COMMERCIAL ITEM GROUP FREQUENTLY ASKED QUESTIONS

These answers are correct according to the best of our knowledge as of 30 May 2024. They are offered in the spirit of transparency and are intended to improve the knowledge base of industry and Government representatives alike. None of the answers provided herein should be construed as official Agency policy, DoD policy, USG legal advice or a commitment by the Government. Also, be aware that updates to this document may lag behind the pace of regulatory change; when in doubt, refer to the applicable regulations on acquisition.gov. Any questions not answered here, please contact DCMA CIG at dcma.boston-ma.eastern-rc.mbx.Commercial@mail.mil.


The Basics

Commercial acquisition and CIG processes for beginners.

(1) Who can submit a request for DCMA CIG services?

DCMA CIG provides services to DoD Procuring Contracting Officers (PCOs), DoD Program Offices (including DLA), and to select other reimbursing customers (NASA and foreign partner nations). The services are available to these customers, but they are not required.

If you belong to a supporting organization (for example DCAA, DCMA, etc.), you will need concurrence from your PCO customer to submit a request for DCMA CIG support.

DCMA CIG does not serve industry or agencies outside of DoD and NASA except by means of the selfservice option described in question 3. In the past, DCMA CIG issued solicitations on SAM.gov for industry requests for specific technologies.

Any future opportunities will be announced on DCMA CIG website and SAM.gov.

(2) What services does DCMA CIG provide to its Government customers?

DCMA CIG customers can request the following services: 

  • Content for li Goes Here
  • Commerciality Determination 
  • Pricing Support 
  • Market Research (pre- or post-solicitation) 
  • Negotiation Support 
  • Mentoring on how to self-perform market research, commercial determinations, and commercial price analysis.

See also the Case Acceptance Criteria on our website.

(3) Do you have a self-service option?

Yes! Members of the general public can check the Commercial Determination Repository, searchable by part number or nomenclature, to see if a commercial determination already exists for a part or service. This database is updated about every two weeks. Note that this repository only contains Commercial Determination results issued by DCMA CIG.

DoD personnel can check the Commercial Determination repository stored in Procurement Integrated Enterprise Environment (PIEE). This database is the PGI-required tool for all DoD PCOs to upload their commercial determinations. A how-to video and training documents are available on how to work with CDs on PIEE.

(4) Where can contractor employees (and others) learn about commerciality and/or commercial pricing? Where can we find examples?

Here are some resources, listed in order from elementary to advanced:

Most of these resources include examples. For more, see Commercial Acquisition Resources - Examples Roles and References.pdf. (As of April 2024, this document is somewhat dated but still has relevant information)

For in-depth training, take classes offered by Defense Acquisition University. (DAU allows non-DoD personnel to take its courses if space is available). See New & Prospective Student Information. Two relevant courses are:

  • CON 7800 Commercial Acquisition, and
  • CON 7810V Commercial Acquisition Capstone

(5) What federal regulations govern commercial item acquisition?

A complete list is beyond the scope of this FAQ. Some key regulations include:
  • Definitions of Commercial Product, Service, and COTS in FAR 2.101 (https://www.acquisition.gov/far/2.101). It’s organized alphabetically; scroll down to read the relevant entries.
  • Requirements for Certified Cost or Pricing Data and Data Other Than Certified Cost or Pricing Data FAR 52.215-20 and DFARS 252.215-7010.
  • Acquisition of commercial products and services: FAR Part 12
  • DFARS Part 212 and Subpart 244.4
  • DFARS PGI Part 212

Also, DFARS 252.215-7009 Proposal Adequacy Checklist, items 17 & 18, is a distillation and handy reference to regulatory requirements governing documents that must be included in prime contractor proposals. 

You’ll find links to more relevant regulations within other entries in this document.

(7) Can a product or service that has never been sold to a commercial customer meet the definition of commercial?

Yes, it can. One common misconception is that if a product is not commercial off-the-shelf (COTS), then it cannot be determined commercial. This is incorrect: a product or service doesn’t have to be COTS to be commercial. There are multiple paragraphs under the FAR 2.101 commercial product and commercial service definitions setting forth various scenarios, such as modifications, that allow a product to be determined commercial despite lack of commercial sales.

(8) Do FAR and DFARS regulations treat commerciality and pricing as independent considerations, or are they related?

The regulations treat them as independent but intertwined considerations, and in “commercial service” paragraph (2), the link is explicit (more on this below). Slides 67-70 of this CIG summit presentation discuss the interplay between commerciality and pricing.

Commerciality and price reasonableness of commercial products and services are governed by different sets of requirements. Commercial determinations are controlled by the “commercial product” and “commercial service” definitions at FAR 2.101. Fair and reasonable pricing determinations are supported by meaningful data that enables completion of the price analysis techniques as detailed in FAR 15.404-1(b). However, there is often significant overlap between information needed to support commerciality (depending on the specific definition paragraph) and fair and reasonable pricing positions. Often, the same previous sales data that forms the basis of the commercial determination will also be the basis of price reasonableness analysis by demonstrating prices that the commercial marketplace has established based on supply and demand.

The link is explicit for “commercial service” definition paragraph (2) where price reasonableness is a condition of commerciality, as set forth in FAR 15.403-1(c)(3)(ii)(A):

“When purchasing services that are not offered and sold competitively in substantial quantities in the commercial marketplace, but are of a type offered and sold competitively in substantial quantities in the commercial marketplace, they may be considered commercial services (thus meeting the purpose of 41 U.S.C.chapter 35 and 10 U.S.C. chapter 271 for truth in negotiations) only if the contracting officer determines in writing that the offeror has submitted sufficient information to evaluate, through price analysis, the reasonableness of the price of such services.”

Furthermore, DoD stated in its response to public comment 6 on DFARS Case 2016-D006 that it is not in the best interest of DoD or industry to delay acquisitions based on a formal two-step sequential process to first evaluate commerciality and then conduct an evaluation to make a determination of price reasonableness. This would delay the process and inhibit time savings in the acquisition process central to the objective of commercial acquisitions. Further, offerors are required (in accordance with DFARS252.215-7010 and FAR 52.215-20) to submit information that is adequate for evaluating the reasonableness of proposed prices when seeking the commercial product and commercial service exception to certified cost or pricing data.

(15) Is the Government bound by a prime contractor’s determination that a certain product or service is commercial?

No. A DoD procuring contracting officer is not bound by a determination made by any non-DoD entity. See DFARS 212.102(a)(ii)(B)(2), DFARS 244.402(a), and FAR 15.403-1(c)(3).

(23) My company or business unit doesn’t sell very much to the Government. We need help to follow these complicated commercial acquisition regulations. Who can help us?

DoD regulations provide a shortcut for less experienced sellers: DFARS 212.102 (a)(iv) sets forth that Department of Defense PCOs may procure the products and services of contractors using FAR 12 procedures without paperwork demonstrating the products/services meet the definition of commercial, provided the contractor meets the definition of “nontraditional defense contractor.” Additionally, DFARS 252.215-7010(b)(ii)(E) states:

“For items provided by nontraditional defense contractors, a statement that the entity is not currently performing and has not performed, for at least the 1-year period preceding the solicitation of sources by DoD for the procurement or transaction, any contract or subcontract for DoD that is subject to full coverage under the cost accounting standards prescribed pursuant to 41 U.S.C. 1502 and the regulations implementing such section.”

Read the regulations carefully; conditions and caveats apply. Also, on most acquisitions, the PCO is not obligated to use this authority, even if the contractor meets the definition of “nontraditional.” For some service acquisitions, however, the regulations require the PCO to use this authority; see DFARS 212.101(a)(iv)(B). . See also Question 67.

Not all PCOs are aware of this provision, and they won’t know that your company is eligible unless you tell them. In such situations, the PCO may contact DCMA CIG for assistance.

Help with other aspects of DoD contracting is available from the Office of Small Business Programs.

(39) What tools and resources are available to help with market research?

Tools for market research can be found in the following Government publications:

In addition, there are many (private) companies that provide market research services ranging from searchable databases of parts to customized research on specific market segments, although it would be inappropriate for us to list (i.e., endorse) any of them here.

