Monday, May 21, 2018

2019 National Defense Authorization Act

Details of the fiscal year 2019 National Defense Authorization Act (NDAA) are beginning to emerge but are no where near complete as representatives introduce amendments to the proposed legislation  almost daily. If past years are an indication, we won't see the 2019 NDAA signed into law until late fall.

From time to time, we will be bringing you updates on details within the proposed NDAA, including proposed amendments - especially provisions that pertain to Government acquisition. These provisions are usually found in NDAA's Section 800.  Today we want to begin with a provision that attempts to bring clarity to the definition of "commercial items".

The statutory definition of commercial item is located in 41 USC 103 and the regulatory definition is found in FAR 2.101. Both read the same. Briefly, a commercial item is an item, other than real property, that is of a type customarily used by the general public or by nongovernmental entities for purposes other than governmental purposes and has been sold, leased, or licensed, or offered for sale, lease, or license, to the general public. The definition also includes items that evolved from an item (defined above) through advances in technology or performance and is not yet available in the commercial marketplace but will be available in time to satisfy the delivery requirements under a Federal Government solicitation. The current definition also discusses installation services, maintenance services, repair services, training services and other services that meet the same basic requirements as "items".

Under the proposed 2019 NDAA, Congress giving commercial "services" its own specific definition and renaming "items" into "products". The result is separate definitions for Commercial Products (41 USC 103) and Commercial Services (41 USC 103a).

The definition of commercial products is the same as it was for commercial items except for sections (5) and (6) which dealt with services which have been dropped out of the new definition and are now part of the definition for commercial services.

The new definition for commercial services includes:

  1. Installation services, maintenance services, repair services, training services and other services if those services are procured for support of a commercial product, regardless of whether the services are provided by the same source or at the same time as the commercial product and the source of the services provides similar services contemporaneously to the general public under terms and conditions similar to those offered to the federal Government. 
  2. 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.
  3. A service described above even though the service is transferred between or among separate divisions, subsidiaries, or affiliates of a contract.

These proposed changes do not seem to be significant but do add clarity to a definition that is sometimes confusing and often times applied inconsistently.

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