, sending out all bids by the US Postal Service. This later became mandatory as a means to prove that there was competition in the purchasing process.

Now if you have watched many of the old Westerns’ you will remember the Indian Agent who was supposed to provide food and goods to a reservation they served with the funds given to them. You probably also remember that a few of them decided to keep more of that money for themselves and would provide food and goods not quite of the quality that was intended. Now this certainly does not mean that this was the case every where, but there was not a system of checks and balances that had someone such as an Inspector General who would monitor the contracts that had been awarded. In fact most Federal Contracts that did not involve specific products such as fire arms were actually monitored at all.

The purchasing process changed further as more merchants and manufacturers wanted Federal Contracts and needed a way to find out what was needed and when the requirements would be announced. This created the Federal Register which contains a list of all the purchases that were now authorized or requests for bids for proposed purchases including the requirements for the development of specialized equipment such as fire arms. This basic way of purchasing did not change until the early 1990’s when the internet became a reasonable way to distribute this information in a much more timely fashion.

If you have seen the original postings on what is now “Federal Business Opportunities” the process to move into the electronic age was one of kicking and screaming by the agency. If you looked at the “font” you would think that an IBM Selectric Typewriter was at the other end of the screen putting in each entry.

As you see the FAR today being used, it is administered by Contracting Officers and Specialists who have the Warrant to make purchases up to their authorized level. They sign actual contracts that have cancellation clauses and specific performance requirements. They are audited periodically to ensure they are within their authority and that they have competed their purchases through competitive bidding. One of the most important changes though that has come about is the new requirement of “best value” versus lowest price. This is where you see today’s contracting staff many times conflict with the project manager.

Most general contracting staff does not have a specific understanding of everything they are asked to purchase. Meetings or related services are two areas where many contracting staff will tell you where they struggle. Many have never attended a meeting in a city where they do not live or are aware of all that is required to produce the event. Other than by just price they can have a hard time making a determination on how paying more is actually better and produces better results. You usually see this when you pose specific questions to them that they defer to the project manager.

The FAR is an evolving policy and procedure that you must learn to work within. If you find yourself not knowing how to proceed, seek out one of the senior members of our association and ask for help. Any of us can either guide you to where the answer can be found or answer your questions. The power of membership in SGTP is accessing the shared knowledge of the members.

By Ted Miller, CHME, CHSP

Starwood Hotels and Resorts




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