Commercial Items (FAR Part 12)

Products and services that meet the definitions of commercial product and commercial service at FAR Subpart 2.1 – Definitions may be acquired using the streamlined procedures set forth in FAR Part 12 – Acquisition of Commercial Items. Non-Developmental Item (NDI) and Commercial Off-the-Shelf (COTS) are considered subsets of commercial items. See definitions of NDI and COTS at FAR Subpart 2.1 – Definitions.

DFARS 212.102(a)(iii) further expands the application of commercial item procedures to supplies and services from non-traditional defense contractors and, when appropriate, from business segments of traditional contractors that meet the definition of non-traditional defense contractor, for purposes of enhancing defense innovation and investment and encouraging nontraditional vendors to do business with the government. A commercial item determination is not required when commercial item procedures are applied to procure supplies and services from non-traditional defense contractors, nor does applying commercial item procedures for such procurements mean an item is commercial.

As defined in 10 U.S.C. §3014, a non-traditional defense contractor is defined as an entity that is not currently performing and has not performed, for at least the one-year period preceding the solicitation of sources by the Department of Defense for the procurement or transaction, any contract or subcontract for the Department of Defense that is subject to full coverage under the cost accounting standards prescribed pursuant to Section 1502 of Title 41 and the regulations implementing such section.

Many entities will find they qualify as nontraditional defense contractors because:

• They are a small business exempt from CAS requirements
• They exclusively perform contracts under commercial procedures
• They exclusively perform under firm-fixed-price (FFP) contracts with adequate price competition
• They performed less than $50 million in CAS covered efforts during the preceding cost accounting period

Common Applications

• COTS Defense Business Systems
• COTS solutions and technologies
• Commercial products and services
• Products and services provided by non-traditional defense contractors
• IT products and services
• Health IT services and solutions
• Cyber services and solutions
• Cloud services and solutions
• Software licenses
• Telecommunications and wireless services
• Mobile solutions

Restrictions

• Commercial item determination required
• Contract types limited to Firm-Fixed-Price (FFP), Fixed-Price with Economic Price Adjustment (FPEPA), and Time-and-Materials (T&M)

Resources

• FAR Subpart 2.1 Definitions
• FAR Part 12 Acquisition of Commercial Items
• FAR Subpart 16.2 Fixed-Price Contracts
• FAR Subpart 16.6 Time-and-Materials, Labor-Hour, and Letter Contracts
• FAR Part 30 Cost Accounting Standards Administration
• DFARS Part 212 Acquisition of Commercial Items
• DFARS PGI Part 212 Acquisition of Commercial Items
• DFARS Subpart 234.70 Acquisition of Major Weapon Systems as Commercial Items
• DoD Guidebook for Acquiring Commercial Items Part A: Commercial Item Determination, Defense Pricing and Contracting, Jul 2019
• DoD Guidebook for Acquiring Commercial Items Part B: Pricing Commercial Items, Defense Pricing and Contracting, Jan 2018
• Defense Contract Management Agency – Commercial Item Group
• Guidance on Commercial Item Determinations and Price Reasonableness, DPAP Memo, Sep 2016
• Commercial Acquisition Workshop (WSC 022 – Acquiring Commercial Items and Services), Defense Acquisition University
• Commercial Contracting, DAU ACQuipedia