A recent DPAP guidance memo was issued re commercial item and price reasonableness determinations (see http://law.pubkgroup.com/wp-content/uploads/sites/6/2016/09/DPAP-Guidance-on-Commercial-Item-Determinations-and-the-Determination-of-Price-Reasonableness-for-Commercial-Items.pdf).
The underlying objective of the guidance appears to focus on movement towards timely and consistent determinations made within the Agency related to same or similar purchases made throughout the Agency. This initiative of consistency is in transition, and, in the meantime the guidance offers the following:
- Establishment of six regional Commercial Item Centers of Excellence – staffed with engineers and cost / price analysts to assist the PCO with both commercial item and price reasonableness determinations. Note – the determinations related to subcontractor items or services rests with the prime contractor.
- Reliance on prior commercial item determinations – contracting officers are encouraged to rely on prior determinations of commerciality made within the Agency. Deviations from prior Agency determinations (i.e., FAR Part 12 to FAR Part 15) are permitted; however, an internal protocol is required to vet and justify this deviation.
- Advance agreements – use of advance agreements is now being considered for purposes of defining, and agreeing upon, the types of information that may be used by contractors to support both commercial item determination and price reasonableness.
- Market research – continued emphasis on use of market research to maximize the procurement of goods or services on a commercial item basis. Additionally, the purchase of IT products or services shall be on a commercial item basis; unless, the head of Agency determines this approach is not suitable for the acquisition.
Contractors should be aware of this guidance and the government’s overarching objective to purchase commercial items to the maximum extent possible. Additionally, the same objective and processes apply to a contractor’s supply chain as well.
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