RFO Part 2 now explicitly defines (at least some) construction as a commercial service.

Link to RFO Part 2: FAR Overhaul - Part 2 | Acquisition.GOV

Text in question:

(2) Services, including construction, 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... (blah blah blah).

Setting aside the question of how one might decide which types of projects are commercial and which are not (and I have my ideas about that), it seems there are some fundamental and perhaps irreconcilable differences in standard commercial terms and conditions and federal construction terms and conditions. Changes come immediately to mind. Any thoughts on how the powers that be are going to unscramble this egg, or is this just going to be a regulatory free-for-all while everyone behaves differently?

By "standard commercial terms and conditions", do you mean the untailored version of FAR 52.212-4? If so, I think it would be crazy to use that in a construction contract. I would research what standard contracts were available from organizations like the American Institute of Architects and tailor FAR 52.212-4 accordingly.

1 hour ago, Don Mansfield said:

By "standard commercial terms and conditions", do you mean the untailored version of FAR 52.212-4? If so, I think it would be crazy to use that in a construction contract. I would research what standard contracts were available from organizations like the American Institute of Architects and tailor FAR 52.212-4 accordingly.

52.212-4 can be tailored except as limited by RFO 12.205(b)(1)(ii). As an example, that says you cannot tailor the payment paragraph. So, how do you deal with the inherent conflicts between the commercial payment paragraph and 52.232-5?

What about the huge difference in changes? Would you suggest just tailoring RFO 52.212-4(d) changes so that it looks like 52.243-4 or -5?

In the world of reality, instead of the world of government contracting, construction always has been a commercial service, but the people who came up with FAR Part 12 were not competent to deal with it.

Don't buy construction as a commercial service under FAR Part 12 until someone at those *@&^#% FAR councils further addresses that matter. The standard FAR commercial item clauses are not suitable for construction. Wait until "those people" address that matter more fully.

1. Assuming that you are asking how to pay as the work progresses, how about line items for each stage of completion?

   5 hours ago, GeoJeff said:

   What about the huge difference in changes? Would you suggest just tailoring RFO 52.212-4(d) changes so that it looks like 52.243-4 or -5?

   2. No, I would suggest tailoring the paragraph so it's consistent with customary commercial practice.

      2 hours ago, Vern Edwards said:

      Don't buy construction as a commercial service under FAR Part 12 until someone at those *@&^#% FAR councils further addresses that matter. The standard FAR commercial item clauses are not suitable for construction. Wait until "those people" address that matter more fully.

The problem is that the FAR part 2 deviation guidance specifically includes construction in the definition of "commercial service," and FAR requires the use of part 12 when buying commercial services. There's also the EO that now requires a contracting officer to get higher-level approval whenever they determine something is not commercial.

20 hours ago, GeoJeff said:

Any thoughts on how the powers that be are going to unscramble this egg, or is this just going to be a regulatory free-for-all while everyone behaves differently?

My first inclination, IF I were still a CO, would be to see how others have already unscrambled the egg. One specific example and one anecdotal one.

The specific would be to take a a stroll SAM.gov Contract Opportunities and look at construction solicitations. I did a quick search before before posting this and the very first hit was a "construction services" effort that was initially solicited on a Standard Form 1449. I looked no further to see how they unscrambled the egg but with interest noted that the solicitation had been amended 7 seven times with some being an effort to make it look more like FAR part 36. This said out of the 6,411 hits I am guessing there were several other examples.

Anecdotally, back in the day, and using guidance issued by OFPP I accomplished a couple of construction projects as commercial services. One was a pole barn that was in truth built to house a couple of wildand fire engines. It was a success and a marrying, just as Don Mansfield suggests, FAR and the tailoring of commercial practices. In the marrying there was internal push back and the changes clause matter was one area. But I will pose this, as the subject is somewhat fresh in my mind based on another discussion thread in WIFCON. The few efforts that were accomplished were in my view and by my effort as a CO relational contract experiences and not transactional. Would these few efforts fit every constuction service I ever did as a CO, probably not, with market research being very key. And market research would be very key today.

11 hours ago, Don Mansfield said:

The problem is that the FAR part 2 deviation guidance specifically includes construction in the definition of "commercial service," and FAR requires the use of part 12 when buying commercial services.

DO NOT attempt "tailoring" Part 12 clauses on your own, unless you are truly expert, and I mean EXPERT, not just "experienced", in construction contracting.

