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Deep Dive: Analysis of the Overhaul of FAR Part 34

This page provides a detailed analysis of the RFO changes to FAR Part 34 - Major System Acquisition.

Executive Summary

The RFO changes to FAR Part 34 eliminate the entire procedural framework that has governed how the U.S. government acquires its largest and most complex systems. By removing detailed rules for competition, acquisition planning, and phased development, the overhaul replaces a structured and transparent process with broad, undefined agency discretion. This shift creates significant barriers for small, innovative companies, which have historically relied on the structured "on-ramps" within major programs—like concept exploration and demonstration phases—to introduce new technologies and compete for both prime and subcontracting opportunities. The new conformed text confirms that the only remaining regulations in Part 34 concern post-award administration, not the critical pre-award planning and competition phases.

Detailed Breakdown of Changes

The RFO initiative removed the entire procedural core of the old FAR Part 34 (sections 34.001 through 34.005), which outlined the policies and procedures for acquiring major systems. The new conformed text confirms that the only sections retained are Subparts 34.1 (Postaward rules related to the Defense Production Act) and 34.2 (Earned Value Management System administration). The key deletions that remove the entire framework for competition and acquisition planning are:

Deletion of Foundational Policy and Agency Responsibilities

  • What the Rules Used to Say: The old sections 34.000 through 34.003 established the foundational policy for major acquisitions, referencing OMB Circular A-109 as the guiding policy document. They required agency heads to establish written procedures, identify key decision points, and define what constitutes a "major system acquisition" that warrants special management attention.
  • The Practical Consequence: Removing these rules eliminates the requirement for a documented, agency-wide management process for its largest acquisitions. This reduces transparency and makes the process more ad-hoc and less predictable for industry partners. The new conformed text simply begins at Subpart 34.1, confirming these foundational sections are gone.

Deletion of the Entire "General Requirements" Framework (Old Section 34.005)

This is the most significant removal, as it deletes the specific, actionable steps that ensured a competitive and phased approach to acquiring major systems.

  • Competition (34.005-1): The explicit requirement for program managers to "promote full and open competition and sustain effective competition" throughout the acquisition process was removed.
  • Mission-Oriented Solicitation (34.005-2): The rule directing agencies to describe their needs in terms of mission capabilities—and explicitly stating that "each offeror is free to propose its own technical approach"—was deleted. This was critical for encouraging innovative solutions from non-incumbent contractors.
  • Phased Development (34.005-3 to 34.005-6): The entire framework for a phased lifecycle—including Concept Exploration, Demonstration, **Full-Scale Development**, and **Full Production**—was eliminated. This structured process provided multiple entry points for different types of contractors, including specialized and innovative small businesses, to participate during the lifecycle of a major program.

In-Depth Small Business Impact Analysis

While small businesses rarely act as prime contractors on major systems, the procedural framework within the old FAR Part 34 was critical for ensuring their participation as subcontractors and innovators. The removal of this framework has the following significant impacts:

  • Loss of Critical "On-Ramps" to Major Programs: The elimination of the phased development process (Concept Exploration, Demonstration, Full-Scale Development) is the most damaging change. These phases served as crucial entry points, or "on-ramps," for smaller, highly specialized firms to introduce innovative technologies and prove their capabilities on a manageable scale. Without these structured phases, agencies are more likely to award a single, massive contract to a large incumbent, closing the door to new entrants.
  • Reduced Subcontracting Visibility and Opportunity: The requirement for a detailed, written acquisition strategy and transparent, mission-oriented solicitations gave small businesses visibility into the long-term needs of a major program. This allowed them to proactively position themselves for subcontracting roles. The new, less-defined process makes it much harder for small firms to anticipate needs and find opportunities to support prime contractors.
  • Stifling of Innovation: Major systems are where cutting-edge technology is often integrated into government solutions. As documented in other campaign materials, small businesses are a primary engine of this type of innovation. By removing the early "concept" and "demonstration" phases where these firms could best compete, the government makes it less likely that new, transformative technologies from small firms will be incorporated, leading to a less advanced and less competitive industrial base.

APA & Procedural Compliance Failures

The complete removal of the procedural framework for Major System Acquisition (the old sections 34.001-34.005) constitutes a substantive and significant policy change. According to 41 U.S.C. §1707, any procurement policy with a "significant effect beyond the internal operating procedures of the agency" or a "significant cost or administrative impact on contractors" must be published for public comment in the Federal Register before taking effect. By eliminating the rules for competition and development for the government's largest contracts via an unpublicized class deviation, the administration has failed to meet this legal standard.

Agency Implementation Tracker

The following agencies have been confirmed to have issued class deviations adopting the FAR Council's model text for the overhaul of FAR Part 34. The lockstep adoption of nearly identical text by these diverse agencies provides overwhelming evidence of a centrally-directed policy implementation, not a series of independent decisions.

  • Commodity Futures Trading Commission (CFTC)
  • Consumer Product Safety Commission (CPSC)
  • Department of Commerce (DOC)
  • Department of Education (ED)
  • Department of Health and Human Services (HHS)
  • Department of Homeland Security (DHS)
  • Department of Labor (DOL)
  • Department of State (DOS)
  • Department of Transportation (DOT)
  • Department of Agriculture (USDA)
  • General Services Administration (GSA)
  • Merit Systems Protection Board (MSPB)
  • Millennium Challenge Corporation (MCC)
  • National Aeronautics and Space Administration (NASA)

External Commentary & Expert Analysis

While specific public commentary on the technical changes to FAR Part 34 is still developing, the practical effect of removing its procedural guardrails aligns directly with broader concerns about market consolidation and the health of the U.S. industrial base raised by experts and officials.

"Small businesses bring competition to federal contracting... and ensure the defense industrial base isn't reliant on a handful of massive corporations."
— Senator Joni Ernst (R-IA), Chair, Senate Small Business Committee

The removal of the structured, competitive framework in FAR Part 34 directly contributes to this risk of consolidation by making it harder for new and small innovators to participate in the early stages of major defense and civilian agency programs, favoring large incumbent firms.