Thursday, October 10, 2019

Expansion of Definition of Commercial Item

FAR (Federal Acquisition Regulation) was amended today to expand the definition of "commercial item". The definition heretofore has been written broadly to include seven different scenarios or situations. Now there's an eighth. The eighth and newest category of commercial items reads as follows:
A non-developmental 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.
The first question when reading this definition is what is a "non-development item". Well, FAR has a definition for that as well. In FAR 2.101, we read:
A non-developmental item (NDI) means:
  • Any previously developed item of supply used exclusively for governmental purposes by a Federal agency, a State or local government, or a foreign government with which the United States has a mutual defense cooperation agreement
  • Any item described above that requires only minor modification or modifications of a type customarily available in the commercial marketplace in order to meet the requirements of the procuring department or agency
  • Any item of supply being produced that does not meet the requirements above solely because the item is not yet in use.
Like any commercial item procurement, contractors should not assume that a contracting officer will know or would likely consider whether an item being offered qualifies as a commercial item. Offerors should be ensure that such distinctions are highlighted.

This change to FAR was necessitated based on a provision in the 2018 NDAA. FAR Part 12 creates a preference for buying commercial items and provides relief from certain record-keeping, reporting, and compliance requirements. According to an analysis performed by the Section 809 Panel, commercial acquisitions are subject to 138 contract clauses while acquisitions for NDI that do not meet the commercial item definition as well as acquisitions for noncommercial items could be subject to nearly 500 clauses, including TINA (Truth in Negotiations Act) which has long been recognized as one of the most costly statutes and regulations in Federal procurement.

The full text of the expanded definition of "commercial item" is available here.

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