Construction is the most litigated of all types of government contracts. Construction has a massive common law and government contract law history. Regardless of what the "overhaul" people say about the commercial status of construction contracting, stay away from it until the government adopts standard commercial construction contracting clauses.

I know what I'm talking about. My last government job was head of construction contracting for a federal agency. Until then I had never had to go to court on a government contract. Upon taking that job I got to meet a lot of lawyers.

Remember the warning at the gates of Hell: Lasciate ogne speranza, voi ch'intrate.

10 hours ago, Don Mansfield said:

There's also the EO that now requires a contracting officer to get higher-level approval

I haven't looked, but I'd suspect there is or soon will be a class waiver or other work around for services like construction that are and should remain (IMO) non-commercial.

If not, this approval is, ironically, not that big a deal thanks to other EOs. For most or all agencies (not just DHS), most or all new contracts have to go through five to ten SES/C-Suite approvals anyways, - something like CO, HCA, Agency COS/CFO/COO, Agency Head, Department Acquisition Staff, anonymous approver not in Department, SPE. Sometimes this happens twice, solicitation and then again for award. Adding another SPE J&A is just adding a few more freight cars onto the train. Still true for even more SPE J&As (like for contracts instead of using GWAC/GSA). It all reminds me of Catch-22's loyalty oaths.

Agree, don't go first with commercial construction. I'd probably let the experts - Corps of Engineers (1,000 construction contracts last year, $3B), GSA or DOT (each with few hundred worth ~$1B) - take lead here.

AIA A201 is entitled "General Conditions for the Contract of Construction." Section 7 talks about changes, and, to my reading, is actually very similar to the traditional 52.243-4 or -5 arrangement. The "Owner" can issue a "Construction Change Directive" within the general scope of the contract in advance of a mutually agreed upon price impact and the contractor has to perform. There are procedures laid out for how to resolve the dispute, blah blah blah. VERY different than the "mutual agreement of the parties" language at 52.212-4.

Sample AIA document here: AIA Document A201-2017 - Sample

2 hours ago, Vern Edwards said:

DO NOT attempt "tailoring" Part 12 clauses on your own, unless you are truly expert, and I mean EXPERT, not just "experienced", in construction contracting.

That's good advice if the CO has a choice. The EO now requires the CO to seek higher-level approval, which they may not get.

@GeoJeff Remember that you can tailor FAR 52.212-4 to include other FAR clauses if they are consistent with customary commercial practice. Are the FAR construction clauses consistent with customary commercial practice? If so, why not include them by addendum?

Just now, Don Mansfield said:

Are the FAR construction clauses consistent with customary commercial practice? If so, why not include them by addendum?

The FAR clauses for fixed-price construction contracts are similar, but identical to, to the AGC's terms and conditions.

Where is Joel Hoffman when we need him?

Construction is a very tough business done by very tough people. Don't mess around.

I know--this thread is Joelnip.

13 hours ago, Don Mansfield said:

The problem is that the FAR part 2 deviation guidance specifically includes construction in the definition of "commercial service," and FAR requires the use of part 12 when buying commercial services.

This may be an unintended consequence of the recent separation of the old "commercial item" definition into "commercial product" and "commercial service". The product one retained the statutory "(1) A product, other than real property..." language. Many offices were relying on this language to call construction noncommercial, and then they continued to do so for lack of anything explicit about construction in the service definition.

How can RFO affect a statutory definition? I wonder if RFO and Congress will butt heads over this.

15 hours ago, Don Mansfield said:

FAR requires the use of part 12 when buying commercial services

Don, I don't see a "shall" in the RFO Part 12 where one used to be, at current FAR 12.102(a). The new RFO 12.101 preference seems more permissive, allowing market research to drive the decision.

@GeoJeff

My read of the RFO change to Part 2 is that now commercial construction is an option where it used to be verboten.

If your market research says it's commercial but you do not want to tailor the commercial clause, you could try to use sealed bidding if bids are a commercial practice. The RFO did not substantially change these:

6.101 Full and open competition.

(a) Except as authorized by 6.102 and 6.103, contracting officers must obtain full and open competition by using competitive procedures to solicit offers and award Government contracts (see 10 U.S.C. 3201 and 41 U.S.C. 3301).

