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Commercial Item Determination


Fara Fasat

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Guest Vern Edwards

I didn't say that it was reasonable to "cut off any discussion" of other information. I said it was reasonable of her to ask for proof of sales. I feel your pain.

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I'm still glad the decision is made by the contracting officer on a case-by-case basis. Here's why--

Just assuming, arguendo, that Fara Fasat is right, well, he can still sell his wares to other contracting officers. But if the decision was made by a central office and was dispositive on all contracting officers in the United States and abroad, and the contracting officer in question worked there, well, then he could never sell his wares anywhere in the Government as commercial items.

See? Discretion at the lowest level is the best way! :-)

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True, there could be unintended consequences. On balance however, I think a central office, whose sole function is making CI determinations, would be more likely to be more experienced and knowledgeable, and more likely to apply the full definition. Furthermore, if you have confidence in the office, you are more likely to accept the decision and not feel like you got screwed.

It's hard to predict. It could end up like the old saying: "Be careful what you ask for, because you might get it."

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Guest Vern Edwards

Let's call such an office the Central Commerciality Office (CCO). How would such an office work?

1. Would firms be able to seek a determination from the CCO in advance of and without reference to any particular procurement or would they have to seek a determination for a particular procurement?

2. If firms could seek a determination if advance of and without reference to any particular procurement, what redress would a firm have if the office determined its product to be noncommercial, since they could not protest and they could not proceed under the Contract Disputes Act.

3. How many such requests do you think the CCO would get? How long do you think such determinations should take? How much staff would you give the CCO to process such determinations? What would be your justification for the expense -- the convenience of firms wanting to do business with the government?

4. If firms can go to the central office for a determination in connection with a particular procurement, then the buying office could be subject to a protest without any authority to propose corrective action. It would be held in thrall to the decisions of the central office. Consider, too, the question of how

5. Could contractors seek a determination from the CCO for particular contract? In that case, it seems likely that the person making the determination would have to be a contracting officer for that purpose. Would a lengthy period of determination be grounds for a delay claim? If so, then the buying office would be in thrall to the CCO for the costs of delays that it did not cause.

6. Where in the government would the CCO be situated? At OMB? OFPP? GSA? The Pentagon? At each contracting activity? In each contracting office? If at the agency level of below, would a determination by one organization be binding on the rest of the government? If so, would there be a route of appeal?

I ask those questions and make those points (I could make many more) to show you that it's easy to propose an idea, but hard to design it to work in a way that would be acceptable to all.

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OK, here are a few more thoughts. Assume just for discussion that DLA already maintains an extensive database of NSNs, and could add a field for whether it is a commercial item. A check means it is; no entry means nothing (kind of like the old "neutral" for no past performance).

Here is how it might work: DLA could, as part of its charter, conduct a systematic review of its NSNs, and check the field if it is a CI. Contractors could also submit a justification and ask for a determination. Again, no entry means nothing. A contractor would still be free to make its case to the CO on an individual solicitation, just as it does now.

Now, for a few of Vern's comments on a potential Central Commerciality Office -- CCO:

1. Would firms be able to seek a determination from the CCO in advance of and without reference to any particular procurement or would they have to seek a determination for a particular procurement?

1. yes whenever they think they need it.

2. If firms could seek a determination in advance of and without reference to any particular procurement, what redress would a firm have if the office determined its product to be noncommercial, since they could not protest and they could not proceed under the Contract Disputes Act.

2. no redress from the CCO. The contractor would have to make its case on an individual contract action, just like it does now.

3. How many such requests do you think the CCO would get? How long do you think such determinations should take? How much staff would you give the CCO to process such determinations? What would be your justification for the expense -- the convenience of firms wanting to do business with the government?

3. who knows how many, how long, etc? Justification for cost -- consistency, more educated determination, efficiency (as more parts get a positive determination -- saves a separate determination on each contract action).

4. If firms can go to the central office for a determination in connection with a particular procurement, then the buying office could be subject to a protest without any authority to propose corrective action. It would be held in thrall to the decisions of the central office.

4. no. CCO operations are separate from individual contract actions. If a product has a positive CI listing at DLA, all future contract actions would use it. If there is no listing, the CO must do as he/she does now -- do market research, make a determination. Also, the contractor could submit its justification. All the same as now.

5. Could contractors seek a determination from the CCO for particular contract? In that case, it seems likely that the person making the determination would have to be a contracting officer for that purpose. Would a lengthy period of determination be grounds for a delay claim? If so, then the buying office would be in thrall to the CCO for the costs of delays that it did not cause.

5. no. CCO is a separate function from contract actions. If there is a positive determination, it is used in contract actions. If not, it means nothing. No change from current state of affairs.

6. Where in the government would the CCO be situated? At OMB? OFPP? GSA? The Pentagon? At each contracting activity? In each contracting office? If at the agency level of below, would a determination by one organization be binding on the rest of the government? If so, would there be a route of appeal?

6. wherever it makes most sense. yes, a positive determination would be binding.

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  • 2 weeks later...
  • 9 months later...

What are the advantages to a Contractor to having something determined to be a Commercial Item ?

All I can think of is that:

1) they don't have to furnish any cost or pricing data, plus

2) a couple dozen clauses and provisions for non-CI solicitations/ contracts are left out.

Are there any disadvantages ?

.............................

On the other hand, for an Agency, it seems like it makes a much bigger difference to them.

The whole acquisition process goes faster, including evaluation.

The one downside I can think of, CO's who are more comfortable looking at cost and price data may fear that they are paying too much.

What are the reasons a CO may NOT want to call something a Commercial Item ?

This authority has been around for almost 20 years now.

I'd expect it to be used more often.

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  • 1 year later...

Bringing this string back to life, so as not to re-create, but rather expand...

How about the pain felt by a small business subcontractor when proposing a Commercial Item to the Prime. Prime is rigorous (no argument here) and calls in DCMA. DCMA reviews vigorously (many hours of our staff, but that's part of the deal), and gives a blessing. The agency declines to accept DCMA approval. The agency (not just current CO) has taken the stand that any comp invoices must be no older than @2 years. (don't look for a reference in the FAR/DFAR) The insanity is that tech companies move rapidly forward in evolving products and the USG is buying the same product for upwards of 10 years due to program lifespans. If our last 'commercial' sale was 5+ years ago, that does NOT make our product any less commercial today.

As mentioned above, on one hand the gov't advocates 'commercial' solutions, yet on the other is deaf to a commonsense argument.

BC

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  • 1 year later...

In the 2016 National Defense Authorization Act, section 851 requires DoD to establish a central office to oversee commercial item determinations, and provides that a prior determination will serve as a presumption of commerciality for subsequent acquisitions. There are several other provisions regarding price information, flowdown, etc., but this may have the most impact.

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Guest Vern Edwards

Buying commercial products and services makes perfectly good sense, and the government ought to do so whenever possible. The problem with government CI policy is that CIs are exempt from many controls over the government buying process and Congress wanted to make sure there were that there would be no loopholes that would let the wrong ones into the CI sanctuary. So it created a complex definition and then amended it to make it even more complex, and now DOD must create a new bureaucracy to oversee commercial item determinations.

What this shows is the impossibility of government doing anything simply.

Acquisition reform is a long-running joke. Thanks to the Federal Acquisition Streamlining Act :lol:, we have more rules than ever. Go back and check the page count of the FAR in 1994, before the enactment of FASA, and then check it 10 years later.

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