Overview
FAR Part 12 establishes the policies and procedures for the acquisition of commercial products and commercial services, implementing the federal government’s statutory preference for these items. It aims to streamline procurement by adopting practices that closely resemble the commercial marketplace, thereby encouraging a broader range of vendors to do business with the government.
Key Rules
- Market Research Mandate: Agencies must conduct market research to determine if commercial products or services are available to meet their requirements before seeking non-developmental or government-unique items.
- Order of Precedence: When the requirements of FAR Part 12 conflict with other parts of the FAR (such as Part 13, 14, or 15), Part 12 takes precedence for the acquisition of commercial items.
- Description of Need: Agencies must describe requirements in terms of functions to be performed, performance requirements, or essential physical characteristics rather than restrictive internal specifications.
- Allowed Contract Types: Acquisitions are generally restricted to Firm-Fixed-Price (FFP) or Fixed-Price with Economic Price Adjustment (FP-EPA). Time-and-Materials (T&M) or Labor-Hour contracts are permitted only under specific conditions and require a formal Determination and Findings (D&F).
- Streamlined Clauses: Contracts must only include clauses required by law, executive order, or those consistent with customary commercial practices. The primary "commercial" clauses are 52.212-1 through 52.212-5.
- Intellectual Property & Software: The government generally acquires only the technical data and software licenses customarily provided to the general public.
- Unauthorized Obligations: To prevent Anti-Deficiency Act violations, any "click-wrap" or "browse-wrap" indemnification clauses in commercial EULAs that create an undisclosed financial obligation for the government are rendered unenforceable.
Responsibilities
- Head of the Agency: Responsible for ensuring that market research is conducted and that the agency maximizes the use of commercial products, services, and components.
- Contracting Officer (CO):
- Determines if a product or service meets the "commercial" definition.
- Establishes price reasonableness using commercial market factors (e.g., warranty, volume, delivery speed).
- Executes a Determination and Findings (D&F) if a T&M or Labor-Hour contract type is used.
- Tailors solicitation provisions and clauses to match industry standards while ensuring legal compliance.
- Program Managers / Requirements Owners: Responsible for defining the agency's needs in functional/performance terms that allow for commercial solutions.
- Prime Contractors: Required to incorporate commercial products and services as components of items supplied to the agency to the maximum extent practicable.
Practical Implications
- Market-Driven Pricing: Unlike traditional government contracting where cost-plus models are common, FAR Part 12 relies on market forces. Contracting Officers must be skilled in analyzing "commerciality" and price reasonableness without relying on certified cost or pricing data.
- Speed of Procurement: Part 12 allows for shorter solicitation response times (fewer than 30 days) and streamlined evaluation procedures, making it the preferred vehicle for rapid acquisition of technology and common services.
- Reduced Barrier to Entry: Because the government agrees to use standard commercial terms and relies on the contractor's existing quality assurance systems, non-traditional defense contractors are more likely to bid.
- Risk Management in Software: The inclusion of FAR 12.216 protects the government from "hidden" legal risks in standard commercial software licenses (EULAs), effectively nullifying clauses that would normally require the government to indemnify a vendor (which is illegal under the Anti-Deficiency Act).
- Tailoring is Key: COs have the flexibility to "tailor" clauses (via 12.302) to adapt the contract to specific industry standards, provided they don't waive mandatory statutory requirements.