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Commercial Item Determinations -- DCMA is now the decision authority

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In the past, DCMA's Commercial Item Group was responsible for reviewing/making recommendations as to Commercial Item Determinations for buying commands throughout the field. The Procuring Contracting Officer was ultimately responsible for making the determination/decision.

Now, based on one of DPC's newest policies, this authority has been taken away from Procuring Contracting Officers altogether.

Thoughts?

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I think its a huge savings of time and resources for both the Government and contractors.

A suggested improvement--change the rules such that an item is commercial until proven otherwise. As it is now, commerciality has to be proven.

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I tend to agree with Don's assessment. My experience is that, looking at DoD as a whole, the PCOs' knowledge, skills, experience -- and willingness to commit to a position -- is uneven. I'm happy to leave the decision in the hands of the SMEs.

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20 hours ago, Don Mansfield said:

A suggested improvement--change the rules such that an item is commercial until proven otherwise.

I disagree with this suggestion.  As it currently stands, the Contractor is in the best position to provide evidence in support of its assertions that its product fits one of the eight definitions of commercial item (e.g. sales figures, marketing documents, internal emails).

If the burden switched to the Government, you'd be forcing the party without any of that data to prove a negative.

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2 hours ago, Amart said:

I disagree with this suggestion.  As it currently stands, the Contractor is in the best position to provide evidence in support of its assertions that its product fits one of the eight definitions of commercial item (e.g. sales figures, marketing documents, internal emails).

If the burden switched to the Government, you'd be forcing the party without any of that data to prove a negative.

I agree with you. Many - but not all - items are obviously commercial items. Where a determination is necessary, information, which the government may not have, is in the hands of, or may be obtained by,  the supplier. 

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Related question regarding CPSRs. Recently I've heard of Review Teams having findings related to inadequate contractor CIDs. Will review of contractor CIDs also be farmed out to the CIG?

As a contractor, if PCOs can no longer be trusted to make adequate CIDs, why should I accept that CPSR reviewers have the expertise to review my CID for adequacy?

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I would say the answer would be that the difference is in experience, training and specialty.In addition, there should be consistency across DOD with one group performing the determination.

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5 hours ago, Amart said:

I disagree with this suggestion.  As it currently stands, the Contractor is in the best position to provide evidence in support of its assertions that its product fits one of the eight definitions of commercial item (e.g. sales figures, marketing documents, internal emails).

If the burden switched to the Government, you'd be forcing the party without any of that data to prove a negative.

Why couldn't the Government obtain the data from the contractor? Doesn't the Government obtain data from the contractor to determine price reasonableness? I think it's called cost or pricing data or something like that. 

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16 minutes ago, Don Mansfield said:

I think it's called cost or pricing data or something like that.

You mean those documents that contractors need to submit to demonstrate that their pricing is fair and reasonable or else they doesn't get a contract?  Kind of like how they currently have to submit documents to prove that its product is commercial?

Under the burden-shifted regime, the contractor would be incentivized to stonewall.

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Contractors don't have to assert that their pricing is fair and reasonable, like they have to assert that something is commercial. The contracting officer makes a determination of fair and reasonable pricing based on the information provided. 

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8 minutes ago, Don Mansfield said:

Contractors don't have to assert that their pricing is fair and reasonable, like they have to assert that something is commercial.

Assertions notwithstanding, contracting officers have a "no data, no F&R determination, no contract" stick when it comes to cost or pricing data like they currently have with commercial item determinations.

I notice you responded to the first part of my post but not the part about the incentive to stonewall.  How would you mitigate/counter that under your proposed regime?

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27 minutes ago, Amart said:

I notice you responded to the first part of my post but not the part about the incentive to stonewall.  How would you mitigate/counter that under your proposed regime?

The general rule would be to treat all items as commercial. An exception would be if the contractor was performing or had performed within the last year a fully-covered CAS contract or subcontract. 

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It looks like this is only a DOD policy and does not apply to procurements controlled only by FAR. For Part 15 procurements in excess of the TINA threshold, contractors would typically submit its assertion and facts in support thereof in order to qualify the end item/service for an exemption from cost or pricing data. I assume the Contracting Officer would forward that info to DCMA for a decision.  

Edited by Neil Roberts
changed exception to exemption

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On 1/11/2019 at 3:34 PM, Don Mansfield said:

The general rule would be to treat all items as commercial. An exception would be if the contractor was performing or had performed within the last year a fully-covered CAS contract or subcontract. 

