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Commercially available off the shelf


Cable

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I am looking for guidance on the meaning of commercially available off the shelf under the FAR.

A company manufactures three different widgets, but sells them only to state, local, and foreign government agencies/organizations (e.g., first responder entities).  The widgets are never modified for a particular state, local, or foreign customer. 

Although the company has a catalog price for its widgets, that catalog is not publicly available.  Although the widgets are on the company's website, no consumer can click on the widget, see a price, and order the widget; rather the consumer is directed to contact a sale rep. 

The company has never sold its widgets in a commercial marketplace.  The only non-government entities to which it has sold its widgets are third-party re-sellers, who then sell the widgets to a state, local, or foreign government agency.  Re-sellers are necessary because the company is unable to penetrate certain markets on its own due to local regulations and laws.  

The company now wishes to sell its widgets to the federal government. 

FAR 2.101's definition of commercially available off the shelf provides that the item is 1) commercial; 2) sold in substantial quantities in the commercial marketplace; and 3) sold to the government without modification (and is not bulk cargo). 

Do I understand this definition correctly to require there be actual sales in a commercial marketplace as a prerequisite for an item to be considered a COTS product?  

Assuming the substantial quantity threshold is met (whatever that means), are sales to a re-seller, who then sells to a governmental entity end user, sufficient to meet this prerequisite?

Are there examples of companies correctly claiming their products to be COTS even though it does not sell those products to non-governmental end users, either directly or through re-sellers? 

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The definition of "commercial product" in 2.101 indicates that items sold to state, local, or multiple foreign governments could be considered COTS:

"... (6) A nondevelopmental item, if the procuring agency determines the product was developed exclusively at private expense and sold in substantial quantities, on a competitive basis, to multiple State and local governments or to multiple foreign governments."

I think that non-federal government pool can be interpreted as its own "commercial marketplace" for the purposes of the COTS item definition you cite. 

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Thanks, @bosgood, but if the definition of COTS includes as the first requirement that the product be commercial, isn't commercially available off the shelf a subset of commercial?  I.e., all COTS products are commercial, but not all commercial products are COTS. 

I agree the widgets could be considered commercial under FAR 2.101.  But I've never heard of a non-federal governmental entity be considered a commercial entity ... is there authority for that?

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A couple of the prerequisites for an item to qualify as a COTS item is that the item is a commercial product AND "sold in substantial quantities in the commercial marketplace."  While 41 USC 104 comes out of FARA (Pub. L. 104-106, § 4203) rather than FASA, the legislative history for FASA (passed close in time to FARA) suggests that sales to state and local governments would NOT count as sales "in the commercial marketplace."

 

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59 minutes ago, Jacques said:

... the legislative history for FASA (passed close in time to FARA) suggests that sales to state and local governments would NOT count as sales "in the commercial marketplace."

Emphasis added.

What do you mean by "suggests"? Does it "suggest" of do you infer? Please cite the legislative history and quote the suggestive language.

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If you are DOD you can obtain assistance for commercial determination and similar support from the DCMA Commercial Item Group:

https://www.dcma.mil/Commercial-Item-Group/

There may be a commercial determination for the widget in question in the website database. 

If you're not DOD it wouldn't hurt to make an inquiry and see what they say. 

Also, you may want to check within your Department/Agency for a similar commercial support office.

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Vern,

I'm not self-aware enough to make the distinction you ask.  The legislative history suggests as much to me.  Other folks can do their own research to decide for themselves.  I base my conclusion on the discussion of the legislative history in Federal Publication's Course Manual on The Federal Acquisition Streamlining Act, at IV-35ff.  It references the Conference Report at 228 (HR Conf Rep 103-712), which in turn states:
 

Quote

 

Commercial Items.-The Senate bill would define "commercial items" to include items of a type used by the general public or by nongovernmental entities. The House amendment would include items of a type used "for other than Federal Government purposes" and sold or offered for sale to domestic State and local governments.

