[Federal Register Volume 87, Number 82 (Thursday, April 28, 2022)]
[Rules and Regulations]
[Pages 25141-25144]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2022-08812]


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DEPARTMENT OF DEFENSE

Defense Acquisition Regulations System

48 CFR Part 212

[Docket DARS-2020-0044]
RIN 0750-AL19


Defense Federal Acquisition Regulation Supplement: Commercial 
Item Determinations (DFARS Case 2020-D033)

AGENCY: Defense Acquisition Regulations System, Department of Defense 
(DoD).

ACTION: Final rule.

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SUMMARY: DoD is issuing a final rule amending the Defense Federal 
Acquisition Regulation Supplement (DFARS) to implement a section of the 
National Defense Authorization Act for Fiscal Year 2018 that allows a 
contract for an item using Federal Acquisition Regulation (FAR) part 12 
procedures to serve as a prior commercial item determination.

DATES: Effective April 28, 2022.

FOR FURTHER INFORMATION CONTACT: Ms. Jeanette Snyder, 571-372-6106.

SUPPLEMENTARY INFORMATION: 

I. Background

    DoD published a proposed rule in the Federal Register at 84 FR 
65322 on November 27, 2019, DFARS Case 2019-D029, to implement sections 
877 and 878 of the National Defense Authorization Act (NDAA) for Fiscal 
Year (FY) 2017 (Pub. L. 114-328) and further implement section 848 of 
the NDAA for FY 2018 (Pub. L. 115-91). DoD published a second proposed 
rule at 85 FR 74636 on November 23, 2020, DFARS Case 2020-D033, to 
further implement section 848 of the NDAA for FY 2018 due to 
substantial statutory changes made after the issuance of the first 
proposed rule under DFARS Case 2019-D029. Comments received in response 
to DFARS Case 2019-D029 were addressed in the second proposed rule, 
DFARS Case 2020-D033.
    Section 848 modified 10 U.S.C. 2380(b) to provide that a contract 
for an item using FAR part 12 procedures shall serve as a prior 
commercial item determination, unless the appropriate official 
determines in writing that the use of such procedures was improper or 
that it is no longer appropriate to acquire the item using commercial 
item acquisition procedures. On January 1, 2021, 10 U.S.C. 2380(b) was 
redesignated as 10 U.S.C. 2380(c) in accordance with section 816 of the 
NDAA for FY 2021 (Pub. L. 116-283). Three respondents submitted 
comments in response to the proposed rule for DFARS Case 2020-D033.
    This final rule does not replace the term ``commercial item'' with 
``commercial product'' and/or ``commercial service'' in accordance with 
section 836 of the NDAA for FY 2019 (Pub. L. 115-232). This change is 
addressed in DFARS Case 2018-D066, which implements section 836.

II. Discussion and Analysis

    DoD reviewed the public comments in the development of the final 
rule. A discussion of the comments and the changes made to the rule are 
provided, as follows:

A. Summary of Significant Changes From the Proposed Rule

    No changes are made in the final rule as a result of public 
comments.

B. Analysis of Public Comments

1. Exceptions to Implementation
    Comment: A respondent suggested adding examples of what ``other 
evidence'' at DFARS 212.102(a)(ii)

[[Page 25142]]

