FAR 36.104 Contracting Policy: Federal Signals for Bidders
Federal solicitations do not exist in a vacuum; they reflect statutory policies that govern how agencies select delivery methods, establish site sustainability baselines, and regulate project labor. Under FAR 36.104, contracting officers are bound by specific procurement policies that directly influence how solicitations are structured for trade contractors and general contractors. Whether you are bidding framing, drywall, ceiling packages, or broader commercial scopes, understanding these policy signals helps you anticipate overhead costs, waste handling rules, and labor terms well before bid day.
Delivery Methods and Two-Phase Selection Procedures
Under FAR 36.104(a), federal procurement policy establishes clear guidelines on how contracting officers structure construction contracts. Unless the government uses traditional design-bid-build procurement under 40 U.S.C. chapter 11 (Selection of Architects and Engineers) or another statutory process, contracting officers must apply the two-phase selection process under 10 U.S.C. 3241 or 41 U.S.C. 3309 when contracting to design and construct a public building, facility, or work.
This mandate applies whenever the contracting officer determines that two-phase design-build procedures are appropriate under subpart 36.3. Contracting officers may also employ other procedures authorized by law, including the standard methods set out across Part 36 or the specific Department of Defense (DoD) design-build process under 10 U.S.C. 2862. For small general contractors and specialty subcontractors, understanding the project delivery structure is critical. As discussed in our review of contract delivery methods, a two-phase design-build solicitation means offerors must first clear qualifications before submitting detailed cost and technical proposals, whereas traditional design-bid-build solicitations present completed drawings and specifications up front.
High-Performance Sustainability and the 25,000 Gross Square Foot Threshold
Section 36.104(b) establishes broad obligations for high-performance sustainable building practices. Contracting agencies must implement sustainable practices across design, construction, renovation, repair, commissioning, facility operations, maintenance, and deconstruction. Specifically, the regulation establishes strict expectations for modern government facilities:
- New construction as well as modernization work exceeding 25,000 gross square feet must align with, and where practicable exceed, federal sustainability and operational principles.
- Applicable projects must adhere to the Council on Environmental Quality's Guiding Principles for Sustainable Federal Buildings and Associated Instructions.
- All renovation projects involving existing federal properties must follow these sustainable design and operations principles to the greatest extent that is technically feasible and practicable.
For interior trades estimating drywall assemblies, metal framing gauges, and ceiling finishes, projects exceeding 25,000 gross square feet regularly carry heightened product submittal rules, indoor air quality management obligations, and detailed commissioning verifications.
Historic Buildings and Deferred Maintenance Mandates
Federal policy under FAR 36.104(b) also targets long-term asset management. Contracting officers are required to actively evaluate facility lifecycle alternatives and historic preservation:
- Agencies must identify alternatives to renovation that reduce existing assets' deferred maintenance costs.
- Rehabilitation of federally owned historic buildings must utilize retrofitting best practices and modern technologies that safeguard the long-term viability of the structures.
When estimators encounter historic federal renovations, these requirements signal that selective demolition, structural patching, and interior retrofits will be held to strict preservation standards rather than standard commercial alteration methods.
The 50 Percent Non-Hazardous Waste Diversion Mandate
Environmental management on federal jobsites is not an optional suggestion; it is a regulatory mandate under FAR 36.104. Under subsection 36.104(b)(4), agencies must enforce pollution prevention and eliminate waste by diverting at least 50 percent of non-hazardous site debris and construction materials.
For trade contractors and small GCs, this mandate directly impacts the jobsite cleanup allowance when estimating general conditions. Bidders must plan for structured disposal workflows rather than relying on unsegregated open-top dumpsters. Framing off-cuts, drywall scrap, packaging crates, and metal studs must be sorted and routed to legitimate recycling facilities to generate the documentation required by federal project inspectors.
Project Labor Agreements on Solicitations at or Above $35 Million
Labor structures on large projects are governed by FAR 36.104(c). The regulation sets explicit financial thresholds and market study rules that every contractor must know:
- Federal agencies must require the use of a project labor agreement (PLA) on construction projects with a total estimated construction cost reaching or exceeding $35 million, unless a specific exception applies under subpart 22.5.
- When conducting market research under 10.002(b)(1) for projects at or above the $35 million mark, contracting officers must perform a proactive, current assessment of local market conditions.
- This market research examines regional, national, and local interest in bidding under a PLA, and evaluates the availability of unions as well as unionized and non-unionized contractors.
- Contracting officers may coordinate directly with agency labor advisors during this process.
For subcontractors pricing divisions of work under a prime GC, noting whether the total government estimate crosses $35 million tells you immediately whether union coordination, wage agreements, and PLA paperwork will govern the jobsite.
Quick-Reference Summary for Federal Bidders
Before finalizing your numbers on any federal solicitation, review the project documents against these core policy checkpoints:
- Delivery Type: Verify if the procurement follows traditional design-bid-build under 40 U.S.C. chapter 11 or two-phase design-build under 10 U.S.C. 3241 or 41 U.S.C. 3309.
- Building Size: Note whether the project scope exceeds 25,000 gross square feet, which triggers mandatory compliance with CEQ Guiding Principles.
- Debris Handling: Allocate sufficient crew hours and sorting bins to divert at least 50 percent of non-hazardous construction and demolition debris.
- Contract Scale: Watch for total project estimates of $35 million or more, which mandate a project labor agreement unless an exception applies under subpart 22.5.
Sources
Acquisition.GOV: FAR 36.104 Policy
Published October 29, 2026. No affiliate links on this page. Facts come from the sources linked above; check them for updates.