The conference agreement would adopt an alternative formulation, under which a nondevelopmental item would be included in the definition of commercial item if the procuring agency determines that the item was developed exclusively at private expense and has been sold in substantial quantities, on a competitive basis, to multiple state and local governments, under conditions set forth in the Federal Acquisition Regulation.

The definition of "commercial items" in the Senate bill would include items not yet available in the commercial marketplace that will be made available for commercial delivery within a reasonable period, but only if the items are "of a type customarily used" for other than governmental purposes. The House amendment included such items if they are "intended to be used" for other than Federal government purposes.

The conference agreement would provide that items that are not yet available in the commercial marketplace would be included in the definition of commercial items if they evolve out of commercial items based on advances in technology or increases in capability and will be available for delivery in the commercial marketplace in time to meet government requirements. This provision is intended to ensure that new generations of commercial products incorporating technological advances are included in the definition. At the same time, this provision should ensure that there is some yardstick in the commercial marketplace against which to measure price and product quality, and to serve as a surrogate for the imposition of government-specific requirements.

 

It seems to me, if sales to non-Federal governmental entities (state and local governments) were to be treated as part of the commercial marketplace, then there would be no need for this distinction.  Had the Senate receded, then the "commercial marketplace" could conceivably include every "marketplace" except one in which the Federal Government is a buyer.  Maybe I'm making a leap.

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On 5/16/2023 at 9:31 AM, Cable said:

I am looking for guidance on the meaning of commercially available off the shelf under the FAR

You have gotten comments to consider.  Here is mine, why worry about if it is COTS or not?   

COTS is a subset of commercial item.  Both can therefore be purchased using FAR Part 12.  The only difference is that COTS are not typically subject to modification but a commercial product can be and still be a commercial product. 

With my question posed here are my additional thoughts 

The standard of GAO and the courts is that a determination of a commercial product is at the discretion of the agency and such a determination will not be disturbed unless the GAO or courts find the determination unreasonable.  

FAR 2.101 FAR definition of commercial product includes  (emphasis added) (6)  A nondevelopmental item, if the procuring agency determines the product was developed exclusively at private expense and sold in substantial quantities, on a competitive basis, to multiple State and local governments or to multiple foreign governments.

At the same FAR 2.101 Non-developmental item is defined as  (1) Any previously developed item of supply used exclusively for governmental purposes by a Federal agency, a State or local government, or a foreign government with which the United States has a mutual defense cooperation agreement;

 By your post you have indicated the item has been sold to not only state and local governments but foreign governments as well.  Were such sales on a competitive basis? And was the widget developed exclusively at private expense?   And when sold to foreign governments do those foreign governments have mutual defense agreements with the United States?  For the latter many do.   If yes to all these questions then it would seem the widget is a commercial product as it meets (6) of the commercial product definition.

So in a reasonable view the widget could be a commercial product.  And if so why worry about whether it is COTS? 

 

Edited by C Culham
Pushed the post button to soon.
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50 minutes ago, C Culham said:

why worry about if it is COTS or not?

While a very good question, your's is not a rhetorical one.

·       FAR Subpart 4.19 does not apply to acquisitions solely for COTS items.  FAR 4.1902.  The “Basic Safeguarding of Covered Contractor Information Systems” clause at FAR 52.204-21 is not prescribed in contracts exclusively for COTS items.  FAR 12.301(d)(5).Accord, paragraph (c) of the “Basic Safeguarding of Covered Contractor Information Systems” clause at FAR 52.204-21.  Likewise, per paragraph (c)(1)(iv) of the “Subcontracts for Commercial Products and Commercial Services” clause at FAR 52.244-6, contractors are not required to flow down the clause if the subcontract is exclusively for COTS items.

·       The “Compliance with Safeguarding Covered Defense Information Controls” provision at DFARS 252.204-7008 is not prescribed for acquisitions consisting solely of COTS items.  DFARS 204.7304(a).

·       The “Notice of NIST SP 800-171 DoD Assessment Requirements” provision at DFARS 252.204-7019 is not prescribed for acquisitions consisting solely of COTS items.  DFARS 204.7304(d).  Likewise, contractors are not required to flow down the “NIST SP 800-171 DoD Assessment Requirements” clause at DFARS 252.204-7020 on subcontracts exclusively for COTS items.  See paragraph (g)(1) of the clause.

