DOD's proposed acquisition rule changes faltering in Congress

Recently, Defense Department leadership asked Congress to change acquisition laws that open the door to systemic abuse – but the House so far has declined to alter the rules. However, a last-minute change of plans is keeping the rule change on the table, throwing the future commercial of-a-type acquisition into question.

DOD gave Congress a number of proposed legislative changes for consideration in the 2013 National Defense Authorization Act, and many of them were incorporated. Omitted was a proposal to more narrowly define commercial of-a-type acquisition, designed make it easier for the government to buy everyday items similar to those sold in the private sector.

Now, a late amendment has been offered on the House floor to include changes to U.S. Federal Acquisition Regulation language governing commercial of-a-type acquisition, according to Trey Hodgkins, senior vice president for national Security and procurement policy at TechAmerica. It’s unclear whether the amendment will be considered.

DOD officials have expressed concern about abuse of commercial of-a-type’s looser rules on providing data and competitive pricing. Some commercial of-a-type acquisitions have been modified to the point that they’re no longer adequate for any customer other than DOD, which some say defeats the purpose of the practice altogether.

But opponents of the rule change say it would lock out businesses and prevent the government from taking advantage of the latest technologies, many of which are currently considered commercial.

Under commercial of-a-type rules, companies – typically familiar to DOD buyers – don’t have to provide as much of the detailed pricing data that drives competition and helps DOD determine how much a given item should cost. The idea is that since it’s a commercially available item, the pricing has already been through the process of determining fair market value.

Recently, Shay Assad, DOD director of defense pricing, expressed frustration with the overly broad language, which is part of U.S. Federal Acquisition Regulation.

“This is the number one topic that I get from contracting officers in the field. The issue is when we don’t have a valid basis for comparing what someone’s asking us to pay for a particular product that they’re claiming is an of-a-type commercial item, and the contractors don’t have the pricing data to support their claims,” Assad said at an April 27 event. “We’re addressing this in Congress. We think there should be a change in that definition.”

Abuse of commercial of-a-type acquisition makes it harder for DOD to gauge the right price of a product, but industry has been vocal in its opposition of changing the language.

“Dropping the definition will remove a number of goods and services from the government’s acquisition catalog as commercial items…that includes almost every hardware device the government buys. Smart phones, desktop computers, laptops, tablets – they’re all networked and they all have unique requirements and revisions. They would become ineligible for federal government acquisition as a commercial item,” Hodgkins said.

Those modifications have been accommodated in current FAR rules on commercial of-a-type “to open up the commercial marketplace for the government to take advantage of the innovation and technological advancement in the private sector,” Hodgkins said. “These changes would be using a sledgehammer to kill a gnat.”