For Government agencies, FAR 10 sets forth policy and procedures for market research.

(41) Does DCMA CIG have any dollar thresholds for case acceptance?

Our case acceptance thresholds are posted on our website. Below these thresholds, DCMA CIG is available for general questions and informal support. Also, below-threshold cases can be accepted at the discretion of the DCMA CIG director.

(48) Can DCMA CIG help my company send advertising materials for our commercial products to the DoD?

This is not a DCMA CIG function; other entities are responsible for announcing opportunities to dobusiness with the federal government. You may also want to pitch your products or services to DoD prime contractors. The top 100 vendors for the US Government by dollars obligated are found here on a list that is updated annually. Large prime contractors typically have web portals geared toward existing and prospective suppliers.

Help for small businesses is available from the Office of Small Business Programs.

(56) What is DCMA CIG’s role in the commercial acquisition process?

DCMA CIG was created in response to 10 U.S.C. §3456.

DCMA CIG provides specialized support to DoD buying commands and their procuring contracting officers (PCOs) as experts in commercial determinations, market research and price analysis for the purpose of DoD procurements. The commerciality reviews result in either a commercial determination (CD) or an Other Than Commercial (OTC) memo signed by a DCMA CIG contracting officer. The pricing reviews result in either a price recommendation (if the products and services being reviewed are commercial) or a market research report with pricing data points and possible sources of supply (if the products and services are considered OTC). DCMA CIG provides other types of support to buying commands such as more informal mentoring/answering commercial related questions, negotiation support, and assistance with the CD database.

(59) Can people at my federal agency or DoD office receive training on commercial acquisition from DCMA CIG?

DCMA CIG strives to remain focused on the core mission of commercial determinations, market research, price analysis, and supporting DAU in their training development. Nonetheless, DCMA CIG has provided training to federal agencies, especially DoD agencies, as resources permit; typically trying to maximize participation in large groups. If you have any requests, visit DCMA CIG’s website and click request support, and then ask a question to get more information. See Question 4 for training resources.

(61) Have your thresholds for case acceptance changed?

DCMA CIG adjusts case acceptance thresholds from time to time to manage workload and to be consistent with current acquisition regulations. For current thresholds please review our website.


Commerciality

How to know if a product or service can be procured using commercial procedures/FAR 12.

(24) Are there any shortcuts to commerciality?

Yes. First, if a DoD contracting officer has previously determined in writing that your product or service is commercial, there is (usually) no need to justify its commerciality again. Second, acquisition regulations provide for certain products and services to be treated as commercial for acquisition purposes even if they don’t meet the FAR 2.101 definition. They are:

  • Supplies or services to be used to facilitate defense against or recovery from cyber, nuclear, biological, chemical, or radiological attack pursuant to FAR 12.102(f).
  • Supplies or services from nontraditional defense contractors pursuant to DFARS212.102(a)(iv) (see previous question).
  • Supplies or services solicited pursuant to DFARS 212.70, which applies to general solicitations known as Commercial Solutions Openings (CSO) and is aimed at promoting innovation in the DoD. See Question 22.
  • Plant stock. See Question 62.

Another commerciality shortcut is available for products or services previously sold to the DoD on FAR 12 contracts, except those that were only “treated as commercial” (i.e., not actually determined commercial) as outlined above. See DFARS 212.101(a)(ii).

(27) Can a previous DoD (affirmative) commercial determination be reversed?

If a product or service was previously determined commercial by DoD and there is reason to believe that the determination was made without foundation or in error, the determination can be overturned by the Head of Contracting Activity (delegated to lower levels in some agencies). See DFARS212.102(a)(ii)(B)(1). See also Questions 28 and 29.

(28) What if I disagree with an Other Than Commercial (OTC) decision?

An Other Than Commercial (OTC) position issued by the CIG is not a binding determination. As such, it does not preclude a DoD contracting officer from issuing an affirmative commercial determination at any point in the future.

If an offeror believes that new information has become available which may change an OTC position, they should communicate that information to their cognizant PCO, who may request that the CIG revisit the case. The offeror should not attempt to appeal to the CIG directly, as all requests for CIG support must originate from a DoD customer.

Note that a request to revisit a decision is an exception, and entertained only if the emerging evidence is clearly new and significant. Examples of such evidence:

  • An industry leader in electric vehicles has recently adopted your product, or one very similar, in their new flagship model which has sold substantial quantities.
  • Your company has recently won several contracts to upgrade/repair avionics for large commercial airlines, with contract terms and conditions similar to those being offered to the Government.

(29) Do commercial determinations ever expire? If a commercial product becomes obsolete, is it still commercial?

Government CDs do not have expiration dates. Historical (affirmative) DoD commercial determinations and historical FAR 12 awards awarded by DoD (unless the award uses one of the authorities listed in the bullets of Question 24) are considered precedent-setting, i.e., DoD must continue to use FAR 12 procedures for such products/services unless overturned by an HCA (delegated to lower levels in some agencies). See DFARS 212.102(a)(ii)(A) and (B)(1).

Absent a prior (affirmative) determination or historical FAR 12 award, the commerciality of an obsolete product depends on whether it is still customarily used by the general public or by nongovernmental entities for purposes other than governmental purposes. Some “legacy” products, for example electronic components, are sold by dealers who specialize in those types of items to meet demand by owners of legacy equipment.

(31) A contractor claims that a certain plant of theirs is a “commercial facility,” therefore any product coming from this plant is commercial. Is this valid?

No. The FAR does not define terms such as "commercial facility,” “commercial company,” or “commercial product line.” The buyer (prime contractor in the case of a sub-tier supplier or PCO in the case of a prime contract) must review each product or service proposed as commercial and evaluate it against the FAR 2.101 commercial product and commercial service definitions. See, however, Question 62 concerning plant stock.

(32) A product or service has previously been sold to the DoD on a FAR 12 contract without a Government-issued commercial determination. Is it automatically commercial going forward?

It’s not automatic, but in most cases, yes, such products and services will be treated as having a prior determination. See DFARS 212.101(a)(ii) for details. Notable exceptions are parts/services previously sold to the Government using one of the authorities listed in the bullets of Question 24.

The contractor should be prepared to identify, by contract number, the relevant FAR 12 contract.

This is a comparatively new regulation that was implemented on April 28, 2022 as a result of DFARS case2020-D033. PCOs may, if they choose, contact DCMA CIG for assistance on how to document determinations in these cases.

Additionally, the offeror will still need to submit, at a minimum, information that is adequate for evaluating the reasonableness of prices offered, in accordance with FAR 52.215-20(a)(1)(ii) and DFARS252.215-701(b)(1)(ii).

(34) Is everything on the GSA Schedule commercial?

No, the DoD does not consider products/services on the GSA schedule to be automatically commercial. GSA considers them commercial, however GSA isn’t held to DFARS 212.102(a)(iii), which requires a commercial determination be issued by a DoD contracting officer or the existence of a prior DoD FAR 12 contract for the identical product/service.

Nevertheless, being listed on the GSA Schedule is an important consideration that may contribute to the entirety of the commercial substantiation. If GSA awarded the contract on a competitive basis or performed their own Commercial Determination and documented the substantiation before adding the product/service to the GSA schedule, that may be sufficient evidence for a DoD contracting officer to issue a CD.

(37) How should a contractor handle buyer/USG requests for data rights with a commercial product?

There are many categories of data rights. Whether inclusion of specific data rights in a sale to a prime contractor or to the Government affects the product’s commerciality depends on the practices that prevail in the comparable commercial marketplace. Data rights requests will be unique to each contract action and may be subject to negotiation.

Outside DCMA CIG, the Intellectual Property Cadre within DoD Acquisition & Sustainment is coordinating a DoD-wide effort to modernize IP policies, culture, and best-practices. You may wish to contact them for additional IP advising, support, and resources.

(42) In commercial product definition paragraph (3)(i), what do “of a type” and “customarily available” mean with respect to modifications? Can you give an example?

