Friday, September 30, 2011

Commercial Items - Part II

We began this series yesterday discussing the Government's preferred method of acquiring goods and services; making every effort to buying commercial items. Beginning with the Federal Acquisition Streamlining Act (FASA) in 1994, the Government signaled a shift from traditional buying of goods and services tailored exclusively for its own use and purposes to buying commercial items and using commercial buying practices. One of the impediments to buying commercial items is deciding what is and is not a commercial item. Obviously COTS (Commercially Available Off-The-Shelf) items are commercial but the Government's definition is much broader.

Items that require modifications of a type customarily available in the commercial marketplace, or require minor Government-unique modifications, can still be considered commercial items. To qualify as a minor modification, of a type on customarily available in the commercial marketplace made to meet Government requirements, the modification must significantly alter the nongovernmental function or essential physical characteristics of an item or component, or change the purpose of a process.

The FAR commercial item definition includes many services as well as products. A service is considered a commercial item when it is provided in support of a commercial item. A service is also considered a commercial item when it is of a type offered and sold competitively in substantial quantities in the commercial market on the basis of established catalog r market prices for specific tasks performed under standard commercial terms and conditions.

The phrase "of a type" broadens the definition so that qualifying items do not have to be identical to those in the commercial marketplace. This takes full advantage of the opportunities for modified commercial items.

If a commercial item evolves through technical or performance advances and that is not yet available in the commercial marketplace, it still meets the commercial item definition, as long as it will be available in time to satisfy the  Government's requirement (e.g. product updates, model changes, and product improvements).

For minor modifications of a type not customarily available in the commercial marketplace, the Government considers value, size, and comparative value and size of the final product. Dollar value and percentage are used as guideposts, but are not conclusive evidence that a modification is minor.

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