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What would be an example of software development services that would not meet the definition of "commercial item"?

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Services of a type offered and sold competitively in substantial quantities in the commercial marketplace based on established catalog or market prices for specific tasks performed or specific outcomes to be achieved and under standard commercial terms and conditions. For purposes of these services-

                (i) "Catalog price" means a price included in a catalog, price list, schedule, or other form that is regularly maintained by the manufacturer or vendor, is either published or otherwise available for inspection by customers, and states prices at which sales are currently, or were last, made to a significant number of buyers constituting the general public; and

                (ii) "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.

 

 

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Maybe any effort where there are no established catalog or market prices for specific tasks performed or specific outcomes to be achieved, but everything has been and will continue to be done on an hourly-rate or cost-reimbursement basis?

Edited by ji20874
add "or cost-reimbursement"
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10 minutes ago, ji20874 said:

Maybe any effort where there are no established catalog or market prices for specific tasks performed or specific outcomes to be achieved, but everything has been and will continue to be done on an hourly-rate basis?

Theoretically, yes, that would be an example. But I'm interested in real world examples where an agency determined that software development was noncommercial.

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7 hours ago, Don Mansfield said:

What would be an example of software development services that would not meet the definition of "commercial item"?

Well, now, with a little imagination, you have your example: software development for weapon systems, intelligence systems, space systems, cyber security... 

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To provide some more background on my original question, I read this in an article on DCMA's Commercial Item Group Web site:

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In accordance with (IAW) FAR Part 2.101, many defense programs have determined that software licenses, cloud services and software development are categorized as commercial.

I knew Kessel Run used FAR part 12 to acquire software development, but it looks like they're not alone. 

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@formerfed

39 minutes ago, formerfed said:

I started to post something similar about weapons systems, avionics, intelligence systems, and FAA control system modifications and found FAR 12 examples for it all.

Yes, like when the Air Force called the C-130J a commercial item and got slammed by the Senate and the DODIG, see DODIG Report D-2009-074, June 12, 2009. That little trick resulted in Pub.L. 109-163, Sec. 135:

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Any C-130J/KC-130J aircraft procured after fiscal year 2005 (including C-130J/KC-130J aircraft procured through a multiyear contract continuing in force from a fiscal year before fiscal year 2006) shall be procured through a contract under part 15 of the Federal Acquisition Regulation (FAR), relating to acquisition of items by negotiated contract (48 CFR 15.000 et seq.), rather than through a contract under part 12 of the Federal Acquisition Regulation, relating to acquisition of commercial items (48 CFR 12.000 et seq.).

And see DFARS 234-7002.

DOD's JEDI Cloud is being done as a commercial item. How has that made that acquisition successful?

Part 12 is an exception to standard contracting practice. Dumb contracting people are always looking for exceptions to standard practice, because they are incompetent. What is the point of buying under Part 12 if you have to tailor 52.212-4 to add a changes clause and clauses about configuration management and security?

Many software acquisitions qualify as commercial. But in my opinion, only a fool of a CO would contract for the development of software that is to be embedded in a weapon system, an intelligence system, a security system, or a military space system as a commercial item.

But that's just my opinion. People are going to do what they are going to do when they don't know how to do things properly. That's why we have so many rules, like the dumb rule restricting the use of LPTA source selection. Idiots were using LPTA to buy professional support services, thinking it is inherently faster and simpler than the tradeoff process.

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3 minutes ago, Vern Edwards said:

What is the point of buying under Part 12 if you have to tailor 52.212-4 to add a changes clause and clauses about configuration management and security?

Why do you think you would have to add a changes clause?

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1 hour ago, Don Mansfield said:

Why do you think you would have to add a changes clause?

Because in systems development you often have to change things on short notice and still meet a deadline, and you can't wait to negotiate a (bilateral) supplemental agreement.

Next question, Socrates.

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@Don MansfieldI think you think that coding is coding, no matter what you're coding for. But in systems development the embedded software affects the operation of components that must work in conjunction with other components in order for the system to work properly. A change in one component can affect the design and development of other components. That's why you need a changes clause and configuration management procedures. The software is not an independent system. It is a subsystem and must work with other subsystems that have not yet been fully developed and tested and that will change during the course of the development process..

Think F-35, and the software problems that come with trying to do something no one has done before.

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It seems like acquisition teams (including the contractor) for systems development contracts would rely on regular interactions (not so performance based). A team could quickly* establish and agree to some parameters to move forward with changes and funded amount; especially if the contract or modification uses a firm-fixed unit prices or a time-and-materials structure. After all, bilateral modifications are used, in part, to reflect other agreements of the parties modifying the terms of contracts. This is in addition to making negotiated equitable adjustments.

*relative to how long the Government would take to reach internal agreement on what a change order should look like

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Jamaal, Are you saying that, as a general proposition, the parties to a weapon system development could complete a supplemental agreement in less time than it would take for the government to issue a change order?

Are you saying that a changes clause is not necessary in such contracts?

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1 hour ago, formerfed said:

Or Agile could be used and change orders don’t apply

@formerfedDo you have a copy of an agile contract for a major system acquisition? I want to see one of those and what terms it contains. What provisions do such  contracts make for maintaining a system configuration baseline? Or do they not require such a thing? Have you seen one?

I'm not talking about a pure services contract, but a hardware/embedded software system development contract.

Or are you talking about stand-alone development of software that is not to be embedded?

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@Vern Edwards

Not a general proposition. My major systems experience was on the industry side of things.

In my Government and industry experience, change orders—in general—take a long time because of formalizing the changes in writing (changes to specs, drawings, SOW), internal reviews, securing funding and routing it in the financial and contract writing systems.

I wouldn’t say that a changes clause isn’t needed; its usefulness likely varies from contract to contract.

I know the Air Force used an interagency acquisition under the Economy Act to partner with an agency to develop their latest contract writing system. They essentially change things on the fly via mutual agreement.

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Would recommend asking a question like this to the DoD Commercial Item Group - this is what they do all day/everyday. www.dcma.mil/commercial-item-group  they have monthly office hours open to anyone to attend. 

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