The DoD Guidebook for Commercial Item Acquisitions Part A has a chapter on interpreting and using the commercial definitions, including product paragraph (3). It lists some questions to consider when evaluating of-a-type modifications:

 
  • How similar is the modified item to other modified items sold in the commercial marketplace? If there are no similarities, the mod is likely not of a type.
  • Does the supplier perform similar modifications for non-government customers? If not, the modification is likely not of a type.
  • Are there differences in the manufacturing processes used to perform the modification for the Federal Government and non-government customers?

The DoD Guidebook for Commercial Item Acquisitions Part A also identifies key concepts of modified products and provides practical examples of modified products.

Evidence to show that a given modification is “customarily available” might consist of advertising that is routinely seen by commercial customers stating the type and range of modifications the company (or another firm) is prepared to undertake. For example, a stock car can be modified with whitewall tires purchased from one vendor, upholstery from another, and a sound system from a third, so an auto customized with these modifications meets paragraph (3)(i). By contrast, an automobile-mounted missile launcher is not customarily available except to military buyers, nor is it likely to be considered “minor,” so the car-plus-missile-launcher combo would not be commercial.

One modification DCMA CIG often sees is ruggedization. To show that a ruggedized product is customarily available, there should be evidence that the seller or the seller’s competition routinely offers (or better yet, sells) products to the general public that operate reliably in a similar rugged environment. Commercial industries that might use ruggedized products comparable to military ones include oil & gas and space launch services. It is useful in such cases to look at the specifics of what makes the environment “rugged.” Is it shock and vibration, and if so, how much? Is it heat? Humidity? Commerciality analysis need not turn into a PhD dissertation, but it should include enough justification to convince a contracting officer that the ruggedized product still meets the definition of commercial product.

(44) With reference to commercial product definition paragraph (3)(ii), are there any numerical rules for modifications stating what percentage is regarded as surpassing “minor”?

No. Paragraph (3)(ii) of the commercial product definition in FAR 2.101 states that “dollar values and percentages may be used as guideposts but are not conclusive evidence that a modification is minor.” DCMA CIG does not have any such rule, formal or informal; however significant modifications trigger additional requirements; see previous question.

Paragraph (3)(ii) of the “commercial product” definition further states that “’Minor modifications’ means modifications that do not significantly alter the nongovernmental function or essential physical characteristics of an item or component, or change the purpose of a process. Factors to be considered in determining whether a modification is minor include the value and size of the modification and the comparative value and size of the final product.”

See also: DoD Guidebook for Commercial Item Acquisitions Part A.

(47) The buying activity and contractor are at an impasse over commerciality. How can we proceed?

There are some limited situations in which the Government can procure a product or service using commercial procedures without a commercial determination; see Question 24 and Question 62.

If none of these apply, then the PCO can request DCMA CIG assistance to perform additional market research and/or to support them during negotiations. Use the Request Support button on our website.

 

If you want to continue independently, here are some tools: First, check our database for same or similar items. A PCO can request DCMA CIG analyses for similar items and adapt the prior analysis to the current product or service. DCMA CIG has previously performed market research on many products large and small, such as aircraft engines, inertial measurement units, power supplies, signal processors, flight simulator components, castings and forgings, aircraft wheels and brakes, hose assemblies, rocket engines, altimeters, antennas, and an equally diverse array of services.

 

If that doesn’t work, go to market research. (See also Question 39). Learn as much as you can about the product, product line, and the competition. Instead of searching on the internet for the part number, search for the part nomenclature. Find a similar COTS or “of a type” commercial item to compare with the one you are buying.

 

Having identified a similar commercial product made by someone else, the next step is for you (the buyer) to ask the contractor to explain any price delta, which may shed light on technical differences. For example, in a situation where commercial product definition paragraph (3) is potentially applicable, ask why the proposed price is $1,000 when a similar item can be purchased from Acme, Inc. for $150? Ask the contractor to walk you through the differences between their product and the Acme product. Once you understand the differences, ask about the impact of each difference on price. This approach may get you to a determination that the part meets definition (3)(i) or (3)(ii).

If there is still an impasse, a PCO may consider the following options:

  • Leverage pricing. While price should not dictate commerciality decisions, it can be the basis for further questions using a thought process similar to that described above applied to other "commercial” definition paragraphs.
  • If the contractor isn’t answering questions, the Government (via the ACO/DACO/CACO) may find it appropriate to issue a Corrective Action Request (CAR). This process holds contractors accountable for noncompliance and can lead to payment withholds if the noncompliance is not remedied. Contractor nonresponsiveness to Government RFIs can constitute noncompliance with ISO 9100 para. 8.2.1 Customer Communication. AS9100D has similar language. [cont’] May 30, 2024 Approved for public release: distribution is unlimited 34 These industry consensus quality assurance standards are often found as requirements in DoD contracts. Another compliance tool is FAR 15.403-3(a)(4).
  • Take another look at the technical requirements. If the product is commercial, there must be other companies making similar products. Can one of these other companies meet the Government’s need? DCMA CIG has seen cases where an impasse over commerciality led to nobid, followed by the Government buying the data rights and competing the requirement to find a new supplier.
  • Truthful Cost or Pricing Data Act waiver (formerly known as TINA waiver). As set forth in FAR15.403-3(a), if the PCO is satisfied with the information provided by the contractor to justify price reasonableness, subject to approval by the HCA, this waiver may be an option.

(49) Can a commercial piece part be integrated into a noncommercial assembly?

Yes. A component within a larger assembly can be commercial even if the assembly is OTC, as long as the component meets the “commercial product” definition. An example might be a light bulb installed in the bathroom of an aircraft carrier. (Interestingly, the US Navy has used an off-the-shelf commercial Xbox controller to operate the periscope on the USS Colorado attack submarine, a creative application of commercial technology that was the subject of several news articles)..

(50) How do you determine commerciality for goods manufactured outside the US?

To be procured using commercial procedures, goods manufactured outside the US must meet the same FAR 2.101 definition as those manufactured inside the US.

However, even if a foreign-made item is commercial, there may be laws, regulations, or directives prohibiting the DoD from buying it. For example, the Department of Defense has issued guidance on use of foreign-made commercial unmanned aerial vehicles, and the Defense Innovation Unit is chartered with supply chain vetting on which UAV products can be purchased by DoD. This does not affect commerciality of the UAVs; rather, it is a restriction on the DoD’s ability to acquire them.

These two considerations—commerciality and acquireability--are separate and independent, because the definition of “commercial product” is in FAR, which is used by all federal agencies, whereas DFARS sets forth additional rules, for example in DFARS 225, that regulate DoD acquisition only.

(53) Is it possible to have commercial services on a non-commercial product?

Yes. Of the three paragraphs under the FAR 2.101 “commercial service” definition, paragraph (1) is aimed exclusively at services performed in support of a commercial product, so paragraph (1) wouldn’t apply here. However, if the services meet the requirements of paragraph (2) or paragraph (3), those services would be commercial even if they are in support of a non-commercial product. Paragraph (2) is as follows:

(2) Services of a type offered and sold competitively in substantial quantities in the commercial marketplace based on established catalog or market prices for specific tasks performed or specific outcomes to be achieved and under standard commercial terms and conditions. For purposes of these services–

(i) Catalog price means a price included in a catalog, price list, schedule, or other form that is regularly maintained by the manufacturer or vendor, is either published or otherwise available for inspection by customers, and states prices at which sales are currently, or were last, made to a significant number of buyers constituting the general public; and

(ii) Market prices means current prices that are established in the course of ordinary trade between buyers and sellers free to bargain and that can be substantiated through competition or from sources independent of the offerors;

An example of a paragraph (2) service might be a shop providing dent repair services that are offered and priced according to the dimensions of the dent and material to be repaired, not the type of vehicle.

Paragraph (3) reads:

(3) A service referred to in paragraph (1) or (2) of this definition, even though the service is transferred between or among separate divisions, subsidiaries, or affiliates of a contractor.

This provision extends the “commercial service” definition in paragraph (2) to include services sold between related entities.

(55) Does a commercial determination written for a higher-level assembly flow down to lower level assemblies and piece parts?

