Type: Law Bulletins
Date: 04/13/2020

DOD Issues a Class Commercial Item Determination During COVID-19 Response

In late March, the Department of Defense (DOD) initiated emergency purchasing measures to respond to the COVID-19 epidemic. To streamline the procurement process, DOD recognized a class determination released by the Defense Contract Management Agency (DCMA) Commercial Item Group (CIG).

After reviewing terms and conditions and conducting market research, the DCMA CIG determined that those items listed in the class deviation memo and used in direct response to COVID-19 (such as vaccines, treatment, medical supplies, personal protective equipment (PPE) and cleaning supplies), meet the FAR commercial item* definition. (NOTE: this does not apply to similar goods and services that are not used directly in response to COVID-19). The entire class of items will now be treated as commercial items, and will continue to be treated as such until the COVID-19 response is completed.

As a result, the federal government’s acquisition of these goods and services can now occur more rapidly under FAR Part 12: Acquisition of Commercial Items. In addition, because COVID-19 is recognized as a pandemic, acquisitions for commercial items valued up to $13 million may utilize the FAR Part 13: Simplified Acquisition Procedures. FAR Part 18: Emergency Acquisitions, which allows for emergency acquisition flexibilities, may also be utilized for federal procurements. This guidance will remain in place to combat COVID-19, and will ensure that the federal government can procure goods and services more quickly for direct response.

*Commercial Items
As a bit of context, the federal government prefers to purchase goods or services that are “commercial items.” The definition of a “commercial item” for purposes of federal procurements can be complex and vary depending on the item at issue, but in general a commercial item is something that is sold to the general public and used for purposes other than exclusively governmental purposes. For example, a bearing used in aircraft, a vehicle or a copy machine are traditionally commercial items.

From the government’s perspective, the commercial marketplace shapes these items by ensuring adequate price competition, allowing for private research and development and capturing market efficiencies inherent to publicly available commercial items. The government therefore assumes less risk when it purchases commercial items. The acquisition process for commercial items therefore requires fewer regulatory fail-safes, because they have already been addressed by the commercial market.

Accordingly, the Federal Acquisition Regulations (FAR), the regulatory framework for all federal government acquisitions, utilizes more streamlined procedures when the government is acquiring a commercial item. Selling commercial items to the federal government is beneficial for many companies and contractors because not only do significantly fewer laws and regulations apply, they are also exempt from many of the traditional government contracts requirements that increase administrative costs and risks.

Please visit Taft’s COVID-19 Toolkit for all of our updates on the coronavirus.

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