What is a FAR 12 contract?
Asked by: Sonia Beier | Last update: February 20, 2026Score: 5/5 (29 votes)
A FAR Part 12 contract is a U.S. Federal Acquisition Regulation (FAR) agreement for buying commercial items (products or services the public uses) by streamlining traditional government acquisition rules, focusing on market-based pricing and fewer documentation requirements, making government procurement faster and more efficient for standard goods like laptops or software. These contracts use simpler processes from other FAR parts (like Part 13, 14, or 15) but prioritize commercial practices, meaning they rely on existing market prices and contractor quality systems rather than detailed government inspection and cost breakdowns.
What does FAR 12 mean?
Part 12: Acquisition of Commercial Items
Part 12 of the FAR ensures that contractors and government alike avoid the time-consuming and formal process of a fully negotiated procurement process for (1) purchases of a relatively small value, or (2) where the goods and services are already available in general commerce.
What are the 4 types of construction contracts?
The four primary types of construction contracts are Lump Sum (Fixed Price), where one price covers the entire project; Cost-Plus, where costs are reimbursed plus a fee; Time and Materials (T&M), paying hourly for labor and material costs; and Unit Price, paying for measured units like cubic yards or linear feet, with Guaranteed Maximum Price (GMP) also being a very common fifth type, combining cost-plus with a cap.
What does "far" mean in contracts?
The Federal Acquisition Regulation (FAR) is the principal set of rules regarding Government procurement in the United States. The document describes the procedures executive branch agencies use for acquiring products and services.
What are the three types of federal contracts?
There are three common U.S. government contract types: Firm Fixed-Price, Cost-Plus, and Time and Materials contracts. From a contractor's perspective: Firm Fixed-Price contracts are high financial risk, low compliance risk, and have a low administrative burden.
The Federal Acquisition Regulation (FAR) Explained in 5 Minutes
Who must comply with the FAR?
Any company with a federal contract must be FAR compliant but those that “store, process, or transmit Controlled Unclassified Information, or CUI” are also required to comply with the DFARS. This often applies to DoD contractors or subcontractors. The FAR is the umbrella regulation that the DFARS lives under.
What are the four types of contracts?
While many types exist, four common contract classifications include Bilateral (mutual promises), Unilateral (promise for an act), Express (explicit terms), and Implied (inferred from actions), often categorized by the exchange, formation, or performance status of the agreement, with others focusing on payment (Fixed-Price) or enforceability (Voidable).
What's the difference between CFR and FAR?
The FAR, which is codified in Title 48 of the Code of Federal Regulations (C.F.R.), generally governs acquisitions of goods and services by executive branch agencies.
What is a FAR agreement?
The Federal Acquisition Regulation (FAR) governs the acquisition process for Federal Contracts by which the government purchases goods and services.
What is a FAR-15 contract?
FAR Part 15 describes the procedures for competitive and non-competitive open market acquisitions exceeding the Simplified Acquisition Threshold (SAT). Open market is defined as products or services not available from required sources of supply, such as GSA schedule contracts, outlined in FAR Part 8.
What is the most common construction contract?
What is the most commonly used construction contract? Lump sum contracts (also sometimes known as 'fixed price contracts') are usually considered the most popular type of contract when it comes to building and engineering agreements, however they do have minor differences.
What are the four P's of a contract?
In making an offer and accepting the offer, the parties must be “of one mind” when it comes to understanding the agreement. The terms of the agreement (namely the parties, price, property, and particulars—also known as the “Four P's”) must be certain. The contract should be evidenced in writing and executed.
What are the 5 special contracts?
In India, five major categories of special contracts are recognized under the Indian Contract Act, 1872: indemnity, guarantee, bailment, pledge, and agency.
What are the changes to FAR part 12?
Notable FAR Part 12 changes include (i) consolidating simplified procedures for acquisitions up to $7.5 million, (ii) incorporating construction into the “commercial service” definition, (iii) clause deletions including FAR 52.212-3 and 52.212-5, and (iv) new clauses explicitly encouraging innovative approaches and ...
What qualifies as a subcontractor?
A subcontractor is a worker who is not your employee. You give a Form 1099 to a subcontractor showing the amounts you paid him.
What is Section 12 of the contract Act?
A person is said to be of sound mind for the purpose of making a contract, if, at the time when he makes it, he is capable of understanding it and of forming a rational judgment as to its effect upon his interests.
What is a FAR contract?
The Federal Acquisition Regulation, or FAR, is the primary set of rules used by the Department of Defense (DoD), U.S. General Services Administration (GSA) and the National Aeronautics and Space Administration (NASA) to govern the federal government's purchasing process.
What are the 4 types of real estate contracts?
The four most common types of legal real estate contracts are Purchase Agreements, Lease Agreements, Real Estate Assignment Contracts, and Power of Attorney Agreements, though other significant ones include Listing Agreements and Option Contracts, covering sales, rentals, transferring rights, and granting authority. These contracts formalize property transactions, defining terms for buyers, sellers, tenants, landlords, and agents.
What are the three types of subcontracts?
The three main types of subcontractors in construction, based on their contractual relationship, are Domestic (or Trade), Nominated, and Named subcontractors, distinguished by who hires and manages them, though often "subcontractor" refers to specific trades like HVAC, plumbing, or electrical. Domestic subs report to the main contractor, Nominated subs are chosen by the client, and Named subs are a middle ground, often pre-approved by the client but hired by the main contractor.
Who is responsible for issuing the FAR?
Federal Acquisition Regulation
Statutory authorities to issue and revise the FAR have been delegated to the Procurement Executives in Department of Defense (DoD), GSA and National Aeronautics and Space Administration (NASA).
Is CFR legally binding?
The Code of Federal Regulations (CFR) is the codification of the general and permanent rules and regulations published in the Federal Register by the executive departments and agencies of the federal government of the United States. Rules and regulations in the CFR are considered legally binding, just like statutes.
Is 14 CFR the same as FAR?
The Federal Aviation Regulations (FARs) are rules prescribed by the Federal Aviation Administration (FAA) governing all aviation activities in the United States. The FARs comprise Title 14 of the Code of Federal Regulations (14 CFR).
What are the 4 C's of contracts?
The document discusses the four key attributes of solid contracts: clarity, certainty, consensus, and consciousness. Clarity means clearly defining the details of the agreement. Certainty means using precise language like 'will' and 'shall'.
What is the difference between FAR and DFARS?
The Federal Acquisition Regulation (FAR) provides baseline rules for all U.S. federal agency procurements, while the Defense Federal Acquisition Regulation Supplement (DFARS) adds specific, stricter requirements for the Department of Defense (DoD), layering on defense-focused mandates for security, cybersecurity (like NIST/CMMC), and sensitive information handling, making DFARS a specialized extension of the universal FAR. Think of FAR as the main rulebook for all government contracts and DFARS as the DoD's specific "playbook" on top of it.
What are the two major types of contracts?
16.101 General.
(b) The contract types are grouped into two broad categories: fixed-price contracts (see subpart 16.2) and cost-reimbursement contracts (see subpart 16.3).