Acquisition of Commercial Items FAR Part 12 (Condensed) Acquisition of Commercial Items

Scope of Part 12 Implements Title VIII of the Federal Acquisition Streamlining Act of 1994 (Public Law 103-355) Reflects the Federal Government’s preference for the acquisition of commercial items Establishes acquisition policies more closely resembling those of the commercial marketplace Encourages the acquisition of commercial items and components.

Definition of Commercial Items (Found at FAR 2.101) Supplies and services that meet the definition of commercial items are listed as: A type customarily used by the general public or Is used by non-governmental entities for purposes other than governmental purposes, and Has been sold, leased, or licensed to the general public or Has been offered for sale, lease, or license to the general public or Any item evolved from the above described and is not yet commercially available, but will be available in time to meet solicitation requirements, or

Definition of Commercial Items (cont.) Any item that would satisfy above criteria but for: Modifications of a type customarily available in the commercial marketplace, or Minor modifications of a type not customarily available in the commercial marketplace but that are made to meet Federal Government requirements. (Minor means does not materially alter basic original intended function or characteristics.) Any combination of any of the above customarily combined and sold in combination to the general public

Definition of Commercial Services Installation services, maintenance services, repair services, training services, and other services if: Such services are procured for support of an item referred to above (regardless if provided by the same source at the same time), or The source provides such or similar services to the general public contemporaneously under the same or similar terms, or Services are of a type offered and sold competitively in substantial quantities in the commercial marketplace Such services are based on established catalog or market prices for specific purposes under standard T & C’s.

Definitions (cont): Non-developmental and Commercial Off-the-Shelf (COTS) Non-developmental items are considered commercial if item is determined to have been developed exclusively at private expense and sold competitively in substantial quantities to multiple State and local government entities. COTS means any commercial item defined above that is sold in substantial quantities in the commercial marketplace and Offered to the Government under a contract or subcontract at any tier, without modification and in the same form as sold in the commercial marketplace, and Does not include bulk cargo such as agricultural and petroleum products.

Subpart 12.1 Acquisition of Commercial Items -- General 12.101 – Policy : What is required of Agencies Conduct market research to determine availability of commercial and non-developmental items Acquire such of the above as are available to meet the needs of the agency Require prime contractors and subcontractors at all tiers to incorporate such items, to the maximum extent practicable, as components of items supplied to the agency.

Applicability 12.102 This part shall be used to acquire supplies or services that meet the definition of commercial items above. CO’s shall use this part in conjunction with P & P’s for solicitation, evaluation and award per Simplified Acquisition Procedures, Sealed Bidding, or Contracting by Negotiation. Acquisitions of commercial items are subject to other policies in the FAR. When policies from another part conflict with this part, this part 12 shall supercede.

Applicability 12.102 (cont.) This part shall not apply to the acquisition of commercial items: That are at or below the micro-purchase threshold By using the Standard Form 44 (see 13.306) By using the imprest fund (see 13.305) By using the Governmentwide commercial purchase card, or Directly from another federal agency.

Applicability 12.102 (cont.) CO’s may treat any acquisition that are used to facilitate defense or recovery from nuclear, biological, chemical or radiological attack as an acquisition of commercial items. A contract with value over $17.5M that is awarded as sole source for an item or service treated as a commercial item shall not be exempt from CAS or certified cost or pricing data requirements. The CO may use Part 12 for any acquisition that does not meet the definition of a commercial item if any of the caveats listed in 12.102(g)(1)(i) through 12.102(g)(1)(vii) are applicable. The CO may tailor paragraph (a) of this clause as may be necessary to ensure remedies adequately protest the Government’s interests.

Special Requirements (12.201-12.202) Market research is an essential element Description in solicitation must contain sufficient but not excessive detailed information for potential offerors . Describe only the type of product or service agency is seeking, and how it will be used in terms of its function, performance requirement or essential characteristics. Use procedures in Subpart 11.2. Requirements for Electronics and IT must comply with standards issued by Architectural and Transportation Barriers Compliance Board (see Subpart 39.2). Include appropriate Internet Protocol compliance requirements for IP acquisitions using Internet Protocol.

