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I'm looking for a citation in the FAR, DFARS, anything "official" that will clearly define the differences between subparagraph (5) and (6) in the FAR 2.101 definition of commercial items. Subparagraph (5) is quite clear that it's intended for repair and maintenance (among other services) in support of a commercial item. My understanding is that (6) is for "stand alone" professional and technical services, but the language is less than clear.

I have a sub who is claiming (6) for repair and maintenance of a commercial item. In my mind, this service clearly belongs in (5).

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I'm curious what difference it makes for this particular service. Aside from that, why is the sub claiming definition (6)?

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Well, in this case, the difference is that (5) requires that the sub provides the same or similar services to commercial customers. Since the sub doesn't do that, or at least has thus far not been able to substantiate it, they want to use (6), which only requires that the services are of a type.

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(5) stands for the proposition that services in support of a commercial item (such as installation, maintenance, repair, and training services) are also commercial items for FAR Part 12 purposes; provided, they are commonly sold to the general public under similar terms even without established catalog or market prices. It is limited to these support services.

(6) stands for the proposition that services sold in substantial quantities in the commercial marketplace with established catalog prices are commercial items for FAR Part 12 purposes. It is covers a far broader concept of services than (5).

Certainly, there is some possibility of overlap with (5) and (6).

The drafters of FAR Part 12 and the definition of commercial item did not want EVERY service to be a commercial service, such as those "consulting" services offered by retired generals and colonels and so forth who often get (or who are perceived as getting) sweetheart deals. If those services aren't sold in the commercial marketplace, they aren't commercial. So commercial services reaches typewriter repair and equipment installation and maid service and even professional services that are commonly sold in the commercial marketplace -- but it doesn't reach personal service contracts for retired generals and colonels and sweetheart multi-million dollar sole-source T&M contracts for companies they own whose only customers are the organizations where they once worked.

You should ask yourself why the subcontractor cares about (5) versus (6). Is it for honest reasons? or nefarious reasons?

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Well, in this case, the difference is that (5) requires that the sub provides the same or similar services to commercial customers. Since the sub doesn't do that, or at least has thus far not been able to substantiate it, they want to use (6), which only requires that the services are of a type.

To go back to Joel's question, what difference does it make as to which paragraph from the definition is applicable? Is there a questiion as to whether the services are commercial services? As ji20874 indicated, there is overlap between (5) and (6) and they are not mutually exclusive.

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Look - is the problem a matter of establishing that the firm is offering a reasonable price or whether or not the service itself is commercial.? I suspect it is the former. For 6 to apply, it appears that the service provider would be able to show established prices for the service or that it can be determined from other sources that the price is fair and reasonable and meet the buyers expectations or requirements

FAR 2.101 under the definition of a commercial item at (6) (ii) says “Market prices” means current prices that are established in the course of ordinary trade between buyers and sellers free to bargain AND that can be substantiated through competition or from sources independent of the offerors (emphasis added).

If the service itself is a commecial type, then the sub should be able to provide catalog prcing and a history of actual prices under (6) (i) or prices should be able to be substantiated either through competition or from independant sources of pricing. This isn't an all inclusive explanation.

.

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Thanks for the input. The basic problem is that the sub won't/can't substantiate that it performs these or similar services for anyone but my company as a prime. The commercial equipment is similar to commercial equipment (with minor mods) but all repair and maintenance for the commercial equipment is performed by independant authorized service centers.

Therefore we can't determine fair and reasonable pricing, and given this sub's track record we and our customer are somewhat suspicious of the motive for trying 6. The sub's interpetation is that as long as other entities offer "of a type" services (i.e. the authorized service centers repair and maintain the commercial version of the equipment), the sub can claim their service is commercial as well, and use pricing for similar services performed by the service centers to determine that the sub's pricing is fair and reasonable.

The customer will not accept a commerciality determination that is not substantiated by proof of commercial sales IAW DFARS PGI 215.403-1©(3)(ii)(2) and 215.404-1(a)(iii) and ( B )(iii)( B ). Did I mention that both the prime and sub contracts are sole source?

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The customer will not accept a commerciality determination that is not substantiated by proof of commercial sales IAW DFARS PGI 215.403-1© (3) (ii) (2) and 215.404-1 (a) (iii) and (B ) (iii) (B ). Did I mention that both the prime and sub contracts are sole source?

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