FAR 42.1104—Surveillance requirements.
Plain-English Summary
FAR 42.1104 explains how the contract administration office decides how much production surveillance to perform and how that surveillance must be carried out. It covers the basis for setting surveillance intensity, including the contracting officer’s assigned criticality of the supplies or services and several practical factors such as reporting requirements, schedule, the contractor’s production plan, past performance, relevant experience, financial capability, and any supplemental written instructions from the contracting office. It also states that contracts at or below the simplified acquisition threshold normally should not require production surveillance, which helps keep oversight proportional to risk and contract size. The section further requires contract administration offices to make maximum use of reliable contractor production control or data management systems, rather than duplicating work unnecessarily. Finally, it warns surveillance personnel to avoid actions that conflict with contract requirements or could be interpreted as waivers, changes, or other contract modifications, because improper oversight conduct can create disputes and unintended legal consequences in federal contracting.
Key Rules
Surveillance is risk-based
The contract administration office must set the extent of production surveillance based on the criticality assigned by the contracting officer and the listed contract and contractor factors. This means oversight should be tailored to the importance and risk profile of the supplies or services, not applied uniformly.
Criticality drives intensity
The contracting officer’s criticality determination under FAR 42.1105 is a key input to surveillance planning. Higher-criticality items generally justify closer monitoring, while lower-criticality items may require less intensive oversight.
Multiple practical factors must be considered
The office must consider reporting requirements, the performance schedule, the contractor’s production plan, past performance history, experience with the supplies or services, financial capability, and any supplementary written instructions. These factors help determine whether the contractor is likely to meet requirements and where surveillance should focus.
Simplified acquisition threshold normally exempt
Contracts at or below the simplified acquisition threshold should not normally require production surveillance. This creates a general presumption against routine surveillance for smaller acquisitions unless unusual circumstances justify it.
Use contractor systems when reliable
In planning and conducting surveillance, the contract administration office must make maximum use of reliable contractor production control or data management systems. The government should leverage existing trustworthy information sources instead of imposing unnecessary duplicate reporting or inspection burdens.
Avoid inconsistent or modifying conduct
Surveillance personnel must not take actions inconsistent with contract requirements or actions that could be viewed as waiving requirements, changing the contract, or otherwise modifying it. Oversight must stay within the contract’s terms and avoid informal direction that could create legal disputes.
Responsibilities
Contracting Officer
Assign the criticality level for the supplies or services under FAR 42.1105, which becomes a primary basis for determining how much surveillance is needed. The contracting officer may also provide supplementary written instructions that guide surveillance planning.
Contract Administration Office
Determine the extent of production surveillance using the criticality rating and the listed contractor and contract factors. Plan and conduct surveillance proportionately, rely on reliable contractor systems where possible, and ensure surveillance activities do not conflict with contract terms or create unintended modifications.
Contract Administration Personnel
Carry out surveillance in a manner consistent with the contract and the administration plan. They must avoid informal actions or statements that could be interpreted as waivers, changes, or other contract modifications.
Contractor
Provide production control or data management systems that are reliable enough for the government to use in surveillance, and maintain the production reporting, schedule, and performance information that the contract requires.
Practical Implications
Surveillance should be scaled to risk, not treated as a one-size-fits-all checklist. High-criticality or troubled contracts may justify frequent monitoring, while routine low-risk contracts may need little or none.
Contract administration staff should document why surveillance was set at a particular level, especially when the contractor has a weak performance history, limited experience, or financial concerns.
Reliable contractor systems can reduce government workload, but only if the data is trustworthy. If the contractor’s controls are weak, the government may need more direct verification.
A common pitfall is overstepping during surveillance by giving directions that change how work is performed without a formal contract modification. That can create disputes over constructive changes or waivers.
Another frequent issue is applying production surveillance to small acquisitions without a clear reason. For contracts at or below the simplified acquisition threshold, the default is no normal surveillance unless special circumstances justify it.
Official Regulatory Text
(a) The contract administration office determines the extent of production surveillance on the basis of- (1) The criticality (degree of importance to the Government) assigned by the contracting officer (see 42.1105 ) to the supplies or services; and (2) Consideration of the following factors: (i) Contract requirements for reporting production progress and performance. (ii) The contract performance schedule. (iii) The contractor’s production plan. (iv) The contractor’s history of contract performance. (v) The contractor’s experience with the contract supplies or services. (vi) The contractor’s financial capability. (vii) Any supplementary written instructions from the contracting office. (b) Contracts at or below the simplified acquisition threshold should not normally require production surveillance. (c) In planning and conducting surveillance, contract administration offices shall make maximum use of any reliable contractor production control or data management systems. (d) In performing surveillance, contract administration office personnel shall avoid any action that may- (1) Be inconsistent with any contract requirement; or (2) Result in claims of waivers, of changes, or of other contract modifications.