·       The “Contractor Compliance with the Cybersecurity Maturity Model Certification Level Requirement” clause at DFARS 252.204-7021 is not prescribed for acquisitions consisting solely of COTS items.  DFARS 204.7503.  Likewise, contractors are not required to flow down the “Cybersecurity Maturity Model Certification Requirements” clause at DFARS 252.204-7021 on subcontracts exclusively for COTS items.  See paragraph (c)(1) of the clause.

·       The restriction on subcontracting with a debarred or suspended vendor does not apply with the subcontract is solely for COTS items.  FAR 9.405-2(b).  Accord, paragraphs (b)-(e) of the “Protecting the Government’s Interest When Subcontracting with Contractors Debarred, Suspended, or Proposed for Debarment” clause at FAR 52.209-6.

·       Consistent with Executive Order 13637, Strengthening Protections Against Trafficking in Persons in Federal Contracts (Sept. 25, 2012, 77 Fed. Reg. 60029), sec. 2(a)(3), the requirement at FAR 22.1703(c) for a certification and compliance plan does not apply for contracts solely for COTS items.  FAR 22.1701(b)(1).  Thus, the “Certification Regarding Trafficking in Persons Compliance Plan” provision at FAR 52.222-56 is not prescribed for acquisitions entirely for COTS items.  FAR 22.1703(c); 22.1705(b)(2).  Additionally, paragraph (b)(1) of the “Certification Regarding Trafficking in Persons Compliance Plan” provision at FAR 52.222-56 makes it clear the certification is not required if the acquisition is exclusively for COTS items.  Likewise, the discussion of the compliance plan in paragraph (h) of the “Combating Trafficking in Persons” clause at FAR 52.222-50 does not apply to any portion of the contract that is for COTS items.

·       The “Employment Eligibility Verification” clause at FAR 52.222-54 is not prescribed if the acquisition is entirely for COTS items.  FAR 22.1803(c)(1).  The clause does not flow down to services in support of the purchase of a COTS item.  See paragraph (e)(1)(i).  Accord, FAR 22.1802(b)(4)(i).  (“Interestingly,” it does not appear that Executive Order 13465, the impetus behind FAR Case 2007-013 (FAC 2005-29, 73 Fed. Reg. 67651 (Nov. 14, 2008)), required this exception.)

·       As one would expect from FAR 12.505, the “Recovered Material Certification” provision at FAR 52.223-4 and the “Estimate of Percentage of Recovered Material Content for EPA-designated Items” clause at FAR 52.223-9 are not prescribed.  FAR 23.406(c) & (d).

·       As one would expect from FAR 12.505, the domestic content test has generally been waived for acquisition of COTS items.  FAR 25.001(c)(1); 25.101(a)(2); 25.201(b)(2)(i).  In other words, COTS construction material (not predominantly of iron or steel) manufactured in the United States automatically qualifies as “domestic construction material,” regardless of from where the components of the end item came.  See definition of “domestic construction material in” FAR 25.003 at (1)(i)(B)(2).

·       See also the definition of “domestic end product” at DFARS 225.003 and the definition of “automotive item” at DFARS 225.7003-1.

·       Broadly speaking, the restrictions on the acquisition of specialty metals do not apply to COTS items, but there are exceptions.  DFARS 225.7003-3(b)(2)(i).  See also paragraph (c)(2)(i) of the “Restriction on Acquisition of Certain Articles Containing Specialty Metals” clause at DFARS 252.225-7009.

·       Broadly speaking, the restrictions on the acquisition of certain magnets, tantalum, and tungsten do not apply to COTS items, but there are exceptions.  DFARS 225.7018-3(c)(1).  See also paragraph (c)(1)(i) of the “Restriction on the Acquisition of Certain Magnets, Tantalum, and Tungsten” clause at DFARS 252.225-7052.

