1. How Far and Procurement Rules Apply to Government Contracting
Federal government contracting operates under a comprehensive regulatory framework that imposes specific obligations at every stage of the contracting process, and a failure to comply with any of these obligations can result in contract termination, financial penalties, and exclusion from future contracting.
Far and Dfars Compliance Obligations for Government Contractors
The Federal Acquisition Regulation is the primary rulebook for all federal government contracting, and the Defense Federal Acquisition Regulation Supplement adds defense-specific requirements for contracts with the Department of Defense. A government contractor must comply with the specific FAR and DFARS clauses incorporated into each contract, including obligations related to cost accounting standards, small business subcontracting, labor law compliance, counterfeit parts prevention, and mandatory disclosure of potential violations.
Regulatory compliance and compliance audit counsel can advise on the specific FAR and DFARS compliance obligations applicable to government contractors and develop the federal procurement regulatory compliance strategy.
Bid and Proposal Requirements and Contract Award Protests
A bid or proposal submitted in response to a federal solicitation must comply with the specific requirements of the solicitation, including representations and certifications about the contractor's eligibility and integrity, and a contractor that submits a materially false representation can face bid rejection, contract rescission, and False Claims Act liability. A contractor that believes it was improperly excluded from a contract award can file a bid protest with the Government Accountability Office or the Court of Federal Claims.
| Legal Area | Governing Framework | Core Obligations | Primary Legal Risks |
|---|---|---|---|
| Contract Formation | FAR Parts 14/15; DFARS | Bid preparation; representation; pricing | Bid rejection; contract rescission |
| Contract Performance | FAR Part 52; DFARS clauses | Cost accounting; reporting; deliverables | Default termination; damages |
| Security and Export | ITAR; EAR; DFARS 252.204 | Access controls; technology transfer; licensing | Criminal prosecution; contract loss |
| Cybersecurity | CMMC; DFARS 252.204-7012; NIST SP 800-171 | CUI protection; incident reporting; assessment | Contract disqualification; debarment |
| Fraud and Compliance | False Claims Act; FAR 3.9 | Ethics programs; disclosure; audit cooperation | Treble damages; suspension; debarment |
Corporate compliance and risk management and federal litigation counsel can advise on the specific defense and government contracting legal framework and develop the government contract compliance and risk management strategy.
Bid protests and government contract disputes counsel can advise on the specific bid and proposal requirements and contract award protest procedures and develop the compliant bid submission and award protest strategy.
2. What Regulatory Requirements Apply to Defense Contractors?
Defense contractors face obligations related to the handling of classified information, compliance with export control laws, and the implementation of cybersecurity measures that protect controlled unclassified information.
Security, Itar, and Export Control Obligations
The International Traffic in Arms Regulations administered by the Department of State controls the export of defense articles and services on the United States Munitions List, and a defense contractor that transfers ITAR-controlled items without the required license faces criminal prosecution, civil penalties, and loss of export privileges. The Export Administration Regulations impose additional controls on the export of dual-use items that have both commercial and military applications.
Export control law and export administration regulations counsel can advise on the specific security, ITAR, and export control obligations and develop the ITAR and export control compliance strategy.
Cybersecurity Requirements and Cmmc Compliance
The Cybersecurity Maturity Model Certification program requires defense contractors handling Controlled Unclassified Information to obtain third-party certification of their compliance with the cybersecurity requirements specified in DFARS clause 252.204-7021, and a contractor that cannot demonstrate CMMC compliance will be ineligible to compete for contracts requiring CUI access. DFARS clause 252.204-7012 requires defense contractors to implement NIST SP 800-171 security controls and report cybersecurity incidents within seventy-two hours.
Cybersecurity and cybersecurity governance counsel can advise on the specific cybersecurity and CMMC compliance requirements and develop the CMMC certification and cybersecurity compliance strategy.
3. What Legal Risks Arise from Government Contract Violations?
Government contractors face significant legal liability under the False Claims Act, which imposes treble damages and civil monetary penalties on contractors who knowingly submit false claims to the government, and a contractor subject to a government investigation or a qui tam action faces both criminal and civil exposure.
False Claims Act Liability and Government Fraud Investigations
The False Claims Act imposes liability of up to three times the damages suffered by the government plus civil monetary penalties on contractors who knowingly submit false claims for payment, knowingly make false statements in support of a claim, or knowingly conceal an obligation to pay money to the government. A whistleblower who files a qui tam lawsuit can share in a percentage of any recovery, and the FCA's anti-retaliation provision protects employees who report suspected violations.
Procurement fraud and whistleblower counsel can advise on the specific False Claims Act liability and government fraud investigation risks and develop the FCA defense and investigation response strategy.
Contract Termination, Suspension, and Debarment
A government contract can be terminated either for the convenience of the government, which entitles the contractor to recover its allowable costs and a reasonable profit, or for default, which can expose the contractor to damages and the costs of reprocuring the work. A contractor that is suspended or debarred from federal contracting is excluded from receiving new contracts with the federal government for the duration of the suspension or debarment period.
Suspension and debarment and contract termination counsel can advise on the specific contract termination, suspension, and debarment risks and develop the suspension and debarment defense strategy.
4. How Legal Counsel Manages Defense Contract Risk and Disputes
Government contract disputes and enforcement actions require specialized legal representation that understands both the substantive regulations applicable to government contracting and the procedural frameworks through which government contractors can challenge adverse agency actions and defend against government investigations.
Defending against Government Audits and Enforcement Actions
Government audits of defense contractor costs and accounting practices are conducted by the Defense Contract Audit Agency, and a DCAA audit finding that a contractor has charged unallowable costs or violated cost accounting standards can result in demands for repayment, adjustments to ongoing contract payments, and referrals to the Department of Justice. A contractor facing a government investigation should engage legal counsel immediately and assess its disclosure obligations under FAR 3.1003.
Federal criminal defense and federal and state fraud defense counsel can advise on the specific government audit and enforcement action defense requirements and develop the government audit response strategy.
Resolving Contract Disputes and Protecting Contractor Rights
Government contract disputes are resolved through the Contract Disputes Act, which requires a contractor to submit a certified claim to the contracting officer before appealing to either the relevant board of contract appeals or the United States Court of Federal Claims. A contractor that disagrees with a contracting officer's final decision has ninety days to appeal to the relevant board of contract appeals or twelve months to file suit in the Court of Federal Claims.
Breach of contract and international sanctions and trade tariffs counsel can advise on the specific government contract dispute resolution options and develop the contract dispute resolution and contractor rights protection strategy.
31 Mar, 2026