might include ``such as, a contract or correspondence from a 
contracting officer'' to assist contracting officers.
    Response: DoD acknowledges that examples of ``other evidence'' may 
be helpful; however, since it not feasible to provide an all-inclusive 
list of what might constitute ``other evidence,'' examples may hinder 
contracting officers' ability to exercise sound business judgment on a 
case-by-case basis. DFARS 212.102(a)(ii) already provides that the 
prior contract may be utilized.
    Comment: Two respondents recommended revising the proposed rule to 
clarify that if a prior FAR part 12 contract exists, a new commercial 
item determination is not required, and another respondent indicated 
the contracting officer should not be required to perform a search of 
the commercial item database.
    Response: As a result of a similar public comment received in 
response to the proposed rule published under DFARS Case 2019-D029, 
DFARS paragraph 212.102(a)(iii) was moved to 212.102(a)(ii) to precede 
the paragraph on commercial item determinations. At the same time, the 
coverage was rewritten to shift emphasis to the use of prior commercial 
item determinations and use of prior acquisitions conducted using FAR 
part 12 commercial item acquisition procedures as a determination. 
Additionally, there are circumstances in which the prior use of FAR 
part 12 procedures was for items that were not commercial items but 
rather items that were only ``treated as commercial items'' (i.e., 
procured under the authority of 41 U.S.C. 1903 or 10 U.S.C. 2380a). 
Therefore, the use of FAR part 12 procedures under these circumstances 
could not be used as a prior commercial item determination. 
Furthermore, the applicability of statutory exceptions to treat certain 
items as commercial is not dependent upon the particular items being 
purchased; rather it is dependent upon the circumstances of the 
particular acquisition that cannot be extrapolated to other 
acquisitions of the same item(s). As such, a contracting officer cannot 
infer that the use of FAR part 12 procedures means that the acquisition 
is always appropriate to serve as a commercial item determination, and 
a review of the commercial item database may be warranted.
    Comment: A respondent indicated that the exclusion of the use of 
FAR part 15 procedures for an item or service previously procured using 
FAR part 12 procedures should be included in this rule.
    Response: This exclusion was addressed in the final rule at DFARS 
212.102(a)(ii)(B)(1).
    Comment: Two respondents took exception to the requirement for the 
contracting officer to document the file.
    Response: Section 848 of the NDAA for FY 2018 modified 10 U.S.C. 
2380 to preclude the need for a commercial item determination under 
certain circumstances. This rule allows for the reliance on a prior 
commercial item determination or ``some other evidence;'' therefore, 
this rule will minimize the contract file documentation required where 
a prior commercial item determination exists. However, that does not 
preclude the contracting officer's responsibility to conduct market 
research and to document the file accordingly.
    Comment: A respondent recommended the Commercial Item Database 
reference be placed in DFARS Procedures, Guidance, and Information 
(PGI) rather than at DFARS 212.102(a)(ii) since section 848 of the NDAA 
for FY 2018 does not address it.
    Response: Although the Commercial Item Database is not referenced 
in section 848 of the NDAA for FY 2018, it is mandated by 10 U.S.C. 
2380(a); therefore, it is appropriate to reference it at the DFARS 
level.
2. Outside the Scope of the Rule
    Comment: A respondent indicated the requirement to obtain higher 
level approval at DFARS 212.102(a)(iii)(C) should be removed.
    Response: The higher level approval at DFARS 212.102(a)(iii)(C) is 
applicable when the ``Prior use of FAR part 12 procedures'' at DFARS 
212.102(a)(ii) is not applicable, and the commercial item determination 
relies on paragraphs (1)(ii), (3), or (4) of the ``commercial product'' 
definition at FAR 2.101 or paragraph (2) of the ``commercial service'' 
definition at FAR 2.101. The requirement for higher level approval was 
added to the DFARS on March 12, 2012, as a result of a recommendation 
of the Panel on Contracting Integrity included in its 2009 Report to 
Congress concerning compliance with the DFARS documentation 
requirements for commercial item determinations. In its report, the 
Panel concluded that determinations were not always sufficiently 
documented; therefore, the DFARS was modified to require approval at 
one level above the contracting officer for commercial acquisitions 
that are based on ``of a type'' commercial procurements or items 
``offered for sale'' but not yet sold to the general public. This 
approval does not conflict with the changes made to 10 U.S.C. 2380 by 
section 848 of the NDAA for FY 2018, and the basis for it is still 
valid.
    Comment: A respondent recommended the Commercial Item Database be 
expanded to include information regarding commercial awards.
    Response: 10 U.S.C. 2380(a) sets forth the requirements for the 
Commercial Item Database, whereas information regarding contract awards 
is available via other means such as the Federal Procurement Data 
System; therefore, it is not necessary to expand the Commercial Item 
Database to replicate data available elsewhere.

C. Other Changes

    DFARS 212.102(a)(iii) is modified to specify that commercial item 
determinations are only required for acquisitions that exceed the 
simplified acquisition threshold (SAT). The proposed rule eliminated 
the $1 million threshold for commercial item determinations, which was 
based on policy to avoid overly burdensome requirements on lower dollar 
value acquisitions. If contracting officers are accepting prior use of 
FAR part 12 procedures, even below $1 million, as a commercial item 
determination for subsequent buys, then it is necessary to apply the 
same standards at any dollar value, as these determinations can form 
the basis for much larger acquisitions. However, requiring commercial 
item determinations for acquisitions between the micro-purchase 
threshold and those at or below the SAT would impose an overly 
burdensome requirement for Government personnel. DoD also recognizes 
the elimination of the $1 million threshold could result in an 
administrative burden on contractors if the requirement for a 
commercial item determination is imposed at or below the SAT. 
Therefore, DFARS 212.102(a)(iii) is modified to reflect the internal 
operating procedures of the Government to specify that commercial item 
determinations are only required for acquisitions that exceed the SAT.

III. Applicability to Contracts at or Below the Simplified Acquisition 
Threshold, for Commercial Products Including Commercially Available 
Off-the-Shelf Items, and for Commercial Services

    This rule does not create any new solicitation provisions or 
contract clauses. It does not impact any existing solicitation 
provisions or contract clauses or their applicability to contracts 
valued at or below the simplified acquisition threshold, for commercial 
products including

[[Page 25143]]

commercially available off-the-shelf items, or for commercial services.

