Government Contracts Monitor

DoD Moves to Restrict Definition of Commercial Item

May 9, 2012

In a proposal sent to Congress on March 28, 2012, the Department of Defense (DoD) recommended that Congress amend the statutory definition of “commercial item” in 41 U.S.C. §103.  A copy of the proposal can be found here.  The DoD proposal would alter the current definition by adding two related restrictions. 

First, the proposal would restrict the definition of commercial items to goods or services that are actually sold to the public.  Under the current definition, goods or services that are not actually sold to the public may nonetheless be considered “commercial items” if they are “of a type” that is offered for sale or lease to the public.  The DoD proposal recommends striking “of a type” from the definition of commercial items.

Second, the proposal would restrict the definition of commercial items to only those goods or services that have previously been sold to the public.  The current definition includes items that have been “offered for sale, lease, or license, to the general public,” but not actually sold, leased or licensed.  The DoD proposal recommends striking the “offered . . .” language.

According to the DoD, these changes are necessary to ensure that the streamlined acquisition procedures applicable for commercial items (namely, the exemption from providing certified cost and pricing information) are only applied to those items whose price has been established in the commercial marketplace.  Significantly, while the changes were proposed by the DoD, they would affect the definition of a “commercial item” government-wide if enacted. 

The DoD’s proposal is currently being considered by the House Armed Services Committee.  Opposition letters from industry have been lodged with the Committee and are available here.

Jeffry Cook is the attorney responsible for the content of this article.