Solicitation, Evaluation, and Award -General (12.203) For the acquisition of commercial items, CO’s shall use the policies prescribed in this Part 12 in conjunction with those in Part 13 (Simplified Acquisition Procedures), Part 14 (Sealed Bidding) or Part 15 (Contracting by Negotiation), as appropriate. CO may use the streamlined solicitation procedure prescribed in 12.603. For commercial items exceeding the SAT but not exceeding $6.5M ($12M for items in 13.500(e)), including options, simplified procedures authorized by Subpart 13.5 shall be employed to the maximum extent practicable.

Solicitation, Evaluation, and Award -Procedures (12.204 – 12.205) CO shall employ Std Form 1449 if acquisition will exceed the SAT, a paper solicitation or contract is issued and streamlined procedures are not being employed. Use of SF 1449 is not mandatory for acquisitions below the SAT, but is encouraged. CO may allow less than 15 days before issuance of solicitation. After reviewing for adequacy, CO’s shall request product literature from offerors in lieu of unique technical specs. CO’s should allow offerors to propose more than one product; each of which will be evaluated as a separate offer. The CO may allow less than 30 days response time, for offers of commercial items unless the acquisition is covered by the WTO GPA or a Free Trade Agreement.

Solicitation Evaluation and Award -Procedures (12.206-12.207) Past performance data should be considered an important element of every evaluation for commercial item contracts. Except for commercial services, agencies shall use FFP contracts or fixed price with economic price adjustment. For acquisitions of commercial services, time-and-materials or labor-hour contracts should generally be employed. (See 12.207 (b)(1) through (b)(4) for caveats.) Indefinite delivery contracts may be used when above contract types are employed. Contract types authorized by this subpart may be used in conjunction with an award fee and performance or delivery incentives when cost is not a factor. Use of other contract types is prohibited.

Solicitation, Evaluation, and Award -Procedures (12.208 – 12.211) Contracts for commercial items shall rely on contractors’ quality assurance systems in lieu of Government inspection and testing unless customary market practices preclude it. CO should be aware of customary market T & C’s, potential extenuating circumstances, and other relevant factors (such as delivery schedules) when determining price reasonability. All factors should be consistent with the Government’s needs. The CO may offer Government financing in accordance with Part 32, if consistent with customary market practice. CO shall acquire only technical data and associated rights customarily provided with any commercial item or process. Relevant clauses or provisions shall be delineated in contract.

Solicitation, Evaluation, and Award -Procedures (12.212 ) Software and/or associated documentation shall be acquired under licenses customarily provided to public to the extent allowed by Federal law and it satisfies needs of Government. Contractors/offerors shall not be required to furnish additional technical data beyond what is provided to public. Contractors/offerors shall not be required to relinquish to the Government the rights to use, modify, reproduce, etc., unless mutually agreed to by the parties. Government shall have only those rights specified in the license contained in any addendum to the contract.

Solicitation, Evaluation, and Award -Procedures (12.213 – 12.215 ) Terms and Conditions consistent with common market practice and/or those that balance the needs of both the buyer and seller should be employed unless the particular item or service being acquired indicates otherwise. Cost Accounting Standards do not apply to commercial acquisitions when FFP or fixed price with economic price adjustment contracts are utilized. In other cases where CAS applies, the CO shall incorporate appropriate provisions. If the contractor notifies the CO that the Government has overpaid at any point, the CO shall follow the procedures at Part 32.604.

Provisions & Clauses Subpart 12.301 Implements only those provisions and clauses required to implement applicable law or executive orders or Those determined to be consistent with customary commercial practice See Subpart 12.301 (b) – (f) for applicable clauses Agencies may supplement clauses in this part only as necessary to implement statutes that are agency unique to a particular acquisition.

Provisions & Clauses Subpart 12.302 - Provisions and clauses employed for acquisitions of commercial items may be tailored to adapt to market conditions when necessary except for the following at 52.212-4: 1) Assignments; (2) Disputes; (3) Payment; (except as provided in Subpart 32.11) (4) Invoice; (5) Other compliances; and (6) Compliance with laws unique to Government contracts. Tailoring shall not be inconsistent with customary market practice. Tailoring shall be implemented by addenda to the contract.