No. There is no automatic downward ‘flow’ of commerciality defined in the FAR 2.101 commercial product definition. The lower-level assemblies or individual piece parts will still require their own analyses and determinations.

One reason is that, if the higher-level product has been determined commercial under paragraph (3)(ii), then it has government-specific modifications, the piece-parts may not meet the commercial product definition in isolation.

(58) How should a prime (or the Government) evaluate the commerciality and price reasonableness of product B when the supplier asserts it is similar to product A in the same proposal?

First, examine product A to see if it meets the FAR 2.101 definition of commercial/COTS. If it does not, then the supplier will need to find another rationale for commerciality and pricing of product B. If it does, you would want to make sure that B is similar to A, i.e., the modifications (differences) don’t significantly alter function, as well as consider differences in form and fit.

Pricing wise, if products A and B are similar, then the prices for A can be used as a baseline for price analysis of product B, accounting for any differences that might cause an increment or decrement. Techniques for price analysis are outlined in FAR 15.404-1(b) Price Analysis, DFARS 215.404-1(b) Price analysis, and DFARS 212.209 Determination of Price Reasonableness

(60) If all the piece-parts of an item are assembled from commercial off-the-shelf items, does that make the end item commercial under paragraph (4) of the FAR 2.101 “commercial product” definition?

It might, but you must also consider the value added by design, assembly, testing, and qualification of the end item. More often than not, the value added by these processes is significant and may preclude application of paragraph (4). This paragraph also requires that the group of piece-parts is “of a type customarily combined and sold in combination to the general public,” i.e., not unique to this particular weapons system or procurement.

A commonly encountered paragraph (4) product is a kit of parts used to perform a standard process such as overhauling aircraft brakes. There should be evidence presented to demonstrate that the individual products or components that make up the kit are, like a brake overhaul kit, customarily combined and sold in combination to the general public.

The DoD Guidebook for Commercial Item Acquisitions Part A includes guidance on substantiating a paragraph (4) commercial product claim.

(62) Can something identified as “supply chain hardware” or “plant stock” be given a commercial determination?

If the term refers to a collection of unnamed parts, then no. Any part included on a commercial determination (CD) must be individually named and reviewed for commerciality.

However, note that DFARS 244.402(a)(S-70) states that items valued at less than $10,000 that are purchased by the company prior to the release of the solicitation, to be used on multiple contracts, and are not identifiable to any particular contract, should be treated as commercial items. No CD is needed for a company to sell these items to the government as commercial. DFARS 252.244-7000 sets forth how this provision should be flowed from primes to subcontractors. You can also read the final rule, which came into effect on Oct 1, 2020.

(66) Can real property be considered commercial?

No. The FAR 2.101 commercial product definition explicitly does not apply to real property.

(67) If a PCO grants a nontraditional defense contractor approval for a subcontractor for the procurement of a specific product/service, can the same product/service be procured again at a later date using the previous nontraditional defense contractor approval?

No. DFARS 212.101(a)(iv)(A) states: “The decision to apply commercial product and commercial service procedures to the procurement of supplies and services from nontraditional defense contractors does not require a commercial product or commercial service determination and does not mean the item is commercial;”

On each procurement, the PCO must re-verify that the seller meets the definition of “nontraditional defense contractor,” and, unless use of the authority is mandatory (see Question 23), a PCO may elect not to use it on a current procurement even if the contractor’s same product or service has been treated as commercial in the past.

(68) If tooling (manufacturing cells, robot arms, automated paint booths) is procured to increase throughput of a Government commercial product, is that tooling automatically commercial?

No. The fundamental nature of commercial sales is that the seller bears all the costs and receives all the benefits of any efficiency improvements it chooses to make. Unless you are delivering the tooling to the Government, there will be no determination made regarding its commerciality.

If the tooling is being delivered to the Government, the criteria of the FAR 2.101 commercial product and commercial service paragraphs would apply.

(69) If the product is commercial, is the related service commercial?

Not necessarily, but it is helpful. If a product is commercial, then for a related service we would look first to “commercial service” definition paragraph (1) to see if it fits. One potential difficulty is meeting subparagraph (ii) of paragraph (1), which requires that “The source of such services provides similar services contemporaneously to the general public under terms and conditions similar to those offered to the Federal Government.” To show the service is commercial, every element in subparagraph (ii) needs to be met.

If the product isn’t commercial, then “commercial service” paragraph (1) doesn’t fit, so try paragraphs (2) or (3).

(71) If a product is found to be Other Than Commercial (OTC) and subsequently determined to be commercial, why does the DCMA CIG public repository still show OTC?

The DCMA CIG public repository displays results of all reviews; DCMA CIG does not go back and remove previous OTC results that have subsequently been revised to be commercial. Previous OTC results are not removed if a product or service is subsequently found to be commercial. An affirmative commercial determination supersedes any previous OTC position.

Keep in mind that the CIG Public Repository only displays results of DCMA CIG determinations, not those performed by contracting officers elsewhere in the DoD.

(74) Are items made using a buildto-print or build-to-spec type of operation, such as a forging or casting, considered a product or a service?

Although the FAR 2.101 commercial product and commercial service definitions do not provide an explicit definition of “commercial” for build-to-print items, DCMA CIG has often found that an applicable FAR definition can be identified based on how the build-to-print items are proposed. If a contract specifies a deliverable with uniquely identifiable part number/configuration, it is more likely to meet the definition of a commercial product than service. However, if there are separate contract line items for Non-Recurring Engineering or support services, then the production of such items might better fit one of the “commercial service” paragraphs. A proposal could also contain line items for both products and services. In a build-to-print scenario, as with any other product or service, the commercial assertion should:

  1. Describe the proposed product/service with sufficient salient technical detail such that the Government can adequately understand what is being proposed and perform independent market research as required.
  2. Compare the proposed product/service to commercial similar-to products/services. The comparison should identify similarities and differences between the commercial products/services and those proposed.
  3. Provide evidence of sales or offers for sale for non-Government end use.
  4. Demonstrate that every element of the asserted FAR 2.101 commercial product or commercial service definition paragraph is substantiated.

(76) If a prime contract with the Government is FAR 12, are all products/services supplied via subcontracts under that contract automatically commercial?

No. Only the deliverable products and services that are on the FAR 12 contract between the prime contractor and Government are viewed as commercial by the DoD. The subcontracts awarded by the prime are business-to-business contracts; they are not considered FAR 12, nor are the items procured by the prime from its suppliers considered commercial.

Only a contract directly with the Government can be considered to be FAR 12.

(70) How can one decide whether a non-recurring engineering (NRE) effort is commercial?

To meet the definition of commercial, the seller or prime would need to show that the NRE effort is being sold to the Government in a manner similar to the way it’s sold in the commercial marketplace. Documents to be submitted would include service contracts with commercial buyers or other evidence that someone else besides the Government is buying NRE services with same or similar scopes of work and terms & conditions. If paragraph (2) of the “commercial service” definition is claimed, then evidence is needed that the services are “offered and sold competitively in substantial quantities in the commercial marketplace based on established catalog or market prices for specific tasks performed or specific outcomes to be achieved and under standard commercial terms and conditions.” This requirement for price reasonableness for paragraph (2) assertions is also explicitly stated in FAR 15.403-1(c)(3)(ii)(A).

Price Reasonableness Analysis

How to know if a proposed price is consistent with the marketplace.

(25) Are there any shortcuts to showing that a proposed price is fair and reasonable?

One shortcut to showing price reasonableness is to make the case that there was adequate price competition. FAR 15.403-3(b) states: “When adequate price competition exists (see 15.403-1(c)(1)), generally no additional data are necessary to determine the reasonableness of price."

Alternatively, if you, the seller, have (or find) relevant pricing data from third-party sources to support the proposed price, DCMA CIG encourages you to share this information, because the same FAR paragraph says:

“[I]f there are unusual circumstances where it is concluded that additional data are necessary to determine the reasonableness of price, the contracting officer shall, to the maximum extent practicable, obtain the additional data from sources other than the offeror. In addition, the contracting officer should request data to determine the cost realism of competing offers or to evaluate competing approaches.” (emphasis added)

If the seller includes such substantiation in their proposal submission, there may be less reason for the Government to question the seller’s proposed price position.

