Federal Acquisition Regulation

TheFederal Acquisition Regulations (FAR) implements a system of federal acquisition regulations,establishes a set of policies and procedures for acquisition by federal agenciesand formulates standards for obtaining goods and services from the private sector. In addition to the general rules, the acquisitionregulations also provide supplements to FAR for specific agencies, including the Defense Federal Acquisition Regulations System(DFARS) and theDepartment of Treasury Acquisition Regulations System(DTARS).

The acquisitionprocedures stipulated by FAR is lack of flexibility, especially for small contracts or purchases. Although some small acquisitions can be completed through simplified procedures, the FAR exemption threshold is too low to be widely used in the field of financial innovation. In addition, there are significant challenges in evaluating financial technology products with small or limited acquisitions, as these products often require a certain scale to be effective (for example, machine learning or artificial intelligence programs require a minimum threshold for data analysis). If there is neither access to financial technology products nor sufficient test data, then it will be difficult for regulators to make meaningful evaluations of the products.

FAR requires executing agencies to purchase goods or services in accordance with the established process. In general, any acquisitionwhich is made through the FAR process requires:

1.Through the capacity development process, consider the cost, benefit and the analysis of alternatives, and establish the organization or institutional requirements for acquisition.

2.Determine contract requirements and formulate acquisitionstrategies.

3.Evaluate supplier proposals, eliminate fuzzy and defects, and hand over contracts to specific suppliers according to established standards.

4.Review according to the supplier tenders or proposals.

5.Prohibit most forms of gifts or emoluments, including federal employee rebates and any possible conflict of interest that may arise.

6.Select officials is prohibited from seeking or obtaining job rewards.

7.Disclosure of source selection materials (supplier tenders or proposals) is prohibited.

FAR is the product of notification and comment process made by APA. Therefore, the above method which is determined in APA discussion will also apply to modifying FAR. If administrative revisions to FAR are not made, other transaction authority (OTA) can be considered. OTA can be faster than the traditional FAR acquisition method, which provide quick access to emerging and cutting-edge technologies, so that institutions can purchase goods and services for research, development and prototype design beyond the requirements of FAR.