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Commercial Contracting.

The Federal Acquisition Streamlining Act of 1994 mandated that if an item or service being bought by the federal government met the definition of "commercial item" (as defined in FAR Part 2), the item or service was to be acquired under FAR Part 12. However the federal government has been slow to implement this requirement.

On March 26, 2001, Kenneth Oscar, acting assistant secretary of the U.S. Army (Acquisition, Logistics, and Technology) issued an implementation plan to guide the Army in meeting an increased goal for the use of FAR Part 12 in awarding commercial contracts.

The plan established an Army-wide goal to double the dollar value of FAR Part 12 contract actions (as awarded in 1999) by the end of Fiscal Year (FY) 2005. The 1999 baseline was established at $2.4 million. The plan also requires that FAR Part 12 contract actions be increased to 50 percent of all U.S. Army contract actions by the end of FY2005. The plan defines a contract action as any new contract award and/or new delivery order placed against a contract awarded with a value greater than $25,000.

The plan specifies that all services, excluding FAR Part 36 (Construction and Architect Engineering Contracts) are presumed to be commercial under the definition provided in FAR Part 2. If market research indicates that the service is not commercial under that definition, the local competition advocate must approve the determination not to use FAR Part 12.

In addition, efforts are underway to evaluate certain classes or categories of items and services for identification as commercial. Suggested categories include Federal Supply Codes, the North American Industrial Classification System, and others.

The plan also addresses the need to develop new and update existing courses related to commercial contracting. The plan directs Army MACOMS to ensure that all members of the acquisition team (including requirements, program management, logistics, contracting, legal, and others) are aware of the emphasis on commercial contracting and that they are properly trained in market research, performance requirements, and the use of FAR Part 12.

FAR Part 36 transactions are excluded from commercial item coverage, notwithstanding the fact that construction/A&E services meet the commercial item definition. This is due to conflicts between the provisions of the two FAR parts. First, FAR Part 12 contains a statement to the effect that if any provision in that part conflicts with any other FAR part, the Part 12 coverage controls. FAR Part 35 contains the same provision. Second, FAR Part 12 provides that all commercial contracts must be firm fixed price (FFP), while FAR Part 36 provides that while construction/A&E contracts should generally be FFP, there may be occasions when a cost-type contract would be appropriate. Third, FAR Part 36 requires the use of specific forms in construction/A&E transactions, while other FAR provisions state that use of all forms is optional.

FAR Part 12 states that it is to be used in conjunction with "Part 13 (Simplified Acquisition Procedures), Part 14 (Sealed Bidding), or Part 15 (Contracting by Negotiation), as appropriate for the particular acquisitions." Deidre Lee, director of defense procurement, suggests that the conflicts between FAR Part 12 and FAR

Part 36 could be addressed simply by including FAR Part 36 as one of the parts to be used with FAR Part 12. She did not give any indication as to when the FAR Council would take action to make this change to FAR Part 12.

About the Author

DONNA S. IRETON is director, Acquisition Management Consulting and Training Group, Advanced Systems Development, Inc., Saratoga, California. She was the 1998-1999 national president; she is an NCMA Fellow and a member of the Washington, D.C., Chapter.
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Publication:Contract Management
Article Type:Brief Article
Geographic Code:1USA
Date:Oct 1, 2001
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