·       In determining price reasonableness when acquiring a major weapon system as a commercial product, when “prices paid for the same or similar commercial products under comparable terms and conditions by both Government and commercial customers” is not sufficient to determine reasonableness, DFARS 234.7002(d)(3) calls on the PCO to request from the contractor uncertified cost or pricing data.  However, a contractor shall not be required to submit uncertified cost or pricing data with regard to COTS items.  DFARS 234.7002(d)(4).

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51 minutes ago, Jacques said:

While a very good question, your's is not a rhetorical one.

Point made, now does everything you have listed apply to a widget?  Likewise are there further exceptions that might apply, say with regard to 52.222-54 if we had more detail?  I would suggest you have given food for thought to the "Beginner" but as usual the devil is in the details much like the questions I raised.  I did not tell the OP to not worry about COTS but it seems you are telling the OP via your posts to not consider the widget a commercial product????? 

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40 minutes ago, C Culham said:

Point made, now does everything you have listed apply to a widget?  Likewise are there further exceptions that might apply, say with regard to 52.222-54 if we had more detail?  I would suggest you have given food for thought to the "Beginner" but as usual the devil is in the details much like the questions I raised.  I did not tell the OP to not worry about COTS but it seems you are telling the OP via your posts to not consider the widget a commercial product????? 

I didn't interpret you question as telling the OP anything.  Your question is the right one.  My post is merely that there may be an answer as to why it matters.  I hope the OP gives us the context for his question.

You write, "It seems you are telling the OP...to not consider the widget a commercial product?"  I hope no one interprets my posts that way.  Given the wide variety of circumstances under which something can be a "commercial product," and given the OP's conclusion earlier in the thread that it was a commercial product, I have no reason not to believe the OP.  My point is narrow:  If one is relying on the sales to state or local governments to qualify as sales in a "commercial marketplace" for purposes of the definition of a COTS item, I personally think that is misplaced.  While I want to say that follows from the plain meaning of the expression, "commercial marketplace," I realize that may not be very satisfying reasoning to some.  That's the reason I referenced the legislative history.

I get that I may not be convincing very many folks here, and I'm not sure I would ever be able to do so.  It's my opinion, but it is an opinion that makes sense to me in the various contexts (see the bulleted list in my earlier post).  For instance, for the last bullet above, does the interpretation that sales to state and local governments qualify as being in the "commercial marketplace" make sense if it results in a Government PCO not being able to ask for other than certified cost or pricing data when the only sales have been to state or local governments?  It might to some, but it doesn't to me.

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48 minutes ago, Jacques said:

My point is narrow:  If one is relying on the sales to state or local governments to qualify as sales in a "commercial marketplace" for purposes of the definition of a COTS item, I personally think that is misplaced.  While I want to say that follows from the plain meaning of the expression, "commercial marketplace," I realize that may not be very satisfying reasoning to some.  That's the reason I referenced the legislative history.

Understood.  

The OP is probably a drummed up example.  First responders?  Many are contracted services especially in the EMT/ambulance world.  Heck even individuals might be "contracted" EMT's and firemen.   Yep I am stretching but it seems it might be reasonable to consider the state, local and foreign the commercial marketplace these days.  The question always comes up, what into todays world is not a commercial item and further not a COTS if it sold "as is" to a bunch of different entities. 

After all what do you pick door number 1, 2, or 3?  https://www.pcmag.com/encyclopedia/term/commercial-market#:~:text=(1) The sale of products,to manufacturers%2C distributors or OEMs.

Further rhetorical thoughts that do not need response.

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Well, this thread is off and running, but it is not responsive to the OP's questions:

On 5/16/2023 at 9:31 AM, Cable said:

FAR 2.101's definition of commercially available off the shelf provides that the item is 1) commercial; 2) sold in substantial quantities in the commercial marketplace; and 3) sold to the government without modification (and is not bulk cargo). 

[1] Do I understand this definition correctly to require there be actual sales in a commercial marketplace as a prerequisite for an item to be considered a COTS product?  

[2] Assuming the substantial quantity threshold is met (whatever that means), are sales to a re-seller, who then sells to a governmental entity end user, sufficient to meet this prerequisite?