(26) What are best practices for industry to demonstrate price reasonableness in a sole-source environment?

In a situation where there is not adequate price competition, price analysis is necessary to show price reasonableness. Techniques are outlined in FAR 15.404-1(b) Price Analysis, DFARS 215.404-1(b) Price analysis for commercial and noncommercial items, and DFARS 212.209 Determination of Price Reasonableness.

As a best practice to support price reasonableness, unredacted evidence of sales (including sales history and supporting invoices) for the subject products and/or services to non-governmental end users can demonstrate prices that commercial buyers are willing to pay. Any adjustments made to prices offered to the Government (discounts, quantity breaks, modifications made, etc.), in comparison to evidence of actual sales in the marketplace, should also be explained.

In addition, tips on supporting price reasonableness are found on slides 29, 60, 65-71, and 80 of the 2023 CIG summit presentation.

(30) Inflation is significant in the current environment. How does DCMA CIG evaluate effects of inflation on commercial pricing?

No. The FAR does not define terms such as "commercial facility,” “commercial company,” or “commercial product line.” The buyer (prime contractor in the case of a sub-tier supplier or PCO in the case of a prime contract) must review each product or service proposed as commercial and evaluate it against the FAR 2.101 commercial product and commercial service definitions. See, however, Question 62 concerning plant stock.

(38) How should a contractor support prices proposed for intellectual property and software sold as commercial?

Tools for market research can be found in the following Government publications:

  • 2017_Market_Research_Guide_(Final).pdf (osd.mil). There is a list of web resources starting on page 9.
  • DAU Acquipedia article.
  • Repositories of federal contract data such as USAspending, SAM, and, for DoD personnel, Advana and PIEE.
  • Appendix A of the DPC Guidebook, Part B.
  • Corporate filings archived by the Securities and Exchange Commission.

In addition, there are many (private) companies that provide market research services ranging from searchable databases of parts to customized research on specific market segments, although it would be inappropriate for us to list (i.e., endorse) any of them here.

For Government agencies, FAR 10 sets forth policy and procedures for market research.

(57) How does DCMA evaluate pricing of a product with no sales history, just a price listed in a catalog?

It depends on the information available in the marketplace. Ideally, the CIG analyst finds similar products for which commercial market pricing is available. Price Analysis approaches are identified in FAR 15.404-1 Proposal Analysis Techniques.

Note that DFARS 215.403-3(a)(1) prohibits contracting officers from relying solely on historical prices paid by the Government to determine that the price of a contract or subcontract is fair and reasonable, because that would perpetuate any overpaying that the Government may have done on past acquisitions. For more about catalog pricing, see Question 19.

(72) Should my company provide cost data to the Government to support the reasonableness of our proposed price?

Offerors who are claiming commerciality may be required to provide data other than certified cost or pricing data that is adequate for evaluating the reasonableness of the price. That data can take several forms as long as it supports one or more price analysis methods (see Question 26).

It may be appropriate to provide cost data to the Government with your proposal submission. Such data might be needed to quantify differences that could reasonably be expected to influence the contracting officer's determination of price reasonableness. Some examples are:

  • Your proposed prices are higher than those shown on commercial invoices because the Government’s shorter turnaround for delivery requires overtime work for contractor employees.
  • Your product incorporates a particular electronic component, the cost of which has gone up a lot more than applicable indices and market trends would suggest.
  • The Government is ordering significantly smaller quantities than your commercial customers, so that pricing is impacted by reduced economies of scale.

Another circumstance that makes cost data necessary to submit is when “minor modifications”--i.e., those meeting all elements of commercial product definition paragraph (3)(ii)--exceed certain thresholds, in which case FAR 15.403‐1 (c)(3)(iii)(C) states that certified cost or pricing data (CCOPD) is required to support the price increase caused by the modifications. For example, if adding a military tracking device to a commercial drone raises the amount of a particular contract action more the threshold for submitting CCOPD, then the end product may still meet the definition of “commercial product,” but the offeror will be required to submit CCOPD for the tracking device portion to support the higher price compared to a drone not so equipped. For more on how the thresholds are applied, see the response to comment 9 in FAR Case 2004-035.

The contracting officer for the acquisition will determine if the information submitted is not sufficient to permit a price evaluation, and if it is not sufficient, you may be requested to provide additional other than certified cost or pricing data to support the reasonableness of your proposed price.

Note: You may also want to view these questions under different headings. 19 and 21 under Contractor Submittals or 58 under Commerciality.

 

Roles of the PCO and Prime Contractor

Information of interest to people in these key positions.

(12) What is the process and timeline for DCMA CIG to review and respond to a customer request? Can DCMA CIG respond to “rush” requests?

After you submit your request, a DCMA CIG team member will contact you shortly to discuss your needs. Based on the completeness of the initial package submission from the contractor, the number of unique parts or complexity of services, and the availability of DCMA CIG resources, a turnaround date for DCMA CIG deliverables will be determined. DCMA CIG will ask the contractor to provide additional information through the Request for Information (RFI) process if necessary.

If pricing assistance is requested, a DCMA CIG cost/price analyst reviews submitted documents for adequacy and performs an independent price reasonableness analysis. DCMA CIG also performs independent market research to validate contractor assertions and proposed prices.

If a commercial determination (CD) is requested, DCMA CIG first checks whether a CD issued by a DoD contracting officer or a FAR 12 contract already exists. If so, per DFARS 212.102(a)(ii)(B)(2), it is unnecessary to perform a review of commerciality. The existence of prior CDs can be checked on the CIG Determination Repository and Commercial Item Database, which are linked on DCMA CIG’s website. Both Government and contractor personnel should make full use of these self-service options.

DCMA CIG also checks whether any of the shortcuts described in Question 24 apply. If not, a full review will be required. The time for DCMA CIG to complete it depends on request complexity, completeness of contractor submittals, and analyst availability. There are no short cuts, but the process can be sped up; see next question. More information is given in the answer to Question 6.

For reference, in January 2024 DCMA CIG was averaging 40 to 60 business days from request to work product delivery.

(13) Our buying activity has only three weeks to complete proposal review. How can we work with DCMA CIG to ensure the quickest turnaround?

Most important is that the contractor’s justification/determination documents are adequate. See DFARS 252.215-7009 Proposal Adequacy Checklist, items 17 & 18 and DFARS 252.215-7010. It’s also extremely helpful when a PCO uses their influence to ensure timely and complete contractor responses to our requests for information. These factors are by far the most common causes of delay in case completion.

DCMA CIG’s review will take less time if customers ensure that all Government sources of relevant information are made available to help substantiate commercial claims. These could include (as applicable):

  • Market research previously conducted by the Government or by the prime (even if several years old),
  • Drawings, including pages from illustrated parts catalogs,
  • Alternative nomenclature commonly used in the relevant marketplace,
  • Photos,
  • PWSs or SoWs,
  • Requirements documents,
  • SMEs,
  • Commercial item assertions submitted by contractors on previous procurements or for related products/services, and
  • Prices paid and cost/price analyses performed on previous procurements.

 

If your acquisition includes a large number of products/services claimed as commercial for which you are requesting assistance on commercial pricing, DCMA CIG will collaborate with you to define a work scope that can be accomplished in reasonable time and supports your acquisition needs.

Another time-saving option is to self-perform the work with the help of DCMA CIG mentoring. Some tips on how to do this are in the response to Question 47. DCMA CIG customers are welcome to discuss their needs with their assigned analyst(s) to see if there are other ways to accelerate the review timeline.

(14) Can my company obtain copies of DCMA CIG documents that pertain to our own products?

DCMA CIG does not provide documents, redacted or otherwise, in response to contractor requests. Such requests should be directed to the PCO of the relevant procurement. For Government personnel, some commercial determinations (CDs) and other than commercial (OTC) memorandums are available for download from the PIEE repository; for those documents not in PIEE, again, contact the PCO. Note that (as of the date of this FAQ) sharing of CDs/OTC memos with industry is not mandatory for PCOs; it is at their discretion.