If a supplier has an established GSA MAS (IT 70 - Services) and wants to add additional commercial items (Labor Categories) to a SIN, FAR 2.101 indicates that 'Of a type customarily used by the general public or by nongovernmental entities for  purposes other than governmental purposes, and— (i) Has been sold, leased, or licensed  to the general public; or (ii) Has been offered for sale, lease, or license to the general  public.'

The Supplier can show commerciality through CID/CSP based on individual contracts with the Federal Government. Don't the offers/individual contracts with the Fed Gov fit the definition of a commercial item? 

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3 hours ago, Joe2713 said:

Don't the offers/individual contracts with the Fed Gov fit the definition of a commercial item? 

What do you mean by this?  I am confused as to what you are trying to ask?  Sales to the Federal government are not sales to the general public.

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19 hours ago, Joe2713 said:

 

The Supplier can show commerciality through CID/CSP based on individual contracts with the Federal Government. Don't the offers/individual contracts with the Fed Gov fit the definition of a commercial item? 

No. 

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On 2/14/2019 at 4:25 PM, Retreadfed said:

What do you mean by this?  I am confused as to what you are trying to ask?  Sales to the Federal government are not sales to the general public.

Can a supplier use past performance/pricing already established with a Federal government Agency (e.g., the supplier has a contract with a Fed Gov customer that the customer ordered against) as proof of commerciality to add a new commercial item to a GSA MAS? For example, the supplier sold a Federal Agency a service via a BPA established by the Agency's contracting activity and now want to use that experience/pricing as proof of commerciality to add that service to their GSA MAS. .  

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I still don't get it.  Are you asking if a determination by one agency that an item is a commercial item can be used to convince another agency that the item is a commercial item?

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On 2/14/2019 at 6:47 PM, Joe2713 said:

The Supplier can show commerciality through CID/CSP based on individual contracts with the Federal Government. Don't the offers/individual contracts with the Fed Gov fit the definition of a commercial item? 

No.  See, Red River Waste Solutions, LP, B-411760.2 (Jan 20, 2016):

Quote

[C]ontracts with the federal government are not generally considered to be part of the commercial marketplace.  In this regard, the FAR defines the term “Commercial item” as:  “Any item, other than real property, that is of a type customarily used by the general public or by non‑government entities for purposes other than government purposes . . . .”  FAR § 2.101 (emphasis added).  If government contracts were generally considered part of the commercial marketplace, everything the government procures could be considered a commercial item, and a significant portion of FAR Part 12 would be rendered superfluous. 

 

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In reading the Red River Waste GAO Decision, just because other government contracts have been classified as “commercial services”,  those contract might or might not be consistent with commercial practices, pricing or other significant conditions. In that case, the GAO decided that the government hadn’t shown that it is common commercial practice to unit price refuse collection.

In particular, the protestor (incumbent contract holder) argued that many of the primary costs are fixed, regardless how full the trash receptacles are. 

And - just because an agency calls a contract “commercial” doesn’t necessary confirm that it is consistent with common commercial practices.  

 

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Joel, aren't you conflating the question of whether an item is a commercial item with the issue of what procedures should be used to acquire that item?

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The GAO did not say that it was not a commercial item.  It concluded that the market research performed by the government was not adequate to determine that the government was purchasing trash services consistent with customary commercial practice for trash removal services outside the federal government, as required by FAR. 

I guess the question is - does buying trash services (or other services) differently than how non-federal government entities customarily contract for trash services (or other services) establish that the government’s services are “commercial services”? 

Perhaps it’s aliken to an example of pricing a contract for purchase of delivered concrete masonry units per unit with no limit on the number to be delivered per individual order; the customer could order one block or a flat-bed semi load.  But the customer wants the contract priced by the block, without separately pricing delivery charges.  It’s not done that way in commerce. 

Or how about a contract for barbers to come to a government installation to cut  new recruits hair - but the government wants a unit price per hair cut with no minimum or maximum number of recruits on any day? Or say - what if the government wants a lump sum price for hair cutting services with no way to tell how few or how many recruits will be served on any day?    

 

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The GAO concluded the market research was not adequate because it relied on other government contracts to make a commerciality determination.  In the case of Red River, the commerciality determination was whether a term/condition was commercial.  However, the principle is the same when applied to the supply or service itself.  You cannot solely rely on other government contracts when trying to assess whether something is commercial because whether or not the federal government purchases something tells you nothing about whether that supply or service is "of a type customarily used by the general public or by non‑government entities for purposes other than government purposes." 

This directly contradicts Joe2713's statement that "The Supplier can show commerciality through CID/CSP based on individual contracts with the Federal Government. Don't the offers/individual contracts with the Fed Gov fit the definition of a commercial item?"  That's what I was responding to.

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