FAR 1.102-2—Performance standards.
Plain-English Summary
FAR 1.102-2 sets out the performance standards for the Federal Acquisition System and explains what “good” acquisition looks like in practice. It covers customer satisfaction in terms of cost, quality, and timeliness; responsiveness to user needs; use of past performance and current capability when selecting contractors; early and constructive communication with industry; maximizing commercial products and services; promoting competition; timely, high-quality, cost-effective performance; advance planning balanced with flexibility; minimizing administrative operating costs; using uniformity only when it improves efficiency, fairness, or predictability; encouraging innovation and local adaptation; conducting business with integrity, fairness, and openness; shifting from pure risk avoidance to risk management; exercising discretion and sound business judgment; treating contractors fairly and impartially; and supporting public policy objectives while efficiently using public resources. In practical terms, this section is the policy backbone for how acquisition personnel should think and act across the entire procurement lifecycle, from market research and planning through source selection, contract administration, and policy implementation. It tells agencies to be efficient without being rigid, competitive without being unfair, and prudent without becoming paralyzed by risk. For contractors, it signals that the Government values performance, transparency, commercial solutions, and constructive engagement, but will still insist on compliance, fairness, and stewardship of taxpayer funds.
Key Rules
Satisfy the customer
Acquisition decisions should be driven by the user’s needs for cost, quality, and timeliness. The “customer” is primarily the end user and line management acting for the taxpayer, so policies and procedures should be judged by whether they improve mission results.
Use past performance and capability
When choosing contractors, the Government should favor firms with a record of successful past performance or a demonstrated current ability to perform well. This reinforces the importance of performance history, technical competence, and credible execution plans in source selection.
Engage industry early
Government personnel are encouraged to communicate with industry as early as possible to understand marketplace capabilities. These exchanges must be responsible, constructive, and consistent with law and regulation, and they must not create an unfair competitive advantage.
Maximize commercial solutions
The Government should use commercial products and commercial services whenever they can meet the requirement. This supports faster acquisition, lower administrative burden, and better alignment with market offerings.
Promote competition
Competition is a core policy of the acquisition system. Agencies should structure requirements and acquisition strategies to encourage competition unless a valid exception applies.
Plan, but stay flexible
All members of the acquisition team must plan as part of the acquisition process, but planning must be proportionate to the size and nature of the task. Plans should support mission needs while allowing adjustment for changing or unforeseen circumstances.
Minimize administrative costs
Rules, regulations, policies, and internal reviews should be used only when their benefits clearly exceed their costs. The same cost-benefit discipline applies to procedures imposed on contractors, so unnecessary bureaucracy should be avoided.
Balance uniformity and innovation
The system should use uniform procedures where they improve efficiency or where fairness and predictability are essential, but it should also allow innovation and local adaptation when uniformity is not necessary. This is a directive against one-size-fits-all acquisition management.
Act with integrity and openness
Every member of the acquisition team must maintain public trust through integrity, fairness, openness, accountability, and wise use of public resources. Open communication among internal and external stakeholders is part of that standard.
Manage risk, don’t eliminate it
The system should move from a risk-avoidance mindset to risk management. Because eliminating all risk is too costly, local procurement officials are expected to use professional judgment and accept managed risk within legal and regulatory bounds.
Treat contractors fairly and impartially
The Government must exercise discretion and sound business judgment while complying with applicable laws and regulations. Contractors and prospective contractors must be treated fairly and impartially, but not necessarily identically in every situation.
Support public policy goals
The acquisition system must help achieve public policy objectives established by Congress and the President. At the same time, it must do so in a way that uses public resources efficiently.
Responsibilities
Contracting Officers
Use sound business judgment, comply with applicable laws and regulations, manage risk responsibly, promote competition, and ensure contractor treatment is fair and impartial. They should also plan appropriately, minimize unnecessary administrative burden, and support public policy objectives while maintaining efficiency.
Program and Line Managers
Define requirements with the end user’s needs in mind, focusing on cost, quality, and timeliness. They should participate in planning, provide feedback on performance needs, and help ensure acquisition strategies reflect mission priorities and practical market realities.
Acquisition Team Members
Plan as an integral part of the acquisition process, remain flexible as mission needs change, and work collaboratively to achieve timely, high-quality, cost-effective results. They must also act with integrity, fairness, openness, and accountability.