[3] Are there examples of companies correctly claiming their products to be COTS even though it does not sell those products to non-governmental end users, either directly or through re-sellers? 

In respons, Jacques said:

On 5/17/2023 at 12:36 PM, Jacques said:

A couple of the prerequisites for an item to qualify as a COTS item is that the item is a commercial product AND "sold in substantial quantities in the commercial marketplace."  While 41 USC 104 comes out of FARA (Pub. L. 104-106, § 4203) rather than FASA, the legislative history for FASA (passed close in time to FARA) suggests that sales to state and local governments would NOT count as sales "in the commercial marketplace."

I disagree with Jacques's inference that the legislative history of FASA indicates that sales to state and local governments would not count as sales in the commercial marketplace.

Quote

Commercially available off-the-shelf (COTS) item —

(1) Means any item of supply (including construction material) that is–

(i) A commercial product (as defined in paragraph (1) of the definition of “commercial product” in this section);

(ii) Sold in substantial quantities in the commercial marketplace; and

(iii) Offered to the Government, under a contract or subcontract at any tier, without modification, in the same form in which it is sold in the commercial marketplace; and

(2) Does not include bulk cargo, as defined in 46 U.S.C. 40102(4), such as agricultural products and petroleum products.

FAR defines commercial product in part as follows:

Quote

Commercial product means—

(1) A product, other than real property, that is 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;

(2) A product that evolved from a product described in paragraph (1) of this definition through advances in technology or performance and that is not yet available in the commercial marketplace, but will be available in the commercial marketplace in time to satisfy the delivery requirements under a Government solicitation....

Emphasis added.

I think it makes sense in the context of FAR to say that a "commercial marketplace" is one in which which goods are sold to the "general public." Thus, I think the meaning of general public is important. I think a key question is whether state and local governments are part of the general public, as that term is used in FAR. However, FAR does not now define "general public."

The term general public was used in acquisition regulations long before the FAR's publication in 1984 and long before either FASA or FARA, and Congress was well-aware of that usage. Prior to FASA/FARA, its principal use was in connection with exceptions from the application of the Truth in Negotiations Act of 1962 (TINA). For instance, in the 1982 Defense Acquisition Regulation one of the exceptions to the requirement for submission of certified cost or pricing data was when prices were based on "established catalog or market prices of commercial items sold in substantial quantities to the general public."" Here is how the regulation explained "general public" at 32 CFR 3-807.7(e):

Quote

"The General Public." An item meets this criterion when it is sold(i) to other than the Government (including FMS); (ii) to other than affiliates of the seller or (iii) for end use by other than the Government (including FMS).

Note: "the Government" with a capital "C," not "governments."

What about FASA/FARA? One of the topics addressed in FASA was the rule about submission of certified cost or pricing data. See Pub. L. 103-355 §§ 1201 - 1210 and 1251m -1252:

Quote

...making TINA requirements for civilian agencies substantially the same as those for the Department of Defense (increasing the threshold for submission of “cost or pricing data” to $500,000 and adding penalties for defective pricing). Provisions are also included that increase the threshold for cost or pricing data submission every 5 years beginning October 1, 1995. A new exception is added to the requirement for the submission of “cost or pricing data” for commercial items; the approval level for waivers is changed, and prohibitions are placed on acquiring “cost or pricing data” when an exception applies. The coverage includes a clear explanation of adequate price competition as required by the Act.

 
The FAR councils implemented those rules in FAC 90-32, 60 Fed. Reg. 48208, September 18, 1995. In so doing, and in that connection, here is how the FAC explained the concept of "general public" in 15.804-1(b)(2)(v):
 
Quote

(v) General public. The general public ordinarily consists of buyers other than the U.S. Government or its instrumentalities, e.g., U.S. Government corporations. Sales to the general public do not include sales to affiliates of the offerors or purchases by the U.S. Government on behalf of foreign governments, such as for Foreign Military Sales. If the contracting officer can determine without requiring information from the offeror that sales are for Government end use, these sales need not be considered sales to the general public.

Emphasis added.

