Friday, May 10, 2019

FAR Councils Propose to Broaden the Definition of "Commercial Item"

The FAR Councils have proposed a new rule, based on requirements of the 2018 NDAA (National Defense Authorization Act) that will expand the definition of "commercial items" appearing in FAR (Federal Acquisition Regulations) 2.101.

Under the proposed rule, NDI (non-developmental items) that are developed exclusively at private expanse and sold in substantial quantities to multiple foreign governments may be treated as commercial items.

Because commercial items, which include commercially available off-the-shelf items, are sold to the Government in the same way as NDIs, the Government can take advantage of the previous testing and general acceptance of the product in the commercial marketplace or by a state, local, or foreign government.

Here are some examples of NDIs that would be considered commercial items under the expanded definition:

  • Protective vests used by police departments and rescue equipment used by fire and rescue units
  • Defense products previously developed by defense agencies of U.S. allies and used exclusively for governmental purposes by Federal agencies, state or local governments, or a foreign government
  • Items that require only minor modifications to meet the requirements of the procuring agency; and
  • A mechanical dereefer (mechanism for releasing parachute reefing lines) used with the U.S. Army's cargo parachutes that was developed for and first used by the Canadian Army.

It is expected that the new expanded definition will achieve savings for both contractors and the Government. According to an analysis published by the Section 809 Panel, commercial item acquisitions are subject to up to 138 contract clauses, while acquisitions for NDIs that do not meet the commercial item definition as well as acquisitions for non-commercial items could be subject to nearly 500 clauses, depending on the principal type and purpose of the contract.

The full text of the proposed rule can be found here.

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