Commercial Item Pricing Opportunities

Claiming a proposed product or service is a commercial item provides considerable advantages to offerors of these items.  Proposals of commercial items allow contractors to avoid certified cost or pricing data or other cost build up requirements, prevent vulnerability to allegations of defective pricing and potential investigations of wrongdoing and require adherence to significantly less onerous terms and conditions.  Perhaps most importantly, commercial item pricing usually offers contractors the opportunity to price their products and services at significantly higher profit margins since they are free of having to base their prices on cost build-up estimates.

There are numerous circumstances that justify the assertion an offered product or service is a commercial item (e.g. prior determinations, catalog price, COTS supplies, “of a type” offerings, sales to federal, state, local and foreign governments, modifications, nondevelopmental items) and where appropriate documentation can be used to justify a claim that the offered product or service is a commercial item.  We provide an understanding of how the government conducts market research and how contractors can proactively use this approach to provide a comfort level to the government that their commercial item determinations are valid.  The government, using auditors, is currently taking steps to impose restrictions for asserting products and services do not qualify as commercial items so challenges to their positions need to be put forth and proactive steps are needed beforehand to establish the commercial item status of offered products and services.

Our staff includes both auditors who have conducted such reviews as well as contracting officers who have evaluated commercial item determinations.  Our consultants have mastered the requirements for commercial item determinations and have helped clients prepare sufficient documentation, including conducting market research, to justify such commercial item determinations.  Our commercial item specialists have published numerous articles in the GCA REPORT and DIGEST on how to qualify an item as a commercial item and how to price those commercial products and services.

Typical commercial item consulting services include:

• Identify opportunities of offering contractors’ products and services as commercial items
• Advice on new regulations covering commercial item pricing
• Recommend proactive steps to ensure products and services can qualify as commercial items
• Conduct market research that justifies commercial item determination
• Prepare documentation that provides evidence products and services are commercial items
• Provide justification for use of commercial item pricing within new FAR rules
• Evaluate subcontractor claims for commercial item pricing