(b) Contracting officers must use the competitive procedure, or combination of procedures, best suited to efficiently fulfill the Government’s requirements. Competitive procedures include sealed bids, competitive proposals, and other procedures explicitly authorized by statute.

(1) Sealed bids. For sealed bidding procedures, see part 14. Use sealed bids only when the contracting officer has found that all of the following apply:

(i) Time permits staff to solicit, submit, and evaluate sealed bids;

(ii) The award will be made on the basis of price and other price-related factors;

(iii) Discussion with bidders is unnecessary; and

(iv) Contracting officers reasonably expect to receive more than one sealed bid.

(2) Competitive proposals. For competitive proposal procedures, see part 15.

36.101 Construction.

36.101-1 Acquisition Strategy.

(a) The contracting officer will only use sealed bid procedures (see part 14) for a construction contract if the conditions in part 6 for use of sealed bidding are met. However, the contracting officer should not use sealed bidding if the contract will be performed outside the United States and its outlying areas.

Try seeing what the VA does with sealed bidding on SAM.gov if you have not done it before. The SF 1449 has been verboten in its construction contact shops for decades (until now).

10 minutes ago, WifWaf said:

Don, I don't see a "shall" in the RFO Part 12 where one used to be, at current FAR 12.102(a). The new RFO 12.101 preference seems more permissive, allowing market research to drive the decision.

I don't think that's different than the current policy at FAR 10.002(d)(1).

31 minutes ago, WifWaf said:

This may be an unintended consequence of the recent separation of the old "commercial item" definition into "commercial product" and "commercial service". The product one retained the statutory "(1) A product, other than real property..." language. Many offices were relying on this language to call construction noncommercial, and then they continued to do so for lack of anything explicit about construction in the service definition.

I don't doubt offices were doing that, but it makes no sense. Purchasing construction is not purchasing real property.

MEMORANDUM FOR AGENCY SENIOR PROCUREMENT EXECUTIVES FROM: Angela B. Styles (signed), OFPP Administrator SUBJECT: Applicability of FAR Part 12 to Construction Acquisitions

July 3, 2003

The provisions and clauses in FAR Part 36 address all fundamental aspects of construction contracting. Part 36 applies well-established commercial principles that are designed to result in an equitable distribution of risk between the government and contractors. In doing so, Part 36 enables agencies to gain easy access to marketplace capabilities.

By contrast, FAR Part 12 lacks clauses for handling critical circumstances common to construction efforts, especially those involving new construction or non-routine alteration and repair services. Clauses that would typically be expected in these efforts include those addressing differing site conditions, change orders, and suspension of work. The gap in coverage reflects the fact that construction contracting was not generally contemplated when Part 12 was promulgated. New construction projects and complex alteration and repair, in particular, involve a high degree of variability, including innumerable combinations of site requirements, weather and physical conditions, labor availability, and schedules. The current coverage in Part 12 fails to allocate risk in a manner that takes into account the nature of these activities.

...

This memorandum is not intended to limit the goal of FAR Part 12, which is to ensure agencies are effectively positioned to take full advantage of the commercial marketplace and the value and efficiencies the marketplace generates. In fact, Part 12 clauses generally are suited for certain types of construction activities that lack the level of variability found in new construction and complex alteration and repair. In particular, Part 12 generally may be suited for routine painting or carpeting, simple hanging of drywall, everyday electrical or plumbing work, and similar noncomplex services, as well as for purchases of commercial construction material and associated ancillary services. Of course, as part of acquisition planning, contracting officers need to consider the particular circumstances of a given acquisition (e.g., the likelihood of a differing site condition) to determine if the current clauses in Part 12 properly allocate risk.

That's from OFPP: MEMORANDUM FOR AGENCY SENIOR PROCUREMENT EXECUTIVES FROM: Angela B. Styles (signed), OFPP Administrator SUBJECT: Applicability of FAR Part 12 to Construction Acquisitions, July 3, 2003

https://georgewbush-whitehouse.archives.gov/omb/procurement/far/far_part12.pdf

Vern,

I remember that! That language about "routine painting or carpeting..." is mirrored exactly at GSAM 512.203(c): (bold added)

(c)  Contracting for Construction. The provisions and clauses in FAR 36 and GSAM part  536 address the fundamental aspects of construction contracting. FAR 36 and GSAM part  536 apply well-established commercial principles that are designed to result in an equitable distribution of risk between the Government and its contractors. The contracting officer should consider the following when contemplating a construction acquisition as a commercial purchase—

(1) FAR 12, as currently promulgated, should rarely be used for new construction acquisitions or non-routine alteration and repair services.