IV. Expected Impact of the Rule

    This final rule is expected to benefit the Government and 
contractors as it streamlines FAR part 12 and commercial item 
determination processes and procedures. Since this rule will allow a 
contracting officer to rely on a prior commerciality determination in 
the Commercial Item Database, a prior contract, or other evidence that 
an item has previously been procured by DoD using commercial item 
acquisition procedures under FAR part 12, it will preclude the need to 
prepare a commercial item determination and, as such, preclude the need 
for contractors to provide information to the Government to support a 
commercial item determination. Therefore, this rule is expected to 
benefit both the Government and contractors. Given that this rule 
streamlines internal Government processes and procedures and, as a 
consequence, benefits contractors, there is no expected cost to 
contractors.

V. Executive Orders 12866 and 13563

    Executive Orders (E.O.s) 12866 and 13563 direct agencies to assess 
all costs and benefits of available regulatory alternatives and, if 
regulation is necessary, to select regulatory approaches that maximize 
net benefits (including potential economic, environmental, public 
health and safety effects, distributive impacts, and equity). E.O. 
13563 emphasizes the importance of quantifying both costs and benefits, 
of reducing costs, of harmonizing rules, and of promoting flexibility. 
This is not a significant regulatory action and, therefore, was not 
subject to review under section 6(b) of E.O. 12866, Regulatory Planning 
and Review, dated September 30, 1993.

VI. Congressional Review Act

    As required by the Congressional Review Act (5 U.S.C. 801-808) 
before an interim or final rule takes effect, DoD will submit a copy of 
the final rule with the form, Submission of Federal Rules Under the 
Congressional Review Act, to the U.S. Senate, the U.S. House of 
Representatives, and the Comptroller General of the United States. A 
major rule cannot take effect until 60 days after it is published in 
the Federal Register. The Office of Information and Regulatory Affairs 
has determined that this rule is not a major rule as defined by 5 
U.S.C. 804.

VII. Regulatory Flexibility Act

    A final regulatory flexibility analysis (FRFA) has been prepared 
consistent with the Regulatory Flexibility Act, 5 U.S.C. 601, et seq. 
The FRFA is summarized as follows:
    This final rule is necessary in order to further implement section 
848 of the National Defense Authorization Act (NDAA) for Fiscal Year 
(FY) 2018, which modified 10 U.S.C. 2380(b) (redesignated, as of 
January 1, 2021, as 10 U.S.C. 2308(c) in accordance with section 816 of 
the NDAA for FY 2021 (Pub. L. 116-283)). The objective of this rule is 
to address the use of Federal Acquisition Regulation (FAR) part 12 
procedures and commercial item determinations. If the DoD Commercial 
Item Database contains a prior commercial item determination, or the 
contracting officer has other evidence that an item has previously been 
acquired by DoD using commercial item acquisition procedures under FAR 
part 12, the prior contract shall serve as a determination that an item 
is a commercial item.
    No significant issues were raised by the public comments received 
in response to the initial regulatory flexibility analysis.
    DoD awarded an average of 24,446 new contracts to an average of 
11,297 unique entities (including 7,344 small businesses) each year 
from FY 2018 through FY 2020. However, this rule is not expected to 
have a significant impact on small entities because the rule is not 
implementing any requirements with which small entities must comply. 
This rule impacts Government internal operating procedures for 
commercial item determinations for products and services offered to the 
Government.
    This final rule does not impose any new reporting, recordkeeping, 
or other compliance requirements.
    DoD did not identify any significant alternatives that would 
minimize or reduce the significant economic impact on small entities, 
because no significant impact is expected. Any impact is expected to be 
beneficial.

VIII. Paperwork Reduction Act

    The rule does not contain any information collection requirements 
that require the approval of the Office of Management and Budget under 
the Paperwork Reduction Act (44 U.S.C. chapter 35).

List of Subjects in 48 CFR Part 212

    Government procurement.

Jennifer D. Johnson,
Editor/Publisher, Defense Acquisition Regulations System.

    Therefore, 48 CFR part 212 is amended as follows:

PART 212--ACQUISITION OF COMMERCIAL ITEMS

0
1. The authority citation for part 212 continues to read as follows:

    Authority: 41 U.S.C. 1303 and 48 CFR chapter 1.