Contract Format 12.303 To the maximum extent practicable, contracts and solicitations for commercial items should be assembled using the following: Std. Form 1449 Continuation of any block from SF 1449, such as blocks 10 (if applicable), 18b, 19, 20, and 25 Contract clauses and addenda from 52.212-4 Any contract documents, exhibits or attachments; and Solicitation provisions at 52.212-1,-2, and -3

Unique Requirements Regarding Terms and Conditions Subpart 12.4 12.401 General- This Subpart provides : Guidance regarding tailoring of T&C’s at 52.212-4 where paragraphs differ from customary market practice and Guidance on administration where T&C’s at 52.212-4 differ substantially from policies found elsewhere in the FAR.

Unique Requirements Regarding Terms and Conditions Subpart 12.4(cont) 12.402 Acceptance: The acceptance paragraph at 52.212-4 is based on the assumption that the Government will rely upon the assurances of the contractor as to a commercial item’s conformance to contract requirements. Government inspection will not prejudice its other rights. Government retains the right to refuse non-conforming items. Paragraph is appropriate for non-complex commercial items.

Unique Requirements Regarding Terms and Conditions Subpart 12.4 (cont) Acceptance continued- Other acceptance procedures can be used for acquisition of critical or complex commercial items. In such cases, the CO shall include alternative inspection procedures via addendum. In such cases, CO must carefully examine T&C’s of any express warranty for postaward remedies, should they be needed. Acquisition of commercial items on an “as-is” basis may also require special acceptance procedures. The CO should consider the effect the specific circumstances will have on the standard acceptance procedures paragraph as well as on anything else contained in 52.212-4.

Unique Requirements Regarding Terms and Conditions Subpart 12.4 (cont) 12.403 Termination: The Government’s Termination for Cause or for Convenience provisions in 52.212-4 differ from those contained in Part 49. Requirements contained in Part 49 do not apply when terminating contracts for commercial items; therefore the procedures in this section 52.212-403(c) and (d) should be utilized . Part 49 may be used as guidance to the extent it does not conflict with this section. Generally parties should agree on the requirements of the termination proposal based upon a balance between the Government’s needs and an expeditious settlement.

Unique Requirements Regarding Terms and Conditions Subpart 12.4 (cont) 12.404 Warranties- Implied Warranties- The Government’s rights are the implied warranty of merchantability, fitness for a particular purpose, and remedies contained in the acceptance paragraph. CO’s should consult with legal counsel prior to asserting any claim of breach of implied warranty. Express Warranties- CO’s are required to take advantage of express commercial warranties and ensure any such warranty is adequate to protect the Government’s needs and includes information regarding the procedures to activate any warranty. Warranty should be cost-effective. Where an implied warranty is excluded or limited, CO must ensure there is express warranty provides for repair or replacement within a reasonable period. Express Warranties shall be included by addendum.

Applicability of Certain Laws to Commercial and COTS Items Subpart 12 12.500 - 12.501 Scope and Applicability This subpart lists provisions that are not applicable to contracts and subcontracts (any tier) for commercial and COTS items. This subpart applies to contracts and subcontracts at any tier for commercial and COTS items. If prime contractor is reselling or distributing commercial items of another contractor without adding value, then waiver of any provision regarding any related subcontract is not authorized. This is intended to preclude unusual contract arrangements solely for the purpose of Government sales. Under this subpart, contractors awarded subcontracts under subpart 19.8 (Contracting with Small Business) shall be considered prime contractors

Applicability of Certain Laws to Commercial and COTS Items Subpart 12 Applicability of Certain Laws to Commercial and COTS Items Subpart 12.5 (cont) 12.502 Procedures The FAR prescription for each of the laws in 12.503 has been revised in the respective part to reflect its proper application. For subcontracts for commercial acquisitions, the clauses in this subpart, “Contract Terms and Conditions required to Implement Statutes or Executive Orders—Commercial Items” and the clause at 52.244-6 reflect the proper applicability of the laws in 12.504 as to what are required for subcontracts. The FAR prescription for the provision or clause for each law in 12.505 has been revised in each respective part to reflect the proper application for the acquisition of COTS items.

Applicability of Certain Laws to Commercial and COTS Items Subpart 12 Applicability of Certain Laws to Commercial and COTS Items Subpart 12.5 (cont) Subpart 12.503 - Applicability of laws to Executive Agency Contracts for the acquisition of Commercial and COTS Items: Subsection (a) lists laws, such as Walsh Healy, that are not applicable to commercial Executive Agency Contracts. Subsection (b) lists certain requirements contained in certain laws that are not applicable to commercial Executive Agency Contracts. Subsection (c) lists laws that have been modified to accommodate commercial Executive Agency Contracts.

