Industry backs new rule on commercial item determinations

By Marjorie Censer / February 6, 2018

Industry groups are supporting a new rule intended to make commercial item determinations more consistent and bolster opportunities for nontraditional contractors.

The Pentagon late last month published the new rule, which incorporates provisions from defense authorization legislation from fiscal years 2013, 2016 and 2018.

"This rule provides guidance to contracting officers for making price reasonableness determinations, promotes consistency in making commercial item determinations, and expands opportunities for nontraditional defense contractors to do business with DOD," the Federal Register notice on the rule reads.

In late 2016, the Defense Department released a proposed version of the rule, though it did not incorporate FY-18 legislation.

The newly released rule revises the defense federal acquisition regulation supplement to say that a contracting officer can rely on prior commercial item determinations made by another Pentagon component. Additionally, it notes that supplies and services provided by nontraditional defense contractors may be treated as commercial items.

Alan Chvotkin of the Professional Services Council, an industry group, told Inside Defense the rule has taken a long time, but represents a positive step forward from current policies on commercial buying.

"Other than taking 17 months, it is an improvement over where things were," he said, noting the addition of the FY-18 provision in the meantime. "It's as current as we're going to get."

He praised the provision that allows contracting officers to rely on prior commercial item determinations.

"You don't want to waste resources relitigating these time after time after time," Chvotkin said, adding that PSC intends to support these changes government-wide.

Wesley Hallman, senior vice president of policy at the National Defense Industrial Association, told Inside Defense his organization too sees the rule as a "significant improvement."

"We're very concerned as an association about barriers to entry," he said of the effort to open the door to more nontraditional contractors. "This is a key step to lowering some of those barriers."

Still, Chvotkin said he's skeptical the rule will entice many more new entrants.

These companies are "still subject to a whole range of other statutory regulatory compliance requirements that I think are far higher barriers to entry than whether you've got a clear determination of commercial item status or whether a prior determination has value," he said.