(2) FAR 12 and GSAM part  512 may be used in limited circumstances involving construction contracting, primarily for routine alteration and repair services as well as for the acquisition of commercial construction materials and associated ancillary services. It may be appropriate to use FAR 12 and GSAM part  512 for routine projects such as painting or carpeting, simple hanging of drywall, everyday electrical or plumbing work, and similar noncomplex services, as well as for purchases of commercial construction material and associated ancillary services.

(3) Whether a construction acquisition is conducted under FAR 36 or FAR 12, the contracting officer must adhere to the policies of FAR Subpart 22.4. This subpart addresses labor standards for contracts involving construction. Prior to making the determination that a construction acquisition can be conducted as a commercial purchase, the contracting officer should conduct appropriate market research in accordance with FAR 10 and GSAM part 510.

(4)  Construction contracts in excess of $2,000 must include an applicable Construction Wage Rate Requirements statute wage determination found under the System for Award Management Wage Determinations at https://www.sam.gov. If the construction contract is greater than $30,000, then the SF 1442 should be used in lieu of the SF 1449 and the bonds or alternate payment protection provisions of FAR 28.102-1, 28.102-2 and 28.102-3 apply.

(5) Construction contracts awarded as commercial acquisitions should not exceed the prospectus threshold. The prospectus threshold as referenced in section 102-73.35 of the Federal Management Regulation (FMR) is posted at https://www.gsa.gov/annualprospectusthreshold

I think that also tracks with the FAR definition of commercial services needing to have "established catalog or market prices." Painting, carpeting, drywall, concrete, asphalt...these are all things that have a market, unit price like per square foot or per cubic yard. Building a new office building, not so much.

On 9/2/2025 at 10:21 AM, GeoJeff said:

question:

(2) Services, including construction, 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

This bolded language, by itself would disqualify most construction projects of any complexity, as a full blown construction projects aren’t priced based upon established catalog prices or market prices.

Even when Sears Roebuck sold houses out of its catalogs over 100 years ago, I believe that it was only for the plans and materials, not including the construction of the kits.

I agree with Vern’s assessment.

Construction contractor’s generally don’t write the contract language or design and prepare the plans and specifications for complete construction projects in commercial practice.

Note that the AIA and other standard model specs like NSPE, ASCE, are prepared for specific contracts by licensed architects and engineers, who are the designers of record. The DOR’s , have both statutory and regulatory responsibilities for not only the functionality and performance but also for durability and life safety aspects of projects. .

I can see using Part 12 for:

15 minutes ago, GeoJeff said:

It may be appropriate to use FAR 12 and GSAM part  512 for routine projects such as painting or carpeting, simple hanging of drywall, everyday electrical or plumbing work, and similar noncomplex services, as well as for purchases of commercial construction material and associated ancillary services.

Also for repairs or replacement of individual building components like an A/C unit or other components in a building for instance.

But one would be a complete fool to use Part 12 for a full construction project.

I agree with @GeoJeff assessment, too.

Of course, the Part 12 payment procedures (no progress payments, no payment for stored materials, etc. prior to completion and acceptance don’t work for construction contractors.

The requirements for bilateral agreement to make changes would likely cause massive disruption and schedule impacts as well as chaos in pricing changes and time extensions and in determining entitlement to compensation for delays and impacts.

49 minutes ago, joel hoffman said:

This bolded language, by itself would disqualify most construction projects of any complexity, as a full blown construction projects aren’t priced based upon established catalog prices or market prices.

Would you say the construction of an Amazon distribution center is NOT based on market prices?

Serious question.

The RFO has created a new thing, commercial construction. What is the advantage of this?

As I think about the payments issue, much of the apparent advantage of commercial contracts compared to construction is illusory.

• As I understand it, a commercial construction contract is really construction first, and commercial second. A commercial construction contract will much more closely resemble an old-school FAR 36 construction contract than a purchase order.

  • For Commercial construction, clauses for construction vs. commercial services conflict. When they do, I assume that 36 trumps FAR 12, so clauses like 52.232- 5 Payments under Fixed-Price Construction Contracts are added to a commercial construction contract. Conflicting payment terms are lined out

  • The customary practices of construction lean much more towards FAR 36 than 12. FAR 52.212-4 would have to be heavily tailored for construction (for T&C not in a construction clause).

