Mike Wolff on
Thursday, February 28, 2002 - 11:08 pm:
We've been having this discussion in my office - do
construction contracts meet the definition of being a commercial
item? I say that they do. The definition of CI is so convoluted
- it is over a 1.5 pages long - that I think that basically any
service that is readily available from commercial contractors is
a CI. Additionally, no where in the FAR does it say that
construction contracts do NOT meet the definition of what a
commercial item is.
I'd like the educated opinions of those of you on this board.
(Request for you Anonymouses out there, please identify yourself
somehow so we know who is who - thanks.)
joel hoffman on Friday, March 01, 2002 - 07:57 am:
As of now, no construction is not a commercial item. This is
official hearsay, as the DAR chair of the FAR Part 36 has
personally told me this.
There are several reasons. One of which is that you'd be foolish
to allow contractors ro draft the standard terms and conditions
for your contract. There are at least seven organizations which
draft model contracts, with every format having numerous user
selected options regarding risk allocation.
P.S, It is standard commercial practice for the owner to draft
the contract language. Even in most design-build situations, the
owner retains a professional to draft the terms and conditions.
In standard design-bid-build, the owner is responsible for the
adequacy of the design and it would be foolhardy to allow the
industry to draft the terms and conditions.
It would take a Philadelphia lawyer to evaluate competitive
commercial proposals and to compare the proposed contract
With that said, there are some exceptions, most notably for pre=fab
structures, commercially produced and provided under industry
standard terms and conditions woth pre=established installation
happy sails! joel
Vern Edwards on Friday, March 01, 2002 - 10:32 am:
I would like to add to what Joel has said about your question.
When FAR Part 12 was initially promulgated, in FAC 90-32, the
Federal Register explanatory material was silent about its
application to construction. Based on the definition of
commercial item in FAR 2.101, construction fits the bill.
[Presumably, it would fall under paragaph (f), since
construction is really a service and is market priced.] However,
the commercial items clauses were clearly inappropriate for
construction (e.g., no changes clause, no differing site
conditions clause, etc.).
When the rules in FAR subpart 13.5 for the simplified
acquisition test program for commercial items were initially
promulgated, in FAC 90-45, the FAC explanatory material stated
that the test program could not be used for acquisitions of
construction, even though agencies may use simplified
acquisition procedures for construction acquisitions at or below
the simplified acquisition threshold. It said:
"At the present time, this rule does not extend authority to use
the special test procedures for construction. The proposed
language included on construction, in Part 13, was not intended
to address the applicability of the test procedures to
construction and the language in the final rule has been amended
to eliminate this ambiguity. The broader issue of the
applicability of the FARs commercial items policies to
construction contracting is under review."
To the best of my knowledge, this was the first public statement
by the FAR Council about the application of the commercial items
rules to construction acquisitions. In my opinion, the statement
The main problem with using the commercial items procedures in
FAR Part 12 to acquire construction remains the clause set. The
FAR clauses that are currently applicable to construction
already reflect commercial practices, for the most part.
Government construction contracting is already as close to
commercial construction contracting as it is likely to get.
Changing the clauses now would create all kinds of uncertainty
and risk, since there is a considerable body of case law based
on the current clause language and there would be little to gain
by making any changes. The combined synopsis/solicitation
procedure isn't useful in construction, because of the need for
specs and drawings and Davis-Bacon wage determinations. Allowing
agencies to give prospective contractors less than 30 days to
submit bids or proposals wouldn't be a good idea, because
bidders and offerors need time to obtain estimates and quotes
from prospective subcontractors.
ji20874 on Friday, March 01, 2002 - 04:18 pm:
The FAR is not silent on this issue -- the definition in FAR
Part 2 for a commercial item says "[a]ny item, other than real
property..." A building is real property, and therefore a
building is not a commercial item. Perhaps someday, commercial
practices for construction will be okay when words are added to
FAR Subpart 36.4.
This said, I will add that I once bought a building as a
commercial item because we bought a log cabin kit installed on
our own foundation -- military civil engineers built the
foundation, and the log cabin kit, installed at our site, was
bought as a FAR Part 12 commercial item WITH a combined
Mike Wolff on
Friday, March 01, 2002 - 04:33 pm:
Ji29874 - Using your logic, mechanical maintenance and
elevator maintenance, for example, would NOT be commercial
items, because these services are performed on real property.
Construction contracts include alterations to real property,
roof repairs, spandrel gasket repairs, etc. While all these
these are performed on real property, they are not the actual
construction of real property.
Additionally, I think that your purchase of a log cabin kit as a
commercial item may be improper, because in that instance, as
you described it, the cabin was real property, and therefore
specifically excluded from being a CI.
This is the problem with the definition of CI - it shouldn't
take more than half a page to describe what a CI is - maybe it
would be easier for the FAR Council to describe what a CI is
NOT, and call everything else a CI.
Vern Edwards on Friday, March 01, 2002 - 10:26 pm:
FAR is silent on the issue. The construction of a
building is not the purchase of a building. The purchase of a
building is a purchase of supplies. See the definition of
supplies in FAR 2.101. While you're at it, see the definition of
construction in the same section.
anon1 on Monday, March 04, 2002 - 02:20 pm:
Just my little two cents based on personal contracting
I once bought a prefab building, essentially, a kit, under
commercial practices. The kit was delivered. Our forces and a
subcontractor proceeded to take the Supplied items,which made up
the kit, erected it, did the landscaping, et.al. The sequence
after delivery of the items became the construction contract.
I excluded the Walsh-Healey Act from the commercial buy which
passed under CPSR review.
joel hoffman on Monday, March 04, 2002 - 07:23 pm:
So far, everyone agrees with me that "purchasing" a pre-fab
or kit building can be a supply contract, using commercial
acquisition practices. Erection of the building must be reviewed
on a case by case basis, depending upon the amount of labor and
other costs involved.
By the way, such purchases by DOD Agencies are regulated by a
DOD Instruction, as implemented by Air Force and Army
Regulations (probably Navy, too). Relocatable buildings must be
approved by the Service Headquarters elements for installations.
They are considered personal property - not real property.
There are restrictions on the percentage of cost to erect or to
remove them. If you exceed the percentage, it's considered real
property, etc., etc.
I have the references, but I'm TDY, so don't have access to my
files and don't have time to re-research. You can find the DODI
in Deskbook and you can do a search under the AF or Army
regulations to find those, too.
I recently answered an Ask A Professor question concerning
relocatable buildings, providing the references. However, the
Deskbook database lost the answer and they might not have
re-posted it. happy sails! joel