I don't see any reason to believe that "general public" meant different things with reference to different topics in the same piece of legislation.

The established catalog and market price exception has since been replaced by the commercial items exception.

Given this long-standing usage of the term "general public," usage that predated FASA and FARA by more than 10 years and of which Congress was well aware since it had long been applied to a Federal statute (TINA), I see no reason to believe that a single vague comment in the House report cited by Jacques should be interpreted so as to exclude state and local governments from the general public and, thus, commercial marketplaces. I find his inferential interpretation of the House report unconvincing. Moreover, the fact that general public and commercial marketplace are not defined in either statute or regulation allows COs to exercise considerable discretion. 

Now, I have provided my interpretation of "commercial marketplace" based on official interpretations of "general public," and I have cited the bases for my conclusions. Those bases include regulations published in the Federal register, which have never been disputed to my knowledge. Do I know the "right" answer? No, because in the absence of official definitions or explanations, I don't know that there is a "right" answer. As a CO I would use judgment and discretion. And given the preference for the use of commercial items, I would tend to be liberal in judgment and discretion.

Please excuse any typos. I'm struggling with my vision.

Vern

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I appreciate everyone's willingness to offer thoughts on the question about, essentially, what is the commercial marketplace for purposes of the FAR's definition of COTS.  I hear the term COTS used frequently, but I'm not sure it always means what people think it means.  Or, as this discussion above suggests, maybe it does, if there is no precise definition that limits a CO's discretion.  I realize it may not be the most interesting issue to most, but I find it fascinating when there is a concept that exists and is somewhat common, and it has consequences (e.g., exemption from some regulations) but there isn't a well-defined definition for it.

I did find a reference in the 2008 NDAA, Section 815(b), that required the Secretary of Defense "to modify the regulations of the Department of Defense on the procurement of commercial items in order to clarify that the terms 'general public' and `nongovernmental entities' in such regulations do not include the Federal Government or a State, local, or foreign government."  Although that provision was specific to DoD and in a section involving weapons systems (and doesn't address commercial marketplace or COTS expressly), not sure why the general public would be one thing to one agency but a different to all others.  That said, while it seems the DFARS did implement Section 815(b), Congress repealed 815(b) with the 2019 NDAA. Section 812, and so DoD removed the definition from the DFARS. 

I will wait until Congress, the FAR Council, or GAO or a court defines commercial marketplace for purposes of COTS, and until then will let discretion be the rule.  No need to continue the discussion on my account; again, appreciate the inputs.  

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13 hours ago, Cable said:

I did find a reference in the 2008 NDAA, Section 815(b), that required the Secretary of Defense "to modify the regulations of the Department of Defense on the procurement of commercial items in order to clarify that the terms 'general public' and `nongovernmental entities' in such regulations do not include the Federal Government or a State, local, or foreign government."  Although that provision was specific to DoD and in a section involving weapons systems (and doesn't address commercial marketplace or COTS expressly), not sure why the general public would be one thing to one agency but a different to all others.  That said, while it seems the DFARS did implement Section 815(b), Congress repealed 815(b) with the 2019 NDAA. Section 812, and so DoD removed the definition from the DFARS...

No need to continue the discussion on my account; again, appreciate the inputs.  

Here is the 2008 NDAA § 815(b):

Quote

Sales of Commercial Items to Nongovernmental Entities- Not later than 180 days after the date of the enactment of this Act, the Secretary of Defense shall modify the regulations of the Department of Defense on the procurement of commercial items in order to clarify that the terms `general public' and `nongovernmental entities' in such regulations do not include the Federal Government or a State, local, or foreign government.

