Overview
FAR Subpart 12.1 establishes the federal government’s mandatory preference for the acquisition of commercial products and commercial services. It directs agencies to leverage the commercial marketplace to the maximum extent practicable, ensuring that the government benefits from the efficiencies, innovation, and competitive pricing of the private sector.
Key Rules
- Commercial Preference: Agencies are legally required to conduct market research and acquire commercial products, commercial services, or nondevelopmental items (NDIs) whenever they are available to meet the agency's needs.
- Regulatory Precedence: When the policies in FAR Part 12 conflict with policies in any other part of the FAR, Part 12 takes precedence for the acquisition of commercial items.
- Integration with Other Parts: Part 12 does not stand alone; Contracting Officers must use it in conjunction with the procedures in Part 13 (Simplified Acquisition), Part 14 (Sealed Bidding), or Part 15 (Contracting by Negotiation).
- Flow-Down Requirements: Prime contractors and subcontractors at all tiers are required to incorporate commercial products or components into the items they supply to the government whenever possible.
- Exemptions: These regulations do not apply to acquisitions at or below the micro-purchase threshold, purchases made via imprest funds or SF 44s, or direct acquisitions from other Federal agencies.
- Emergency "Treat-as-Commercial" Authority: The agency head may treat any acquisition for defense against or recovery from cyber, nuclear, biological, chemical, or radiological (CBRN) attacks as commercial. However, if such a contract is sole-source and exceeds $25 million, it loses its exemption from Cost Accounting Standards (CAS) and certified cost or pricing data requirements.
Responsibilities
- Head of the Agency: Responsible for ensuring the agency conducts market research and prioritizes the procurement of commercial products/services and nondevelopmental items.
- Contracting Officers (COs): Responsible for determining whether a product or service meets the definition of "commercial" under FAR 2.101 and ensuring that Part 12 policies are applied correctly when integrated with other FAR parts.
- Prime Contractors: Responsible for maximizing the use of commercial products and services within their own supply chains and flowing these requirements down to subcontractors.
- Program Managers/Technical Personnel: Responsible for defining requirements in a way that allows for commercial solutions rather than requesting government-unique specifications.
Practical Implications
- Market Research is Non-Negotiable: Before a government entity can solicit a "custom" or "government-unique" solution, they must document that no commercial products or services exist that could satisfy the requirement.
- Reduced Compliance Burden: Because Part 12 takes precedence, many "government-unique" clauses found in Part 15 are waived or modified. This makes it significantly easier for traditional commercial companies to enter the federal marketplace without completely overhauling their commercial accounting or business systems.
- Streamlined Negotiations: The use of Part 12 generally limits the government's ability to demand certified cost or pricing data (unless the specific CBRN sole-source exception applies), leading to faster award cycles that mirror commercial business practices.
- COTS Focus: Commercially Available Off-The-Shelf (COTS) items are treated as a subset of commercial products, benefiting from even broader exemptions from certain laws, which further reduces the administrative burden on the contractor.