FAR vs. DFARS: What Defense Manufacturers Actually Need to Know 

If you hold a government contract, you’ve seen both acronyms. FAR and DFARS show up in every prime contract, every subcontract clause list, and every compliance checklist your team manages. They’re often treated as interchangeable. They’re not. 

Getting them confused is a compliance problem. And for defense manufacturers, the consequences show up in audits, in CPSR findings, and in contracts you don’t win because your compliance posture couldn’t hold up to scrutiny. 

Here’s a clear breakdown of what each one is, how they relate, and where manufacturers can improve their compliance posture. 

FAR Is the Foundation 

The Federal Acquisition Regulation is the baseline rulebook for all U.S. government contracting. Every federal agency uses it. Whether your customer is the Department of Defense, NASA, or the General Services Administration, FAR applies. 

FAR covers a wide range of obligations: cost accounting, labor standards, government property management, subcontractor oversight, document retention, and more. Some clauses are mandatory for any contract above certain thresholds. Others are conditional. They apply only if your contract meets specific criteria related to type, value, or subject matter. 

The flowdown rules are where manufacturers most often run into problems. When you receive a prime contract, certain FAR clauses must be passed down to your subcontractors. Which ones flow down, and under what conditions, depend on the clause itself. There’s no single rule that covers all of them. You have to evaluate each one. 

DFARS Adds Defense-Specific Requirements on Top of FAR 

The Defense Federal Acquisition Regulation Supplement is exactly what the name says: a supplement. It adds requirements specific to the Department of Defense contracts. If your customer is DoD – Army, Navy, Air Force, DARPA, any defense agency – you’re operating under both FAR and DFARS simultaneously. 

DFARS clauses cover areas that FAR doesn’t address in sufficient depth for defense work. The most significant for manufacturers right now include: 

Cybersecurity. DFARS 252.204-7012 governs the safeguarding of Covered Defense Information (CDI). If your work involves controlled technical data, you have specific obligations around your IT environment, incident reporting timelines, and cloud service provider requirements. This clause also flows down to subcontractors who handle CDI. 

ITAR and technical data controls. DFARS includes clauses that govern how you handle export-controlled technical data, who can access it, and what your obligations are when you share it with suppliers. 

DPAS priority ratings. Defense Priorities and Allocations System ratings affect how you prioritize orders and how that priority flows through your supply chain. 

Progress payments and billing. DFARS 252.232-7003 sets specific procedures for interim payments on defense contracts that differ from standard commercial billing practices. 

Supply chain integrity. An expanding set of DFARS requirements address counterfeit parts, foreign ownership, and supply chain risk — areas that have grown significantly in scope over the past several years. 

DFARS is also amended regularly. The DoD updates it in response to new threats, policy changes, and Congressional direction. A clause that applied one way in 2022 may have different requirements in 2024. For example, the November 2023 DFARS change on commercial subcontract flowdowns caught many contractors off guard because they had no mechanism to track regulatory updates against their active contracts. 

Where Manufacturers Get Into Trouble 

Treating FAR and DFARS as a single clause list. They’re separate bodies of regulation with different applicability rules. Analyzing them as a single undifferentiated block results in missed mandatory clauses and incorrect flowdowns. 

Applying the same clause package to every subcontractor. Flowdown requirements vary based on subcontract type (commercial vs. non-commercial), value, and subject matter. A commercial subcontract for standard catalog items has different flowdown obligations than a non-commercial subcontract for custom components. 

Not updating flowdowns when regulations change. If DFARS is changed mid-contract, your existing subcontract clause packages may no longer be current. Most manufacturers have no process to catch this. They find out when an auditor does. 

Underdocumented determinations. Even when the flowdown decision is correct, contractors frequently can’t produce documentation showing how they reached that determination. Auditors want to see the reasoning, not just the output. 

Assuming the prime’s compliance is your compliance. Your prime contractor’s compliance posture doesn’t cover you. Your obligations run directly to the government. 

The Practical Implication 

For a defense manufacturer managing multiple active prime contracts, each with its own clause set and a subcontractor base that may change over time, maintaining compliance is an ongoing operational requirement. And that’s where most manufacturers are underinvested. The contract is awarded, the initial clause packages go out, and the compliance picture remains frozen while the regulatory environment continues to evolve. 

If you’re managing this manually — in spreadsheets, in shared drives, in email threads — you’re working harder than necessary and carrying more risk than you probably realize. 

A Better Approach 

Defense manufacturers who handle this well share a few characteristics. They have: 

• A defined process for initial clause analysis that clearly separates FAR and DFARS requirements.  

• A mechanism to flag regulatory changes and evaluate impact against active contracts.  

• Readily available documentation of their compliance determinations when an auditor asks. 

GovComply was built to help defense manufacturers close the process gaps. The platform reads your prime contracts clause by clause, determines flowdown applicability under both FAR and DFARS, and generates clause packages for purchase orders. Every determination is documented with evidence you can hand to an auditor.  

If you want to see what that looks like on an actual contract, we can run the analysis for you. Contact David Trout at david.trout@garrisoncompliancegroup.com.