Apart from the CDs/OTC memos posted on PIEE, other DCMA CIG work products such as commerciality and price analyses are CUI Fed Only/business-sensitive and are available only to Government entities. The reason for restricting access is that these reports contain confidential pricing and technical data not just from your company, but also from your competitors. These DCMA CIG reports must be handled with strict attention to their marking.

(35) How can a PCO on a FAR 12 solicitation be sure that the proposed products and services meet the definition of commercial?

Before a PCO issues a FAR 12 solicitation, they should perform market research to determine whether the commercial marketplace can indeed meet the Government’s need. DCMA CIG can assist with this research; submit a request on our website.

If a PCO has already issued the FAR 12 solicitation and an offeror has proposed an item that looks like it might not meet the definition of commercial, there are a few options:

  • Amend the solicitation to change the contract type to FAR 15. Then, if an offeror takes exception to the contract type, the burden will be on them to prove commerciality.
  • Perform market research on the offered items based on the Government’s requirements and the limited information that the offeror provided. Again, DCMA CIG can assist with this research; submit a request on our website.

Please note that awarding a FAR 12 contract is equivalent to issuing a commercial determination for the proposed products and services. If the items do not meet the definition of commercial, it will be difficult to determine a fair and reasonable price, which affects not only the current procurement, but all future procurements of those items.

(36) A prime contractor has not received commercial sales invoices from a supplier to show price reasonableness. What should the prime do?

Unless there is adequate price competition, the prime has the responsibility to perform price analysis on their subcontractor and include the analysis in their proposal, per FAR 52.215-20(a)(ii), DFARS 252.215-7010, and FAR 15.404-3(b). The prime made a business decision to choose this subcontractor and it's the prime’s responsibility to determine fair and reasonable pricing, which can be done by performing independent market research for alternate suppliers and similar part pricing. They can look at historical purchases (do they support any commercial platforms for which they have purchased similar products?). Does the prime itself buy or sell similar products?

Note that, even if the supplier has provided commercial sales invoices, the prime contractor is still required to perform market research in accordance with DFARS 244.402(a). Market research provides useful pricing perspective and may uncover alternative sources that can benefit the warfighter, taxpayer, and prime’s bottom line. It is more than googling the part number to see if any other sellers carry the same part. It means investigating questions like:

  • What are the key specifications of the offered items? These should be noted in the solicitation, drawings, and other engineering requirements documents.
  • Are there other companies that offer similar items for commercial end use? Who buys them, and at what price?
  • What are the differences between the supplier’s products/services and those offered by its competitors? How do those differences affect price?
  • Regarding commerciality, if the product is customized, are the same modifications customarily available to the general public? Or are they minor to meet Government requirements?

See Question 39 for some tips on how to perform market research. The most objective and useful market research is that which you conduct independently, without the supplier’s involvement.

(51) How do we, the Government or prime contractor, create competition in source selection?

Defense Pricing and Contracting (DPC) has resources here for buying activities to help them create more competitive source selections.

Some ways to foster competition include:

  • Perform detailed market research ahead of time to understand current market requirements and solutions (FAR Part 10);
  • Whenever possible, define requirements around solutions that already exist in the commercial marketplace (FAR Part 10);
  • Publish draft RFPs to engage with industry and obtain their feedback;
  • Hold timely and thorough debriefings; and
  • Keep gate criteria and requirements as unrestrictive as possible to prevent unnecessarily limiting competition; and
  • Consider holding industry day events in which you advertise program requirements and seek interested commercial market contractors.

(52) Can a prime contractor accept and use an existing DoD commercial determination (CD)?

Yes. Provided that the proposed products and services are identical to those cited in the DoD commercial determination, you can rely on it. Note that the prime is still required to perform market research per DFARS 244.402 and provide information that is adequate for evaluating price reasonableness per DFARS 252.215-7010(b)(1)(ii).

If relying on a prior DoD CD, the prime contractor is required to provide the contract number and military department, defense agency, or other DoD component that rendered such determination, and if available, a Government point of contact, in accordance with DFARS 252.215-7010(b)(1)(ii)(A).

(63) Our buying command procures commercial products for which we have only a Federal Supply Classification and nomenclature, no NSN or part number. Are we still required to upload the commercial determination or S20 forms to PIEE?

Yes. DFARS PGI 212.102(a)(iii)(C) states that “within 30 days of contract award, the contracting officer making the determination shall upload the signed commercial product or service determination or the decision that the item does not meet the commercial product or commercial service definition at FAR 2.101 to the DoD Commercial Item Database at https://piee.eb.mil.

Even without a part number, your uploaded document is useful because PIEE offers search capability by part description, so it can be found by people seeking information on similarly named parts. If you need assistance with the upload process, please review the training materials on our website or send a request to us for help.

(64) What is the minimum price threshold, below which the prime does not have to do market research on its sub’s products or services?

See FAR 52.210-1 Market Research, paragraph (b):

“Before awarding subcontracts for other than commercial acquisitions, where the subcontracts are over the simplified acquisition threshold, as defined in FAR 2.101 on the date of subcontract award, the Contractor shall conduct market research to—

(1) Determine if commercial products, commercial services, or, to the extent commercial products suitable to meet the agency’s needs are not available, nondevelopmental items are available that–”

(i) Meet the agency’s requirements;
(ii) Could be modified to meet the agency’s requirements; or
(iii) Could meet the agency’s requirements if those requirements were modified to a reasonable extent; and

(2) Determine the extent to which commercial products, commercial services, or nondevelopmental items could be incorporated at the component level.”

That said, the level of market research should be commensurate with the proposed price of the product or service. DCMA CIG does not necessarily expect multi-page market research reports on low-dollar items, especially if they are commonly available. For example, market research for a particular nut or bolt might simply be presented as an internet link to the identical item offered on an independent seller’s website. Market research for an AC-DC power converter might consist of a screenshot showing three on-line ads for similar converters, with a matrix comparing high-level specifications and prices.

(73) We (a prime contractor) have a supplier denying access to technical data and commercial invoices. Can we request DCMA CIG assistance to review?

DCMA CIG does not accept requests for support directly from non-Government sources. However, it DCMA CIG receives such a request from a PCO, it may be able to assist depending on the situation. DCMA CIG will first assess whether the prime contractor has exhausted and documented all reasonable attempts to fulfill their regulatory obligations per DFARS 244.402(a).

 

Contractor Submittals

Documents the Government will expect as part of a commercial claim.

(10) My company’s internal records show each sale as either “government” or “commercial.” Can I use the latter sales data to prove commerciality and commercial pricing?

Many FAR 2.101 “commercial product” definitions require that the product is “customarily used by the general public or by nongovernmental entities for purposes other than governmental purposes.” A company’s internal classification of a sale as “commercial” does not demonstrate that this element is met; additional evidence is needed.

Also, note that the requirement for customary use by the general public excludes unusual situations involving a small number of sales, for example a company buying one or two widgets to use in developing a prototype that does not, in the end, become a marketable product.

(11) Considering the 2021 changes arising from FAR case 2018-018 that revised commercial item definitions, is it still appropriate to rely on older, non-updated resources? .

The published rule states that splitting the commercial item definitions into products and services “does not expand or shrink the universe of products or services the Government may procure using FAR part 12, nor does it change the terms and conditions with which contractors must comply.” If you know of a specific counterexample, please contact us at dcma.boston-ma.eastern-rc.mbx.Commercial@mail.mil.

Because the change should have no material effect on contract administration, resources on this site that reference the older definitions are generally reliable as long as it’s understood that the numbering of definitions has changed.

There is no need to update older documents, but please use the new numbering scheme going forward.

(16) What documentation is required from a prime contractor when acquiring commercial products or services from subcontractors for Government contracts?

The first place to look for required submittals is the solicitation. The requirements written there are based on, or directly reference, Federal Acquisition Regulations such as FAR 52.215-20(a)(ii), DFARS 252.215-7010, FAR 15.404-3(b), and DFARS 244.402(a), to name a few key sections. You may also see DFARS 252.215-7009 Proposal Adequacy Checklist, items 17 & 18, which describe the minimum required information in broad terms.

