Deep Dive: FAR Part 34 - Ending Phased Acquisition
The overhaul of FAR Part 34 (Major System Acquisition) fundamentally alters how the government approaches large-scale, long-term projects. By removing policies that encouraged "phased" acquisitions and multiple entry points for specialized firms, the new rules create a powerful structural bias in favor of a single, massive prime contractor, effectively locking out innovative small businesses from the nation's most critical programs.
The "Before" Picture: On-Ramps for Innovation
The original FAR Part 34 recognized that major systems (like new aircraft, IT infrastructure, or defense platforms) are not monolithic. They are complex ecosystems built from many different technologies and services. The regulations were designed to:
- Encourage agencies to acquire systems in phases or increments over time.
- Promote "effective competition" throughout the entire lifecycle of the program.
- Create multiple opportunities for specialized, innovative firms—often small businesses—to compete for and win discrete work packages within the larger system.
This approach ensured that the government could integrate new technologies from a diverse set of suppliers as a program evolved, rather than being locked into a single vendor's technology for decades.
The "After" Picture: A Single Door
The new FAR Part 34 deletes these strategic considerations. The nuanced policies encouraging phased acquisition and lifecycle competition have been removed.
The simplified text now treats a "major system" as a single, indivisible procurement. This naturally favors the handful of large, incumbent prime contractors capable of bidding on the entire system from start to finish, while excluding smaller firms that could have competed on individual phases or components.
Detailed Impact Analysis
This structural change has profound consequences for the American industrial base:
- It Strangles Innovation: Major technological breakthroughs often come from smaller, agile firms. By designing acquisitions as single, massive contracts, the government loses the ability to easily integrate these cutting-edge solutions into its most important programs.
- It Weakens the Defense Industrial Base (DIB): A resilient DIB relies on a deep and diverse network of suppliers. Consolidating contracts into fewer, larger awards makes the supply chain more brittle and overly dependent on a small number of "too big to fail" contractors.
- It Increases Long-Term Costs: Without the competitive pressure from smaller firms throughout a program's lifecycle, the government loses leverage, leading to higher costs and vendor lock-in for decades.
This change sacrifices long-term strategic advantage for short-term administrative simplicity. It creates a closed ecosystem where the largest contractors are protected from competition from the innovative small businesses that are vital to our national security and economic future.