  • Other clauses and statutory requirements found in FAR 36 and 22 don't conflict with FAR 12, rather they were not applicable to commercial services. Now they are applicable, if its construction. Things like Davis-Bacon.

• RFO means less benefit for using commercial vs. construction. The RFO Part covering construction has removed a lot of text, which presumably translates into streamlining construction procedures. This narrows the gap between using FAR 12 vs. FAR 36.

• The people actually writing these contracts will probably continue to be construction-specialists. In the contracting offices I am familiar with, construction contracting is separate tract, and quite different from other sorts of contracting. I know of very few COs who evenly work on both construction and standard commercial services contracts.

• When the very wise and experienced user base of wifcon says "don't do it", as they are when it comes to 'commercial construction', you probably shouldn't do it.

On the other hand...my department did a lot of well-drilling recently. This is a completely commercial service and construction. If the customer were a private citizen or business, the deal could have been made in hours, not weeks. So if, somehow, we could have used mostly standard purchase orders for well drilling, that would have been great and saved many people a great deal of time and effort for exactly the same result.

1 hour ago, GeoJeff said:

Painting, carpeting, drywall, concrete, asphalt...these are all things that have a market, unit price like per square foot or per cubic yard.

I'm not so sure about that. I think the price of a carpet installation job depends on more than just the number of square feet. I think configuration and installation conditions matter, as well. But, admittedly, it's been awhile.

Of course, what all of this points out is the absurdity of trying to establish standard rules for work that can vary in many, many ways from job to job.

Look 𑁋 the government's notion about what is and is not "commercial" is dubious. We're talking about words defined and applied by bureaucrats trying to write one set of rules that will apply to widely various transactions and relationships in a wide variety of industry specialties.

Is hiring someone to paint a room construction? No.The painter is not constructing anything. It's painting. It's only construction to a labor statistician and to someone trying to decide whether the Davis-Bacon Act should apply.

Blah, blah, blah. Critical thinking, please.

15 hours ago, Vern Edwards said:

Critical thinking, please.

This attempt may be to simplistic but here you go.

First, what does the Federal government construct that is not constructed or otherwise 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? One can imagine catalog prices ( I provided an example in a previous post - pole buildings) and I believe one can imagine market prices or in other words construction services sold in a specific market. I therefore think there are market prices for almost anything that is constructed. My conclusion is what the Federal government constructs can be a commercial service almost all the time. Or in other words what out there does the Federal government seek as construction services that is not already provided in the commercial market place? I do not think my experiece is limited and I have a hard time imagining what it might be!

The push pull then becomes the fact that Federal government construction service acquisition is not only intended to achieve a specific end result (construct this or that) but is must fulfill the publics interest and a nationalistic view of mission accomplishment. This inherent difference suggests something more important than why say Carl needs construction services and why the Federal government has a need to handle construction services in some cases a little differently.

I believe this difference is key. As I shared in my first post and has been repeated specifically or implied market research is the key. So I am a subtle distraction from the rest, I would do it, but when I do my reasoning is going to be sound. And if I was not going to do it I would not flinch at getting higher level approval and in my view the highler level better be ready to react quickly for the puclic interest and mission accomplishment.

For a complete construction project, I’m not sure what you are trying to accomplish with a Part 12 commercial service contract format. I can see how a Part 12 Contract could be useful for simple efforts like that I mentioned earlier - installing, replacing or repairing individual items of real property installed equipment, small painting projects, etc.

But for a construction project , the DoD doesnt use the Uniform Contract Format for construction contracts.

It uses the Construction Specifications Institute’s CSI MasterFormat, which is a standard construction industry contract format.

The Unified Facility Guide Specifications UFGS are written in the CSI Format. They incorporate standard industry commercial materials, equipment and installation procedures plus mandatory federal design criteria.

The contract clauses also allocate risk and assign standard roles and responsibilities between the contract parties.

The contract format and roles and responsibilities are not unlike commercial construction contracting for similar type projects.

The standard basic construction contract clauses aren’t that many and generally resemble many non-federal construction contracts.

I would agree that there are a large number of social engineering and bureaucratic clauses that Congress has interjected.

What corners are you trying to cut ?