Farewell Commercial Items. Hello Commercial Products and Services
There’s a new rule in town that kicks the definition of “commercial item” out of the Federal Acquisition Regulations (“FAR”) and replaces it with separate definitions for “commercial product” and “commercial service.”
The concept of a commercial item under the Federal Acquisition Regulations (“FAR”) first arose in the early 1990s under the Federal Acquisition Streamlining Act. For those who aren’t frequent flyers in the government contracting airspace, a commercial item isn’t just a thing, it can be a service. This has confused the best of us even though we know (I mean, we knooooooow) that commercial items include both products and services.
Indeed, a recent report highlighted the confusion over the conflation of products and services under the term “item” noting, for example, that “a service can be a commercial item offered in support of a product that also is a commercial item.” Id. Report of the Advisory Panel on Streamlining and Codifying Acquisition Regulations (Section 809 Panel), vol. 1, Recommendation 1, at page 1 (2018). To reduce this confusion, the Panel recommended that “the definition of commercial items [be bifurcated] into commercial products and commercial services, creating two separate definitions.” Id. at 12.
Congress liked the idea and adopted it in section 836 of the John S. McCain National Defense Authorization Act of 2019 and directed that the commercial item definition be split up. The FAR Council took up the idea and recently issued a final rule that is now in effect (as of December 7). The new rule deletes the term “commercial item” from FAR 2.101 and replaces it with separate definitions for “commercial product” and “commercial services.” If you were to print out the old definition next to the new definitions, you’d see that basically the FAR Council got out their scissors and cut the old definition into two pieces with relatively little substantive change.
I for one am pretty happy about this because being able to say “commercial service” rather than “ ‘commercial item’ that’s a service” will just be easier. Even though this change is not really substantive, this modest revision spawned 240 changes to the FAR alone (not including changes within the changes) to delete the old term and substitute the new ones. I’m guessing hundreds more changes will be made once the revision filters down to the agency acquisition regulations. I suspect we’ll all be making these changes for years to come.
One last thing, will we ever stop saying “commercial item”? Mmmm, probably not. I mean – how many of us still say “BAFO” (best and final offer) instead of “FPR” (final proposal revision). Or, how about “SCA” (Service Contract Act) instead of “SCLS” (Service Contract Labor Standards) – the Department of Labor hasn’t even gotten around to that revision.
On the other hand, this change actually is useful. Perhaps I’ll add it to the New Year’s resolutions.
Speaking of that – may your holidays be happy and healthy.