(17) What documentation is required from a prime contractor when selling their own commercial products or services to the Government?

The first and best place to look for required submittals is the solicitation. It is the contracting officer’s responsibility to ensure that the solicitation identifies what information offerors are required to submit.

In the case of a prime selling its own products/services to the Government, contracting officers are guided by FAR 52.212-1 Instructions to Offerors—Commercial Products and Commercial Services. It states that solicitations for commercial products or services must include requests for (among other things):


  • A technical description of the items being offered in sufficient detail to evaluate compliance with the requirements in the solicitation. This may include product literature, or other documents, if necessary;
  • Terms of any express warranty; and
  • Price and any discount terms.

In addition, FAR 15.403‐3 (a)(1) states that the contracting officer shall (ii) require submission of data other than certified cost or pricing data if the contracting officer determines that adequate data from other sources is not available, and (iv) submission of appropriate data on the prices at which the same item or similar items have previously been sold, adequate for determining the reasonableness of the price unless an exception under 15.403‐1(b)(1) or (2) applies.

When preparing solicitations, DoD PCOs also must follow DFARS 215.408(5), which outlines specific requirements when claiming the Commercial Product or Commercial Service Exemption. It states:

“When reasonably certain that the submission of certified cost or pricing data or data other than certified cost or pricing data will be required, or when using the provision at 252.215-7008, [the PCO will] use the basic or alternative of the provision at DFARS 252.215-7010 Requirements for Certified Cost or Pricing Data and Data Other Than Certified Cost or Pricing Data, in lieu of the provision at FAR 52.215-20, Requirements for Certified Cost or Pricing Data and Data Other Than Certified Cost or Pricing Data, in solicitations, including solicitations using FAR part 12 procedures for the acquisition of commercial products and commercial services.”

(18) What are some common shortcomings in submittals received by the Government from prime contractors for their subcontracted commercial products/services?

Here are some common shortcomings DCMA CIG finds in contractor submittals:

  1. Not selecting and substantiating a specific FAR 2.101 “commercial product” or “commercial service” definition paragraph that applies to the sub’s product/service or providing substantiation and independent market research. If DCMA CIG analysts decide that a different definition paragraph is a better fit, they may ask for additional documentation to fully substantiate it.
  2. Presenting too little market research to demonstrate commerciality (including, for most product claims, customary use by the general public or by nongovernmental entities for purposes other than governmental purposes) as per DFARS 244.402(a) and price reasonableness as required by FAR 52.215-20(a)(ii), DFARS 252.215-7010, and FAR 15.404-3(b). See Question 39 for some tips on how to perform market research.
  3. Submitting invoices from past sales without substantiating that the end user of the product/service was not the Government. See DFARS 215.404-1(b)(v) for additional information on information relevant to pricing data, especially para (C) Volume and completeness of transaction data, which states:

    “Data must include a sufficient number of transactions to represent the range of relevant sales to all types of customers. The data must also include key information, such as date, quantity sold, part number, part nomenclature, sales price, and customer. If the number of transactions is insufficient or the data is incomplete, the contracting officer shall request additional sales data to evaluate price reasonableness. If the contractor cannot provide sufficient sales data, the contracting officer shall request other relevant information.”

    See also subparagraph (D) Nature of transactions:

    “The nature of a sales transaction includes the information necessary to understand the transaction, such as terms and conditions, date, quantity sold, sale price, unique requirements, the type of customer (government, distributor, retail end-user, etc.), and related agreements. It also includes warranties, key product technical specifications, maintenance agreements, and preferred customer rewards.”

    For more on end use, see slide 29 of this 2023 CIG summit presentation.

    (Note: if a supplier does not wish to provide unredacted invoices to the prime, DCMA CIG can arrange for direct invoice review).

    Omitting sales invoices because there were special circumstances, for example a rush order, that made the price higher or lower than usual. You should submit all invoices, and DCMA CIG price analysts will take special circumstances into account when evaluating price reasonableness. For possible uses of cost data, see Question 72.
  4. Omitting sales invoices because they are “too old.” In some industries, the marketplace evolves slowly; older invoices remain relevant to commerciality and perhaps even to pricing. In other industries, evolution in commercially available products occurs quickly; for these products, more recent invoices are needed. As support for the invoices you select, consider including a statement about the pace of innovation and price evolution prevailing in that marketplace over the applicable time period.

(19) Is a catalog acceptable as evidence of commerciality or price reasonableness?

A catalog can help make the case for commerciality, but alone it is usually insufficient; additional evidence should be presented to substantiate sales and/or offers as well as all of the other elements in the commercial product/service paragraph that is being claimed. See slide 30 in this 2023 CIG summitpresentation. In some cases, an on-line catalog accessible to the general public and the Government with “buy-now” functionality, transparent terms and conditions, and the capability to accept immediate payment may serve as reasonable evidence of an offer, but it is always better, whenever possible, to present evidence of actual sales for nongovernment end use.

About catalog pricing, the following regulations are relevant:

FAR 2.101 “Commercial Service” definition paragraph (2) has, as one element, explicit descriptions of “catalog pricing” and “market pricing,” one of which must be substantiated in assertions under this paragraph.

FAR 15.403-3(c) Commercial products and commercial services states, “The fact that a price is included in a catalog does not, in and of itself, make it fair and reasonable.”

DFARS 215.404-1(b) Price analysis for commercial and noncommercial items. (vi) states: “The contracting officer shall consider catalog prices to be reliable when they are regularly maintained and supported by relevant sales data (including any related discounts, refunds, rebates, offsets, or other adjustments). The contracting officer may request that the offeror support differences between the proposed price(s), catalog price(s), and relevant sales data.”

DFARS 252.215-7010(b)(1)(ii)(B) provides requirements for information to be submitted: “For items priced based on a catalog— (1) A copy of or identification of the Offeror’s current catalog showing the price for that item; and (2) If the catalog pricing provided with this proposal is not consistent with all relevant sales data, a detailed description of differences or inconsistencies between or among the relevant sales data, the proposed price, and the catalog price (including any related discounts, refunds, rebates, offsets, or other adjustments);”

(20) What information is needed to show that a product meets the definition of COTS (commercial off-the-shelf)?

To satisfy the COTS definition, the product must meet the requirements of paragraph (1) of the “commercial product” definition, and additional criteria as stated in the COTS definition in FAR 2.101: “Commercially available off-the-shelf (COTS) item

  1. Means any item of supply (including construction material) that is–
    1. A commercial product (as defined in paragraph (1) of the definition of “commercial product” in this section);
    2. Sold in substantial quantities in the commercial marketplace; and
    3. Offered to the Government, under a contract or subcontract at any tier, without modification, in the same form in which it is sold in the commercial marketplace; and
  2. Does not include bulk cargo, as defined in 46 U.S.C. 40102(4), such as agricultural products and petroleum products.”

Thus, a COTS claim requires more evidence to substantiate than a claim of “commercial product” paragraph (1). Many COTS assertions submitted by industry to DCMA CIG satisfy FAR 2.101 commercial product paragraph (1) but fall short of satisfying all elements of the COTS definition.

The DoD Guidebook for Commercial Item Acquisitions Part A includes guidance on substantiating a COTS claim.

(21) How can a company substantiate commerciality and pricing for publicly offered catalog COTS items where no commercial purchases have ever occurred?

If there are no commercial sales, then the items simply cannot be COTS. A COTS item by definition is sold in substantial quantities commercially (see previous question). Specifically, the offeror should look to the FAR 2.101 COTS definition and provide evidence that demonstrates the proposed contract action satisfies each element.

To show price reasonableness, as described in DFARS 252.215-7010(b)(1)(ii), submit other than certified cost or pricing data to support one or more of the techniques outlined in:


(43) What else should offerors know about “minor modifications” in commercial product definition paragraph (3)(ii)?