Government Acquisition Personnel
Engage industry early and responsibly to understand market capabilities, while avoiding conduct that creates unfair competitive advantage. They should use market research and communication to improve acquisition outcomes and support commercial and competitive solutions.
Agency Leadership
Promulgate rules, policies, and internal processes only when benefits justify the costs, encourage innovation where appropriate, and establish a culture that values integrity, risk management, and efficient use of resources. Leadership must also support workforce competence and training.
Contractors and Prospective Contractors
Compete and perform in a system that values past performance, current capability, and commercial solutions. They should expect fair and impartial treatment, but also understand that the Government may differentiate based on merit, performance, and business judgment.
Practical Implications
This section is a policy lens for almost every acquisition decision, so it affects market research, acquisition planning, source selection, contract administration, and policy development.
A common pitfall is overemphasizing process compliance at the expense of mission results; FAR 1.102-2 pushes agencies to balance compliance with performance, speed, and value.
Another frequent mistake is treating risk as something to eliminate rather than manage; the FAR expects informed judgment and acceptance of reasonable risk when it improves outcomes.
Contracting personnel should document why a strategy, rule, or review adds value, especially when it increases cost or delay, because the FAR favors cost-benefit discipline.
Industry communications are encouraged, but careless exchanges can create unequal access or the appearance of favoritism, so acquisition teams must control timing, content, and fairness carefully.
Official Regulatory Text
(a) Satisfy the customer in terms of cost, quality, and timeliness of the delivered product or service. (1) The principal customers for the product or service provided by the System are the users and line managers, acting on behalf of the American taxpayer. (2) The System must be responsive and adaptive to customer needs, concerns, and feedback. Implementation of acquisition policies and procedures, as well as consideration of timeliness, quality, and cost throughout the process, must take into account the perspective of the user of the product or service. (3) When selecting contractors to provide products or perform services, the Government will use contractors who have a track record of successful past performance or who demonstrate a current superior ability to perform. (4) The Government must not hesitate to communicate with industry as early as possible in the acquisition cycle to help the Government determine the capabilities available in the marketplace. Government acquisition personnel are permitted and encouraged to engage in responsible and constructive exchanges with industry ( e.g., see 10.002 and 15.201 ), so long as those exchanges are consistent with existing laws and regulations, and do not promote an unfair competitive advantage to particular firms. (5) The Government will maximize its use of commercial products and commercial services in meeting Government requirements. (6) It is the policy of the System to promote competition in the acquisition process. (7) The System must perform in a timely, high quality, and cost-effective manner. (8) All members of the Team are required to employ planning as an integral part of the overall process of acquiring products or services. Although advance planning is required, each member of the Team must be flexible in order to accommodate changing or unforeseen mission needs. Planning is a tool for the accomplishment of tasks, and application of its discipline should be commensurate with the size and nature of a given task. (b) Minimize administrative operating costs. (1) In order to ensure that maximum efficiency is obtained, rules, regulations, and policies should be promulgated only when their benefits clearly exceed the costs of their development, implementation, administration, and enforcement. This applies to internal administrative processes, including reviews, and to rules and procedures applied to the contractor community. (2) The System must provide uniformity where it contributes to efficiency or where fairness or predictability is essential. The System should also, however, encourage innovation, and local adaptation where uniformity is not essential. (c) Conduct business with integrity, fairness, and openness. (1) An essential consideration in every aspect of the System is maintaining the public’s trust. Not only must the System have integrity, but the actions of each member of the Team must reflect integrity, fairness, and openness. The foundation of integrity within the System is a competent, experienced, and well-trained, professional workforce. Accordingly, each member of the Team is responsible and accountable for the wise use of public resources as well as acting in a manner which maintains the public’s trust. Fairness and openness require open communication among team members, internal and external customers, and the public. (2) To achieve efficient operations, the System must shift its focus from "risk avoidance" to one of "risk management." The cost to the taxpayer of attempting to eliminate all risk is prohibitive. The Executive Branch will accept and manage the risk associated with empowering local procurement officials to take independent action based on their professional judgment. (3) The Government shall exercise discretion, use sound business judgment, and comply with applicable laws and regulations in dealing with contractors and prospective contractors. All contractors and prospective contractors shall be treated fairly and impartially but need not be treated the same. (d) Fulfill public policy objectives . The System must support the attainment of public policy goals adopted by the Congress and the President. In attaining these goals, and in its overall operations, the process shall ensure the efficient use of public resources.