FAR Part 12- Acquisition of Commercial Items

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FAR Part 12 creates streamlined procedures that the Government can use to procure supplies and services that constitute a “commercial item” under 48 CFR § 2.101. FAR Part 12 implements the preference for the acquisition of commercial items contained in Title VIII of the Federal Acquisition Streamlining Act of 1994 (Public Law 103-355). The premise behind FAR Part 12 is that, when the goods and services that the Government seeks to procure are already available in general commerce, the formal process of a fully-negotiated procurement set forth in FAR Part 15 does more harm than good. Instead of forcing the Government through that time-consuming and expensive procurement process, FAR Part 12 establishes “acquisition policies that more closely resembling those of the commercial marketplace.” This regulation defines “commercial item” broadly as:

(1) Any item, other than real property, that is of a type customarily used by the general public or by non-governmental entities for purposes other than governmental purposes, and-

(i) Has been sold, leased, or licensed to the general public; or

(ii) Has been offered for sale, lease, or license to the general public;

(2) Any item that evolved from an item described in paragraph (1) of this definition through advances in technology or performance and that is not yet available in the commercial marketplace, but will be available in the commercial marketplace in time to satisfy the delivery requirements under a Government solicitation;

(3) Any item that would satisfy a criterion expressed in paragraphs(1) or (2) of this definition, but for-

(i) Modifications of a type customarily available in the commercial marketplace; or

(ii) Minor modifications of a type not customarily available in the commercial marketplace made to meet Federal Government requirements. Minor modifications means modifications that do not significantly alter the nongovernmental function or essential physical characteristics of an item or component, or change the purpose of a process. Factors to be considered in determining whether a modification is minor include the value and size of the modification and the comparative value and size of the final product. Dollar values and percentages may be used as guideposts, but are not conclusive evidence that a modification is minor;

(4) Any combination of items meeting the requirements of paragraphs (1), (2), (3), or (5) of this definition that are of a type customarily combined and sold in combination to the general public;

(5) Installation services, maintenance services, repair services, training services, and other services if-

(i) Such services are procured for support of an item referred to in paragraph (1), (2), (3), or (4) of this definition, regardless of whether such services are provided by the same source or at the same time as the item; and

(ii) The source of such services provides similar services contemporaneously to the general public under terms and conditions similar to those offered to the Federal Government;

(6) Services of a type offered and sold competitively in substantial quantities in the commercial marketplace based on established catalog or market prices for specific tasks performed or specific outcomes to be achieved and under standard commercial terms and conditions. For purposes of these services-

(i) “Catalog price” means a price included in a catalog, price list, schedule, or other form that is regularly maintained by the manufacturer or vendor, is either published or otherwise available for inspection by customers, and states prices at which sales are currently, or were last, made to a significant number of buyers constituting the general public; and

(ii) “Market prices” means current prices that are established in the course of ordinary trade between buyers and sellers free to bargain and that can be substantiated through competition or from sources independent of the offerors.

(7) Any item, combination of items, or service referred to in paragraphs(1) through (6) of this definition, notwithstanding the fact that the item, combination of items, or service is transferred between or among separate divisions, subsidiaries, or affiliates of a contractor; or

(8) A nondevelopmental item, if the procuring agency determines the item was developed exclusively at private expense and sold in substantial quantities, on a competitive basis, to multiple State and local governments or to multiple foreign governments.

FAR Part 12 requires that agencies conduct market research to determine whether commercial items are available that could meet the agency’s requirements and to acquire such items when they are available. Agencies must also require prime contractors and subcontractors at all tiers to incorporate, to the maximum extent practicable, commercial items as components of items supplied to the agency. See also 41 U.S.C. 3307.

The U.S. Department of Defense has its own requirements for the acquisition of commercial items, provided in DFARS Part 212. Most notable is the long-standing requirement under DFARS Part 212.102(a) that, for acquisitions exceeding $1 million, DoD contracting officers must make a written determination that the acquisition meets the commercial item definition in FAR 2.101 and to include the written determination in the contract file. That DFARS regulations also expand the application of commercial item procedures to supplies and services from “non-traditional defense contractors”. 10 U.S.C. §2302 defines a non-traditional defense contractor as “an entity that is not currently performing and has not performed, for at least the one-year period preceding the solicitation of sources by the Department of Defense for the procurement or transaction, any contract or subcontract for the Department of Defense that is subject to full coverage under the cost accounting standards prescribed pursuant to Section 1502 of Title 41 and the regulations implementing such section.” The benefit to non-traditional defense contractors is that, when commercial item procedures are applied to procure supplies and services from non-traditional defense contractors, the contracting officer does not need to submit a written determination to the file. DOD has also issued a two-part handbook on “commercial items” with Part A focused on Commercial Item Determination and Part B focused on Pricing Commercial Items

Table of Contents

Focus Areas

Bid Protest

REAs, Claims, Appeals

Socio-economic Policies

Compliance

SBIR / STTR

Other Transaction Authority

Teaming and Joint Ventures