While regulations don’t give us a numerical definition of “minor,” if the modification drives up the proposed price significantly, then offerors should be aware of FAR 15.403-1(c)(3)(iii)(C). This regulation requires the submission of certified cost or pricing data (CCOPD) on minor modifications that exceed the greater of the threshold for obtaining CCOPD or 5% of the total price of the contract at time of contract award.

For subcontracting purposes, the threshold is based on the subcontract amount, not the prime or higher tier contract amount. For more on how the thresholds are applied, see the response to comment 9 in FAR Case 2004-035.

(46) What should a provider of services, for example repair services, submit to show that the services are commercial?

For services in general, an offeror should look to the FAR 2.101 “Commercial Service” definition and provide evidence that demonstrates the proposed contract action satisfies every element of paragraph (1), (2), or (3) of that definition.

One approach would be to share a publicly available brochure listing the company’s services, pricing for each service, and standard terms and conditions, plus evidence of actual sales (or offers) for commercial end use for the same services at the same or similar prices. Lacking this, the company may produce unredacted invoices from past sales to the general public, with each having documentation showing the scope of work and applicable terms and conditions.

When comparing a proposed service with its commercial counterpart, it is useful to crosswalk the scope and Terms & Conditions of commercial service agreements with those proposed to the Government. T&Cs are important because paragraphs (1) and (2) of the definition of “commercial service” both include T&Cs as an element.

See also DoD Guidebook for Commercial Item Acquisitions Part A and Question 17 in this FAQ.

(65) For which commercial product and service definitions is the prime contractor required to submit technical analysis?

Unless an exception applies as described in Question 24, or you are claiming COTS or “commercial product” definition paragraph (6), then you will need to do some level of technical analysis to show the commerciality of the subcontracted product or service. That means comparing the specifications of the proposed product or service with those of comparable commercial ones and providing a rationale for their similarity or an explanation of their differences. The analysis of an “of a type” product might show the breadth of available related products to demonstrate that the proposed product has no features that will take it outside the “of a type” group. For services, compare the scopes of work and terms & conditions. Your technical analysis of a product may also support customary use by showing that the product’s capabilities fulfill a definite and common need by general public (for example, catalytic converters required by law to be installed in automobiles).


Database, Communications and Other

Accessing online resources and talking to the Commercial Item Group (CIG).

(8) Do FAR and DFARS regulations treat commerciality and pricing as independent considerations, or are they related?

The regulations treat them as independent but intertwined considerations, and in “commercial service” paragraph (2), the link is explicit (more on this below). Slides 67-70 of this CIG summit presentation discuss the interplay between commerciality and pricing.

Commerciality and price reasonableness of commercial products and services are governed by different sets of requirements. Commercial determinations are controlled by the “commercial product” and “commercial service” definitions at FAR 2.101. Fair and reasonable pricing determinations are supported by meaningful data that enables completion of the price analysis techniques as detailed in FAR 15.404-1(b). However, there is often significant overlap between information needed to support commerciality (depending on the specific definition paragraph) and fair and reasonable pricing positions. Often, the same previous sales data that forms the basis of the commercial determination will also be the basis of price reasonableness analysis by demonstrating prices that the commercial marketplace has established based on supply and demand.

The link is explicit for “commercial service” definition paragraph (2) where price reasonableness is a condition of commerciality, as set forth in FAR 15.403-1(c)(3)(ii)(A):

“When purchasing services that are not offered and sold competitively in substantial quantities in the commercial marketplace, but are of a type offered and sold competitively in substantial quantities in the commercial marketplace, they may be considered commercial services (thus meeting the purpose of 41 U.S.C.chapter 35 and 10 U.S.C. chapter 271 for truth in negotiations) only if the contracting officer determines in writing that the offeror has submitted sufficient information to evaluate, through price analysis, the reasonableness of the price of such services.”

Furthermore, DoD stated in its response to public comment 6 on DFARS Case 2016-D006 that it is not in the best interest of DoD or industry to delay acquisitions based on a formal two-step sequential process to first evaluate commerciality and then conduct an evaluation to make a determination of price reasonableness. This would delay the process and inhibit time savings in the acquisition process central to the objective of commercial acquisitions. Further, offerors are required (in accordance with DFARS 252.215-7010 and FAR 52.215-20) to submit information that is adequate for evaluating the reasonableness of proposed prices when seeking the commercial product and commercial service exception to certified cost or pricing data.

(22) Are prime contractors able to utilize the new Commercial Solution Opening (CSO) approach described in DFARS 212.70 on their subcontracts?

A CSO is a solicitation vehicle, not a contracting vehicle. This DFARS regulation and associated CSO authority applies only to Government contracting officers.

DFARS 212.102(a)(i)(B) states that products purchased using the CSO authority can be procured using FAR 12 procedures. This is similar to the nontraditional defense contractor authority (described in Question 23) wherein products/services can be treated as commercial without meeting any commercial product or service definition.

(33) Are the Commercial Item Database and the PIEE repository of commercial determinations searchable by National Stock Number (NSN)?

Yes. The intent of both is to include NSNs for every part listed, however coverage is not 100%. If you don’t find your part by its NSN, you should try entering the manufacturer’s part number, other part number, or nomenclature instead.

It should also be noted that a single part number may have a variety of nomenclatures assigned to it by different entities. When performing nomenclature searches, be sure to try alternatives and abbreviations. Examples: “DISC” and “DISK,” “ASSEMBLY” and “ASSY,” “RIGHT” and “RH” (also, for the Navy, “STBD”).

(40) Does DCMA CIG utilize OASIS or NASA SEWP, and do you find them useful?

DCMA CIG employees are encouraged to utilize as many sources as possible. Any and all pertinent resources are used as circumstances demand to understand markets for defense products and services. Depending on the situation, OASIS and SEWP could be a primary focus and be considered first among available Government sources. However, a listing on these sites does not mean that the products/services are commercial; nevertheless, DCMA CIG may use these resources as data points in price analysis. Note that it is the buying activity Contracting Officer’s final decision whether the data is relied upon for pricing purposes.

(45) How can industry communicate to DCMA CIG its perspective on the commercial procurement process? Can we request a meeting?

DCMA CIG holds monthly virtual “Office Hours” events for the purpose of open dialog and answering questions from both industry and our Government customers. See our website.

You can also submit a question via the “Ask a question” button at the bottom of the same page. If DCMA CIG answers a question via email, the same question will also be addressed at the subsequent Office Hours, so the answer is shared for all to hear.

DCMA CIG does not entertain industry requests for private meetings, because that would not be fair to other contractors.

(54) How does DCMA CIG work with contractors to obtain data?

In an ideal scenario, the contractor’s commercial assertion package, market research, and price analysis documentation that are submitted with the proposal clearly demonstrate that all elements of the asserted FAR 2.101 commercial product or commercial service definition paragraph are satisfied, and fair and reasonable pricing is substantiated.

If needed information is not submitted by the contractor, DCMA CIG will seek to obtain through Government resources and through independent market research. Despite these efforts, it may be necessary to request specific information that only the contractor is privy to. If this is the case, DCMA CIG will request additional specific evidence using the RFI (Request for Information) process. Requested information can include additional technical specifications, sales data, invoices, and/or catalog entries if the catalog is not published on the web.

For more information, see slide 71 of this 2023 CIG summit presentation and Part B of the DOD Guidebook for Acquiring Commercial Items.

Many companies consider sales data proprietary and will not share such data with another contractor but are willing to allow the government to see the data, either via a personal visit to their office or via teleconference. In that case, the PCO can request help from DCMA CIG in obtaining this data.

(75) Has the Government considered giving "viewing rights” to the general public to look at commercial determinations in the PIEE commercial item database?

The PIEE database is restricted to DoD officials only due to Industry concerns about competitors obtaining sensitive or advantageous information through analysis of CD data. As an alternative, DCMA CIG maintains a publicly available database which contains sanitized information on the results of CIG commerciality reviews. This DCMA CIG Public Repository can be accessed via the DCMA CIG website. Industry can request commercial determinations issued for their own products/services from the PCO who awarded the contract. DCMA CIG is continuing to explore ways to become more transparent with commerciality and prior FAR 12 awards across the department.