Hello,

I work for a sub who does business with a prime. We sell commercial item A,B,C, D. All parts sold to prime have minor modifications customarily available in the marketplace. 

We have sold Items A, B,C(w/ minor mods)  to the prime in the past asserting commerciality and the Prime accepted our parts. 

Prime comes back a few years later with a purchase order for A,B,C and D. We fill out our commercial item justification for Part D but Prime has now come back and rejected A,B,C. 

So my question is.. once accepted as a commercial item by the Prime, can they now reject our commerciality for Parts A,B,C? The parts (w/ minor mods) are only sold to the Prime but are all catalog parts for our company (w/o the minor modifications). I guess I've never seen a prime suddenly state that parts which they bought in the past are now not commercial items. 

I'm sorry if I'm unclear. If I need to provide clarification, I will. Thank you. 

 

1 hour ago, StePa said:

The parts (w/ minor mods) are only sold to the Prime but are all catalog parts for our company (w/o the minor modifications).

Can you please clarify? Do you sell the same type of parts, without the minor mods that are "customarily available in the marketplace", to customers other than this prime? If so, can you demonstrate that? Can you demonstrate that the mods you make are, in fact, "customarily available in the marketplace"?

StePa, yes, the prime can change its mind about the parts being commercial items.  However, this does not mean that the prime is correct now and was wrong in the past when it accepted the parts as being commercial items.  You did not say why the prime rejected the parts as being commercial items.  However, the bar for what is a commercial item is low and it doesn't take much to be a commercial item.  I presume that when you say the parts are catalog items for your company, you mean that they are offered for sale to other companies, but you have only been able to sell them to the prime. 

Good comments above regarding missing rationale from the prime. You might also want to bone up on the DoD Guidebook for Acquiring Commercial Items JAN 2018 https://www.acq.osd.mil/dpap/cpic/cp/docs/Guidebook_Part_A_Commercial_Item_Determination_20180129.pdf

@here_2_help Hello. Thank you for the response. Yes, we sell the same part without minor modifications to the general public and can demonstrate both this as well as the modifications being "customarily available in the marketplace". 

@Retreadfed Our company has sold this particular part with the minor modification to the Prime only but have sold the part without modification to the general public. Thank you for the clarification. I was not sure if there was a rule where if a Prime had accepted the same exact part as a CI whether they could change their mind or not. 

The Prime rejected our CI status because we only sell this particular part with minor modification to them only and due to the prime accepting the parts as commercial previously, we had only submitted invoices where we sold the part to them previously. This is mainly due to our product being customarily modified to a customer's needs. All modifications are customarily available in the marketplace as this is done for both commercial and military contracts. 

Now that I understand there is no rule or guidance on a prime choosing to withdraw acceptance of the commerciality of the part, I believe it will be simple to address but will have to do a full commercial item justification providing redacted invoices of various sales and parts comparisons with similar products on the market. 

Thank you all for the help. 

 

StePa,

I agree with your approach. If it helps at all, there is a brand new DFARS rule (which obviously applies to government contracting officers, not prime buyers) that basically requires a prior CID to be accepted as valid, unless the CO can show why not.

@here_2_help Thank you. I just found it. 

https://www.federalregister.gov/documents/2018/01/31/2018-01781/defense-federal-acquisition-regulation-supplement-procurement-of-commercial-items-dfars-case

I have linked it here just in case there are other beginners that may run into the same issue and need the  DFARS case. 

On ‎2‎/‎2‎/‎2018 at 5:35 PM, Retreadfed said:

StePa, yes, the prime can change its mind about the parts being commercial items.  However, this does not mean that the prime is correct now and was wrong in the past when it accepted the parts as being commercial items.  You did not say why the prime rejected the parts as being commercial items.  However, the bar for what is a commercial item is low and it doesn't take much to be a commercial item.  I presume that when you say the parts are catalog items for your company, you mean that they are offered for sale to other companies, but you have only been able to sell them to the prime. 

Retreadfed, with all due respect re: "..the bar for what is a commercial item is low...", I have to disagree based on current application of the regulations by a number of DoD entities. Despite the regulatory loosening, the acquisition staff managing one of the largest current contracts insists on demanding at least two true commercial invoices, not older than two years for the exact product number in order to successfully assert commerciality. These 'over the top' requests do not at all reflect the reality that DoD most often buys technology that is at least two (if not five, ten or more) years old once full rate production begins.  Small and non-traditional government contractors that opt to provide and support legacy technology are then subject to onerous costing exercises that cannot accurately capture legacy iRAD costs.

While DCMA has launched CID centers of excellence, Primes are still on the hook for determinations for their subs using the guidance from CO's noted above.

Just wishing we all had one set of rules to work with across the board.

The bar for determining that a product is a commercial item is a low bar as is the level of knowledge of many contracting officers.  Just because the government wants something, does not make it right.  This is a frustrating issue for contractors who, in many instances, know more than their government counterparts.

See the following COFC decision http://www.uscfc.uscourts.gov/sites/default/files/opinions/SMITH.PRECISION092408.pdf