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Commercial Items – FAR Part 12

Commercial Items (FAR Part 12)

Supplies and services that meet the definition of a commercial item at FAR 2.1 may be acquired using the streamlined procedures set forth in FAR 12. Non-Developmental Item (NDI) and Commercial Off-the-Shelf (COTS) are considered subsets of commercial items.

DFARS 212.102(a)(iii) further expands the application of commercial item procedures to supplies and services from nontraditional defense contractors and, when appropriate, from business segments of traditional contractors that meet the definition of nontraditional 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 nontraditional defense contractors, nor does applying commercial item procedures for such procurements mean an item is commercial.

As defined in 10 U.S.C. § 2302(9), a non-traditional defense contractor is 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 DoD for the procurement or transaction, any contract or subcontract for the DoD that is subject to full coverage under the cost accounting standards (CAS).

Most 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 nontraditional 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



Availability of commercial market pricing data reduces administrative cost and procurement lead time Inability to tailor to unique government requirements (e.g. product customization) reduces flexibility for complex acquisitions
Ability to use streamlined procedures for commercial technologies provides opportunity for acquisition programs to deliver capability quickly Limitation of firm-fixed-price (FFP) or time and materials (T&M) pricing arrangements may not be appropriate or suitable for complex requirements
Streamlined commercial procedures and terms and conditions reduces procurement lead time Standard commercial rights and licenses increases burden on government to ensure specialized rights are explicit
  May require integration of commercial technologies into the larger program technical baseline