FAR Companion Part 12

Part 12 - Acquisition of Commercial Products and Commercial Services

FC12.000, FC 12.000, 2.101 Understanding commercial products and services.

When evaluating whether a product qualifies as commercial, acquisition professionals can focus on the extent of modifications required to meet government needs. The critical distinction lies between minor modifications and major customization. ● Minor modifications to products typically qualify as commercial when changes don't significantly alter how the item normally functions or its essential characteristics outside of government use. ● Major customization to products typically eliminates commercial status when substantial changes fundamentally alter core functionality or essential characteristics. Federal Acquisition Regulation (FAR) Companion ● Scope and value considerations include evaluating modifications relative to the overall product. Dollar amounts and percentages can serve as helpful guides, though they're not the only determining factors. ● For services, consider examining whether pricing reflects true commercial practices by checking if prices represent genuine market rates—those rates. Market rates are those established through normal business transactions between willing buyers and sellers, supported by competition or independent sources—rather sources rather than just the vendor's claims. The objective is to ensure that what the government is buying truly reflects what's available in the commercial marketplace under similar terms and conditions.

FC12.201 FC 12.001 Selecting the appropriate contracting method for commercial construction. For construction requirements that have been determined to be commercial (per the commercial service definition in FAR 2.101), FAR parts 6, 12, 14, and 36 offer several options for selecting the appropriate contracting method. For contracts performed within the United States and its outlying areas, use FAR part 14 sealed bid procedures if all of the following conditions are met (see FAR 36.101-1(a) and 6.101(b)(1)): 1. Time permits staff to solicit, submit, and evaluate sealed bids; 2. The award will be made on the basis of price and other price-related factors; 3. Discussion with bidders is unnecessary; and 4. Contracting officers reasonably expect to receive more than one sealed bid. If technical and price tradeoff is desired, or if negotiations may be necessary– ● For contracts up to $9 million (as per the dollar threshold in FAR 12.001(c)), use the simplified request for quotation (RFQ) procedures outlined in FAR 12.201-1. Federal Acquisition Regulation (FAR) Companion ● For contracts exceeding $9 million, use the requests for proposals (RFP) procedure in FAR part 15, in conjunction with part 12. FC 12.201 Modular acquisition strategies.

Consider breaking large, complex requirements into smaller, independently procurable components that align with how commercial markets naturally organize products and services. This approach can open competition to vendors who excel in specific areas rather than requiring contractors to master every aspect of a complex system. This is a common strategy for the acquisition of information technology (see more in FAR part 39 and related FC part 39). By purchasing components of requirements separately—such separately (such as software applications, hardware components, or professional services—agencies services), agencies may follow commercial best practices and reduce integration risks. This strategy also enables more frequent technology refreshes of individual components without replacing entire systems, potentially reducing long-term costs and improving performance over time. FC12.201-1(e)(3) FC 12.201-1(e)(3) Blanket purchase agreements (BPAs). A blanket purchase agreement (BPA) is a simplified method of filling anticipated repetitive needs for supplies or services. BPAs may be established for use by an organization responsible for providing supplies for its own operations or for other offices, installations, projects, or functions within an agency or across the government. BPAs may be established with a single firm or multiple suppliers for products or services of the same type to provide maximum practicable competition. BPAs should include: 1. Sufficient detail about the need, such as scope of work; 2. An ordering period, inclusive of any options or award terms; 3. Ordering procedures, such as identification of the customers/individuals authorized to place orders and any limitations surrounding the placement of orders; and 4. If applicable, any ordering activity requirements, such as invoicing, delivery, discounts or other concessions (if any). BPAs should state the estimated value, but should not specify a ceiling. On an annual basis or prior to exercise of an option, BPAs should be reviewed to ensure the BPA still represents the best value; verify the accuracy of estimated quantities/amounts to assess if the value may need adjustments, ensure that the BPA ordering procedures are being followed; and consider if additional price discounts or other concessions can be obtained. Federal Acquisition Regulation (FAR) Companion FC12.204 FC 12.204 Supplier license agreements. Many commercial products and services are acquired subject to supplier license agreements. These are particularly common in information technology acquisitions, but they may apply to any supply or service. For example, computer software and services delivered through the internet (web services) are often subject to license agreements, referred to as End User License Agreements (EULA), Terms of Service (TOS), or other similar legal instruments or agreements. Federal Acquisition Regulation (FAR) Companion The acquisition team managing Federal Supply Schedule contracts or governmentwide acquisition contracts under category management will establish commercial supplier license agreements that apply to all orders to maximize administrative efficiency. As much as possible, agency orders under the Federal Supply Schedule should use these negotiated license agreements. Agencies should review the terms and determine whether any further terms necessitate negotiation. When the supplier license agreement negotiated under existing Federal Supply Schedule or governmentwide acquisition contracts does not meet the agency’s need, contracting officers should: ● conduct market research to identify the availability of such commercial license terms, ● coordinate with agency legal counsel and IT personnel to review and negotiate acceptable license agreements, and ● ensure that any negotiated terms comply with federal requirements and protect government interests while maximizing commercial terms and meeting the government’s operational needs.

