Over the last decade, the number of laws, regulations and provisions that apply to commercial item have dramatically increased. For example, in 1996 under 52.212-5(b) there were 17 provisions of law or executive orders identified as applicable to commercial item contracts. In 2012, the number has climbed to 51.
The resulting explosion of statutes and regulations applicable to commercial item contracting increases complexity, risk and costs for contractors. Costs that are ultimately passed on to customer agencies through higher pricing. The increased complexity also serves as a barrier to entry for commercial firms offering innovative technologies, services and solutions.
Recommendation: Put “commercial” back in commercial item contracting back through effective management of flexibilities under law regarding determinations relating to laws inapplicable to procurements of commercial items in the FAR. See 41 U.S.C. 430.
Working with industry, it is time for a retrospective review of the current provisions applicable to commercial item contracting to identify and eliminate those where the costs outweigh the benefits.
Moving forward, the FAR Council should be sensitive to the costs to contractors and customers associated when making determinations regarding the applicable new provisions of law or executive order to commercial item contracts.