Applicability of Certain Laws to Commercial and COTS Items Subpart 12 Applicability of Certain Laws to Commercial and COTS Items Subpart 12.5 (cont) 12.504 Applicability of certain laws to Subcontracts for the acquistion of Commercial and COTS items. Subsection (a) lists laws, such as Walsh Healy, that are not applicable to subcontracts at any tier under this Part. Subsection (b) lists certain requirements contained in certain laws that are not applicable to subcontracts at any tier under this Part. Subsection (c) lists laws that have been modified to accommodate subcontracts at any tier under this Part.

Applicability of Certain Laws to Commercial and COTS Items Subpart 12 Applicability of Certain Laws to Commercial and COTS Items Subpart 12.5 (cont) 12.505 – Applicability of certain laws to COTS Items As COTS items are a subset of commercial items, any laws listed in the previous two sections are also inapplicable or have been modified. In addition, the following are also not applicable to COTS items: 41 USC 10a, portion of the first sentence from the Buy American Act-Supplies, component test (see 52.225-1 & 52.225-11), and 41 USC 10b, a portion of the first sentence from the Buy American Act-Construction Materials, component test. Also not applicable is 42 USC 6962(c)(3)(A), Certification and Estimate of Percentage of Recovered Material.

Streamlined Procedures for Evaluation and Solicitation for Commercial Items Subpart 12.6 12.601 - General This subpart provides optional procedures for streamlined evaluation of offers for commercial items and Optional procedures for streamlined solicitations of offers for commercial items for use where appropriate. These procedures are intended to simplify the process of preparing and issuing solicitations and evaluating offers for commercial items consistent with customary practices.

Streamlined Procedures for Evaluation and Solicitation for Commercial Items Subpart 12.6 12.602 – Streamlined Evaluation of Offers When evaluation factors are used, the CO may insert a substantially similar provision in solicitations to that in 52.212-2 or comply with the procedures in 13.106, if Simplified Acquisition Procedures are being employed. When 52.212-2 is used, paragraph (a) of the provision shall be tailored to describe the associated evaluation factors for the specific acquisition. However, when using the SAP in Part 13, CO’s are not required to describe the relative importance of evaluation factors.

Streamlined Procedures for Evaluation and Solicitation for Commercial Items Subpart 12.6 12.602 – Streamlined Evaluation of Offers (cont) Offers shall be evaluated in accordance with criteria in the solicitation, which for the most part, need not be more detailed than technical capability, price and past performance. Technical capability may be evaluated by how well the product meets requirements versus predetermined factors. Solicitation needs only to adequately describe the item’s intended use; sub-factors are not needed. Past performance shall be evaluated in accordance with 13.106 or Subpart 15.3 as applicable. The CO shall ensure that 52.212-1 and 52.212-2 don’t conflict. Offer most suitable for Government will be selected and rationale fully documented; including trade-offs considered.

Streamlined Procedures for Evaluation and Solicitation for Commercial Items Subpart 12.6 12.603 – Streamlined Solicitation for Commercial Items CO’s may use the following procedure for written solicitations, which rolls the synopsis and the solicitation into one document: When using combined procedure, SF 1449 is not used. Prepare synopsis per 5.207. Include the following statement in the Description: “This is a combined synopsis/soliciation for commercial items prepared in accordance with the format in Subpart 12.6, as supplemented with additional information included in this notice. This announcement constitutes the only solicitation; proposals are being requested and a written solicitation will not be issued.”

Streamlined Procedures for Evaluation and Solicitation for Commercial Items Subpart 12.6 12.603 – Streamlined Solicitation for Commercial Items (cont) Synopsis Description must also include the information items listed in 12.603(c)(2)(ii) through 12.603(c)(2)(xvi). When using the combined synopsis/solicitation, it is not necessary to publicize a separate synopsis 15 days before issuance of solicitation as would normally be done. CO’s should establish a response time in accordance with 5.203(b) (but see 5.203(h)). Publicize amendments to solicitations in the same manner as the initial synopsis and solicitation.

End of FAR Part 12