FC12.301 FC 12.301 Strategic management of award notice, debriefing, notices, brief explanations, and protest window. windows.

To avoid unnecessarily extending the protest window, the acquisition team led by the contracting officer should prepare to quickly provide debriefings a brief explanation when requested after making award decisions and notifying unsuccessful offerors. This timing consideration is relevant because unsuccessful offerors generally have 10 calendar days to file a GAO bid protest from the date the basis of protest is known. Note that an automatic stay of performance at GAO is 10 days after contract award or within 5 days of a debriefing date offered. award. Please note that if the last day of the computation period is a Saturday, Sunday, or Federal holiday, then the deadline for filing is the next day the protest venue (e.g., GAO, soliciting agency) is open. Additionally, when a "brief explanation" of the award decision is required (as opposed to a debriefing), such as when awarding an order under the Federal Supply Schedule or using part 12 request for quotations procedures (see FAR 12.201-1), consider preemptively including a the “brief explanation” in the award notice. This approach may start the GAO 10-day bid protest clock, marking the point at which "the basis of protest is known or should have been known." FC12.301(b) FC 12.301(b) and FC12.402(d) Contents of a brief explanation. The brief explanation of the award decision under FAR part 12.301(b) or FAR part 12.402(d)may include the following information: Federal Acquisition Regulation (FAR) Companion ● The number of quotations received; ● The name of each quoter receiving an award; ● The total contract price; and ● In general terms, the reason(s) the quote quotation was not accepted, unless the price information shared readily reveals the reason. In no event shall an quoter’s cost breakdown, profit, overhead rates, trade secrets, manufacturing processes and techniques, or other confidential business information be disclosed to any other quoter. FC12.201-1 Federal Acquisition Regulation (FAR) Companion FC 12.201-1 Periodic Table of Acquisition Innovations (PTAI) for FAR part 12 simplified procedures. FAR 12.201-1 provides for simplified procedures for the acquisition of commercial products and services valued up to $7.5 $9 million (or $15 million as outlined in FAR 12.001(b)) through the issuance of a Request for Quotation (RFQ) followed by a purchase order. Use of FAR part 15 procedures for the acquisition of commercial products or services up to $7.5 $9 million is no longer permissible. PTAI evaluation methodologies can be directly applied to Request for Quotation (RFQ) processes under FAR part 12 by offering proven innovative approaches that agencies can adopt and adapt to their procurements. Contracting officers can implement more efficient comparative evaluation approaches that focus on best value determinations rather than lengthy technical assessments. The use of Periodic Table of Acquisition Innovations (PTAI) and other innovative approaches directly support FAR part 12 core objectives of reducing time, complexity, and cost while maintaining acquisition integrity and achieving optimal mission outcomes. Many of these innovative approaches are also appropriate and beneficial for acquisition of commercial products and services when using FAR part 12 in conjunction with part 15 above $7.5 $9 million.