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2. Revise section 212.102 to read as follows:


212.102   Applicability.

    (a)(i) Use of FAR part 12 procedures. Use of FAR part 12 procedures 
is based on--
    (A) A determination that an item is a commercial item (see 
paragraph (a)(iii) of this section); or
    (B) Applicability of one of the following statutes that provide for 
treatment as a commercial item and use of FAR part 12 procedures, even 
though the item may not meet the definition of ``commercial product'' 
or ``commercial service'' at FAR 2.101 and does not require a 
commercial item determination:
    (1) 41 U.S.C. 1903--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).
    (2) 10 U.S.C. 2380a--Supplies or services from nontraditional 
defense contractors pursuant to 212.102(a)(iv).
    (ii) Prior use of FAR part 12 procedures. (A) Pursuant to 10 U.S.C. 
2380(c), except as provided in paragraph (a)(ii)(B) of this section or 
unless the item was acquired pursuant to paragraph (a)(i)(B) of this 
section, if the Commercial Item Database (for website see PGI 
212.102(a)(iii)(B)(4)) contains a prior commerciality determination, or 
the contracting officer has other evidence that an item has previously 
been acquired by DoD using commercial item acquisition procedures under 
FAR part 12, then the prior contract shall serve as a prior 
determination that an item is a commercial item. The contracting 
officer shall document the file accordingly.
    (B)(1) If the item to be acquired meets the criteria in paragraph 
(a)(ii)(A) of this section, the item may not be acquired using other 
than FAR part 12 procedures unless the head of the contracting activity 
issues a

[[Page 25144]]

determination as specified in paragraph (a)(ii)(B)(2)(ii) of this 
section.
    (2) Pursuant to 10 U.S.C. 2306a(b)(4)(A), the contracting officer 
may presume that a prior commercial item determination made by a 
military department, a defense agency, or another component of DoD 
shall serve as a determination for subsequent procurements of such 
item. In accordance with 10 U.S.C. 2306a(b)(4) and 10 U.S.C. 2380(c), 
if the contracting officer questions a prior determination to use FAR 
part 12 procedures and instead chooses to proceed with a procurement of 
an item previously determined to be a commercial item using procedures 
other than FAR part 12 procedures, the contracting officer shall 
request a review by the head of the contracting activity that will 
conduct the procurement. Not later than 30 days after receiving a 
request for review, the head of the contracting activity shall--
    (i) Confirm that the prior use of FAR part 12 procedures was 
appropriate and still applicable; or
    (ii) Issue a determination that the prior use of FAR part 12 
procedures was improper or that it is no longer appropriate to acquire 
the item using FAR part 12 procedures, with a written explanation of 
the basis for the determination.
    (iii) Commercial item determination. Unless the procedures in 
paragraph (a)(ii) of this section are applicable, when using FAR part 
12 procedures for acquisitions of commercial items pursuant to 
212.102(a)(i)(A) that exceed the simplified acquisition threshold, the 
contracting officer shall--
    (A) Determine in writing that the acquisition meets the commercial 
product or commercial service definition in FAR 2.101;
    (B) Include the written determination in the contract file;
    (C) Obtain approval at one level above the contracting officer when 
a commercial item determination relies on paragraph (1)(ii), (3), or 
(4) of the ``commercial product'' definition at FAR 2.101 or paragraph 
(2) of the ``commercial service'' definition at FAR 2.101; and
    (D) Follow the procedures and guidance at PGI 212.102(a)(iii) 
regarding file documentation and commercial item determinations.
    (iv) Nontraditional defense contractors. In accordance with 10 
U.S.C. 2380a, contracting officers--
    (A) Except as provided in paragraph (a)(iv)(B) of this section, may 
treat supplies and services provided by nontraditional defense 
contractors as commercial items. This permissive authority is intended 
to enhance defense innovation and investment, enable DoD to acquire 
items that otherwise might not have been available, and create 
incentives for nontraditional defense contractors to do business with 
DoD. It is not intended to recategorize current noncommercial items; 
however, when appropriate, contracting officers may consider applying 
commercial item procedures to the procurement of supplies and services 
from business segments that meet the definition of ``nontraditional 
defense contractor'' even though they have been established under 
traditional defense contractors. The decision to apply commercial item 
procedures to the procurement of supplies and services from 
nontraditional defense contractors does not require a commercial item 
determination and does not mean the item is commercial;
    (B) Shall treat services provided by a business unit that is a 
nontraditional defense contractor as commercial items, to the extent 
that such services use the same pool of employees as used for 
commercial customers and are priced using methodology similar to 
methodology used for commercial pricing; and
    (C) Shall document the file when treating supplies or services from 
a nontraditional defense contractor as commercial items in accordance 
with paragraph (a)(iv)(A) or (B) of this section.
    (v) Commercial item guidebook. For a link to the commercial item 
guidebook, see PGI 212.102(a)(v).

Subpart 212.70 [Removed and Reserved]

0
3. Remove and reserve subpart 212.70, consisting of sections 212.7000 
and 212.7001.

[FR Doc. 2022-08812 Filed 4-27-22; 8:45 am]
BILLING CODE 5001-06-P