FAR Part 12 and FAR Part 15

Implementing a Congressional Mandate to Prefer Commercial Items

Although the rules of the Federal Acquisition Regulation (FAR) are notoriously detailed and complex, they do include many concessions to expediency and efficiency. FAR Part 12, for example, is designed to leverage the benefits of the open market to simplify the acquisition process under certain circumstances.

Many of the products and services that government agencies need to purchase and use are available to the general public. Under Sections 1906 and 1907 of Title 41 of the United States Code (USC), certain provisions of the FAR are to be designated “inapplicable to contracts for the procurement of commercially available off-the-shelf items.” Section 3307 of the same Title adds to this requirement a “preference for commercial items” in many cases where they appear to meet the needs of the purchasing agency or other entity.

Laws detailed under Title 10 of the USC adapt and extend the same general sort of guidance to the armed forces. Many of the FAR rules made pursuant to these statutes are collected together under Part 12, although that portion of the regulation references and relies upon many others. FAR Part 12 is often used in conjunction with Part 15, for instance, to award procurement contracts.

The High-Level Policy Goals That Motivate FAR Part 12

As with all of the other FAR Parts that govern the awarding of contracts, Part 12 includes both a statement of the policy it reflects and plenty of related details. As a reflection of the relevant laws passed by Congress, Part 12 requires government agencies to:

  • Conduct market research. The first step toward establishing whether a given need can be satisfied by a commercially available product or service is to assess what the open market has to offer. Agencies are required to detail their needs specifically enough “for potential offerors of commercial items to know which commercial products or services may be suitable.”
  • Prefer commercial and non-developmental items. When suitable commercially available items have been identified, agencies are encouraged to prefer them over non-commercial alternatives. In addition to “commercial off the shelf” aka “COTS” items which can be used as-is, this includes so-called “non-developmental items” which were originally meant “exclusively for governmental purposes.”
  • Require contractors to adhere to Part 12. Agencies are also intended to ensure that their primary and secondary contractors live up to the same standards of commercial preference. This includes working FAR Part 12 requirements into service contracts that are awarded under different FAR processes.

As with the other procurement systems detailed under FAR, Part 12 includes dozens of different specifications and exceptions to these overall goals. Generally speaking, though, FAR Part 12 is meant to both extend the benefits of the open market to government procurement, where possible, and also to put agencies on even footing with other buyers when they make use of it.

FAR Part 15: Negotiation Enhances Procurement

Congress’s expressed preference for commercial products and services, of course, does have definite limits. Government agencies are not individuals or private businesses and so must have specific guidance as to how they actually follow through on Congress’s dictates.

Depending upon the agency and situation, some FAR Part 12 procurement efforts can be carried out under special regulations that are designed to streamline and simplify the process. Special rules defining a “Micro-Purchase Threshold” and a “Simplified Acquisition Threshold,” for instance, can sometimes be used to facilitate the acquisition of commercially available goods and services identified under FAR Part 12. The General Services Administration (“GSA”) also issues many FAR Part 12 contracts under a “Schedule” system with predefined prices and terms. This is commonly known as the “GSA Schedule.”

In many other cases, though, agencies will be required to award FAR Part 12 contracts using more rigorous and restrictive process. Many such contracts are awarded under FAR Part 14, a section that describes an established procurement process based on sealed bidding.

Another option is defined under FAR Part 15, a set of rules that governs “contracting by negotiation.” This is a traditional government procurement process that includes familiar elements like:

  • Request for proposal (RFP). The agency in question gets the FAR Part 15 process going by soliciting proposals from vendors. In the case of products identified under FAR Part 12, the RFP must include enough detail that commercial entities will be able to identify their products as eligible.
  • All proposals are then evaluated by a panel. At this point, either one proposal can be selected or a “competitive range” of the best candidates can be designated. FAR Part 12 includes cost-based and other types of requirements that must be incorporated into Part 15 evaluations when commercial items are under consideration.
  • With preliminary results established, negotiations are then conducted with those vendors deemed competitive. This allows competitors to refine their original proposals to better suit the needs of the agency in question.
  • Finally, revised proposals will be considered and the contract awarded to the most successful source.

By combining certain of the acknowledged benefits of the open market with a fair, competitive proposal process, this approach to FAR Part 12 acquisitions frequently produces desirable results for all involved. Although there are other common ways to award a FAR Part 12 contract, Part 15 negotiation frequently proves most suitable.

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