Thursday, September 29, 2011

Commercial Items - Part I

Over the next few days, we will be discussing "commercial item" procurement; what are commercial items, from the Government's perspective?, the Government's preference for buying commercially, and criteria used in making source selections. Companies that can offer their products and services to the Government as commercial items have a distinct advantage over those who do not.

Since the passage of the Federal Acquisition Streamlining Act of 1994 (FASA), the preference within the Federal Government has shifted from the acquisition of items developed exclusively for the Government to the acquisition of commercial items.  This change was designed to take advantage of available and evolving technological innovations in the commercial sector.

FASA represented a dramatic shift in acquisition policy for the Federal Government.  FASA promoted maximum use of commercial items to meet the government’s needs and streamlined the process of acquiring such items following commercial market practices.  Under FASA, the concept of commercial practices is overarching and affects every functional area within the acquisition process.  Source selection is made on a "best value" rather than a "cheapest price" basis.  

The Government's preference for commercial item pricing is stated right at the beginning of FAR. The "guiding principles" section at FAR 1.102(b) states that Federal Acquisition System will:
  1. Satisfy the customer in terms of cost, quality, and timeliness of the delivered  product or service by;
    • Maximizing the use of commercial products and services,
    • Using contractors who have a track record of successful past performance or who demonstrate a current superior ability to perform, and
    • Promoting competition;
  2. Minimize administrative operating costs;
  3. Conduct business with integrity, fairness, and openness; and
  4. Fulfill public policy objectives.


Commercial items include any item of a type customarily used by the general public, or by nongovernmental entities, for purposes other than governmental purposes that has been sold, leased, or licensed, or offered for sale, lease, or license to the general public (see FAR 2.101). The definition also includes items that are not yet in the commercial marketplace, as long as they will be available in time to satisfy Government requirements. 

Commercial items do not necessarily have to be “off-the-shelf”.  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.  We will go into more detail tomorrow on what constitutes "minor modification".

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