On July 24, 2025, the Office of Federal Procurement Policy (OFPP) and Federal Acquisition Regulation (FAR) Council published its latest rewrite to the FAR. We previously discussed this rewrite initiative—the Revolutionary FAR Overhaul—and post updates when they occur in this Alert. This latest update includes a rewrite to FAR Part 35, Research and Development (R&D) Contracting. We wanted to highlight this update because OFPP and the FAR Council believe the rewrite “makes the federal R&D environment more attractive to innovative commercial firms.” As discussed below, the rewrite ostensibly provides greater flexibility in the types of procurement methodologies and structures employed by the government procuring R&D, which should make participation in R&D by more commercial-focused firms more accessible.
Generally, the FAR defines applied research as efforts to determine or exploit the potential of scientific discovery or improvements in technology, materials, processes, methods, devices, or techniques to advance the state of the art. Development is use of scientific and technical knowledge in the design, development, testing, or evaluation of new products, or improvements to existing products.
FAR Part 35 was 5,517 words about R&D contracting; now it is 2,871 words. Many deletions are of duplicative guidance. FAR Part 35 included information on intellectual property, data, insurance, government property, subcontracting, and publicizing requirements that was also addressed in other FAR parts. That guidance is now out of FAR Part 35.
More substantively, several changes as a result of the rewrite may give contractors and the government more options than before when it comes to R&D procurements.
- Added flexibility for statements of work: FAR 35.005 was deleted, which had specific instructions for structuring a statement of work (SOW). By removing FAR 35.005, contractors and their government customers should have more flexibility to define not only the SOW’s structure, but also solutions and deliverables.
- Removal of preference for cost-reimbursement contracts: FAR 35.006, which discussed contracting methods and contract type, has been deleted as well. Notably, FAR 35.006 had suggested “the use of cost-reimbursement contracts is usually appropriate” for R&D contracting. Many start-ups and nontraditional vendors, however, do not have accounting systems in place to do cost-reimbursement contracts. Eliminating FAR 35.006 may help enable their participation, since agencies may now be more open to firm fixed price R&D arrangements.
- Increased options for defining R&D objectives: Generally, prior to the rewrite, FAR Part 35 appeared to limit R&D contracting strategies because of an inability to “precisely” describe an R&D’s objectives in advance. FAR Part 35 made six such references. Those references now have all been removed. As a result, the rewritten FAR Part 35 has fewer limitations on the parties when contracting for R&D.
Indeed, in addition to the rewrite of Part 35, there is a new Practitioner Album that encourages innovation in acquisition to keep up with the innovation that results from R&D. The Practitioner Album includes “smart accelerators,” such as use cases for broad agency announcements and non-FAR based authorities like other transactions, Small Business Innovation Research/Small Business Technology Transfer programs, prize challenges, and Commercial Solutions Opening. The Practitioner Album notes these acquisition tools offer the flexibility to help “attract fresh talent from industry, startups, and … nontraditional vendors.”