DOD made that clarification in 2010, but then removed it, as explained in the final rule at 84 Fed Reg 12137, April 1, 2019:

Quote

DoD is amending the DFARS to implement section 812 of the National Defense Authorization Act (NDAA) for Fiscal Year (FY) 2019. Section 812 repeals more than 60 obsolete Defense acquisition laws, most of which have been completed, have expired, or do not impact the procurement regulations. Of the obsolete laws listed in section 812, only one was implemented in the DFARS: section 815(b) of the NDAA for FY 2008 (Pub. L. 110-181). Section 815(b) required modification of the DFARS to clarify that the terms “general public” and “non-governmental entities”, with regard to sales of commercial items, do not include the Federal Government or a state, local, or foreign government. The clarification with regard to the terms “general public” and “non-governmental entities,” as used in the definition of “commercial item,” was added to DFARS 202.101, Definitions, via a final rule published in the Federal Register at 75 FR 51416 on August 20, 2010 (DFARS Case 2008-D011).

Since section 812 of the NDAA for FY 2019 repealed section 815(b) of the NDAA for FY 2008, this final rule removes the clarification of the terms “general public” and “non-governmental entities” at DFARS 202.101. No other changes are required to implement section 812 of the NDAA for FY 2019.

And according to the current lists, there is no open FAR or DFARS case to define or clarify "general public" or "commercial marketplace."

Neither the GAO nor a court has the power to define those terms. The can only infer their meanings based on an interpretation of a statute or regulation.

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If you are a contracting officer for a prime, and your subcontractor wants to omit a clause from the subcontract because it believes what it is selling to you is a COTS item, but all the subcontractor has to support its conclusion that the item is in fact a COTS item is sales to state or local governments, and you're worried I may be right (and, God forbid, Vern Edwards may be wrong), recall that under the Disputes clause, you can always ask the Government contracting officer for an "interpretation of contract terms."

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  • 4 weeks later...

I opened this thread and got exactly what I hoped to find:  That while the regulation is quite clear, the intent behind it matters, and the intent is what is used pretty much invariably in the real world.  

If you follow the regulation to a tee, then it means that for any new widget, the Government should be at least the second buyer...the widget must first sell to a commercial buyer.  There is some practical wisdom in that - the Govt doesn't want to be the guinea pig.  BUT...let's say the widget is something like a longer accessory cable than what was available before, for an already widely available product.   There were 6 foot cables on the market, and now a 10 foot cable is being introduced.  Does the Govt really have to wait and confirm that the 10 foot cable was sold in substantial quantities to the general public before they can buy any?   No - that would be crazy.  It might also conflict with a DPAS order rating, or simply a mission need.  

So it makes perfect sense, to me, that a KO would (if they ever considered this at all) say things like "well, the shorter cable qualified" or "well, the main product qualified" or "well, the company making the cable doesn't custom make things for the government, sells a ton of stuff in the commercial market and that works for me."   It is thanks to these judgments that no company I've ever heard of would put the Government 'back in line' for a newly introduced product, or delay sales to them until other sales have happened.    And if a KO can't do that kind of common sense judgement call, then there wouldn't be a need for KOs.  

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1 hour ago, Don Mansfield said:

@jayandstacey,

I think you are interpreting the definition too narrowly. An item need not to have been sold or offered for sale to be a commercial product--it just needs to be like one that is. That's what "of a type" means.

Hi Don,

Yeah, you're right - the further you get into the definition, the looser the criteria.   Under part (1) of the definition, taken by itself, I would disagree with your statement.   But the later sections of the definition pull in a few nuances: modifications, combinations, and (key to your point) a relaxation from the corresponding commercial sale/offer being in the past.

We may disagree in what part (1) says; I interpret that section to be 'of a type' and 'the item (not the type) has been sold or has been offered' -but the rest of the definition relaxes all that from multiple directions.   

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3 hours ago, jayandstacey said:

We may disagree in what part (1) says; I interpret that section to be 'of a type' and 'the item (not the type) has been sold or has been offered' -but the rest of the definition relaxes all that from multiple 

Had to go back and read it a few times, but I think you're right.

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On 5/16/2023 at 12:31 PM, Cable said:

Do I understand this definition correctly to require there be actual sales in a commercial marketplace as a prerequisite for an item to be considered a COTS product? 

Yes, this is a statutory requirement (see 41 U.S.C. 104.  However, the statute does not define what is meant by "commercial marketplace."  I guess congress wanted the FAR Councils to figure it out just as they did for what is a "claim."

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