Commercial Item Exception - Market Prices

Did you read FAR 52.215-20(a)(1)(ii)?

Commercial item exception. For a commercial item exception, the offeror shall submit, at a minimum, information on prices at which the same item or similar items have previously been sold in the commercial market that is adequate for evaluating the reasonableness of the price for this acquisition. Such information may include

• ( For market-priced items, the source and date or period of the market quotation or other basis for market price, the base amount, and applicable discounts. In addition, describe the nature of the market;

Steveatus, I think you may be confusing two things: an exemption from the requirement for a contracting officer to obtain certified cost or pricing data and the determination of fair and reasonable price. Once you determine that an acquisition is for commercial items, the contracting officer cannot then require the contractor to disclose certified cost or pricing data. On the other hand, if the contracting officer determines that an acquisition is for commercial items, the contracting officer still has to determine that the prices offered are fair and reasonable. That can be done in several ways including market pricing analysis or requiring the contractor to submit data other than certified cost or pricing data.

Retreadfed, I'm really trying to get some opinions with respect to both of the items you mention. My scenario would be a contractor, without actual performance history, requests an exemption for submittal of certified cost or pricing data based upon the fact that the item being provided qualifies as a commercial item. The nuance here, is that the contractor submitting the offer has not yet entered the market.

Assuming that the Contracting Officer agreed that the item is a commercial item, would the Contracting Officer be able to determine that the prices are fair and reasonable based upon the contractor's offer being consistent with prevailing market prices.

Again, the only thing out of the ordinary is that the contractor has no performance history with this particular commercial item.

That is a reasonable conclusion to make. The FAR 2.101 definition for a commercial item focuses on the item itself in (1), (2), and (3). There may be some vendors that only sell to the government and never sell to the public. FAR 15.404-1( b )(2)(ii) provides for evaluating price reasonableness based on historical prices paid by government and commercial customers for the same or similar items.

InNeedofWisdom, I wasn't able to find a FAR paragraph 15.401-1( b )(2)(ii).

Steveatus, is the seller basing their request for exception on market based-pricing and providing the information required by the clause at 52.215-20( a )(1)(ii) as Don described? I think it would be difficult to provide all the information that the (ii) paragraph above requires for sales by others.

In typical government passive writing style, one can't clearly determine who would have sold the item(s) "that have been previously sold in the commercial marketplace" but I am assuming that any seller could have sold the item(s).

It does seem odd that if this is a commercial item, that there would be only one seller responding to the government's request - then one that has never sold the item before.

Sorry - this hotel computer doesn't allow copying or pasting of any text.

Joel,

I'm thinking that a contractor trying to enter a new market could (1) claim that an item or service qualifies as a commercial item based upon the criteria in the FAR 201.1 definition, even though the specific contractor has not provided previously provided the item on a commercial basis and (2) if the proposing contractor can find market price information (commercial prices paid to others), this could be used to to support the fair and reasonableness of the contractor's proposed price.

Steveatus, unless the quote that Don provided only applies to the seller's own product, it would appear that the firm could provide the required information concerning sales by others for the same or similar items to try to support the reasonableness of its price.

Steveatus:

Is the commercial item a service? If it is, does it fall under paragraph (6) of the definition of commercial item in FAR 2.101 ("Services of a type offered and sold competitively....")?

InNeedofWisdom, I wasn't able to find a FAR paragraph 15.401-1( b )(2)(ii).

Steveatus, is the seller basing their request for exception on market based-pricing and providing the information required by the clause at 52.215-20( a )(1)(ii) as Don described? I think it would be difficult to provide all the information that the (ii) paragraph above requires for sales by others.

In typical government passive writing style, one can't clearly determine who would have sold the item(s) "that have been previously sold in the commercial marketplace" but I am assuming that any seller could have sold the item(s).

It does seem odd that if this is a commercial item, that there would be only one seller responding to the government's request - then one that has never sold the item before.

Sorry - this hotel computer doesn't allow copying or pasting of any text.

Thank You, Joel. I fixed it.

Vern,

In this scenario, this is service has already met the test of being a Commercial Item. It has been sold commercially to the Government, just not by this particular contractor.

Steveatus,

If it is a service, as you say it is, then your second sentence above is non sequitur to your first sentence. Is it a service as defined in para. (6) of the definition of commercial item in FAR 2.101?

A service is a commercial item under para. (6) if--

YES - NO - of a type offered and sold competitively

YES - NO - in substantial quantities

YES - NO - in the commercial marketplace

YES - NO - based on established catalog or market prices for specific tasks or outcomes under standard commercial terms and conditions

It is a commercial service under para. (6) is the answer to all of these is YES. A single NO answer means it is not a commercial service under para. (6).

ji20874,

In my scenario, the answers to all of the requirements of the definition you quote above would be YES. The only nuance I was raising it that the answers would be YES in a general sense (other contractors have provided the service on a commercial basis), but the contractor submitting the offer has not yet provided the service on a commercial basis.

A full read of the following DFARS PGI may be helpful to your questions even if you are not with a DoD agency. PGI 215.404-1 Proposal analysis techniques. Especially see the ( section.

In a nutshell even though you are not getting certified cost or pricing data does not mean you cannot ask for cost information from the contractor who has had no sales to form an opinion about price reasonableness.

The PGI is found here…..

http://www.acq.osd.mil/dpap/dars/pgi/pgi_htm/PGI215_4.htm#215.404-1