Commercial Item Pricing Changes Will Impact Government Sales


Companies who are selling commercial products and services to the federal government may have a difficult time demonstrating their prices are fair and reasonable under new Department of Defense (DoD) rules. In response to a DoD Inspector General report that was highly critical of DoD buying practices, the Defense Procurement and Acquisition Policy (DPAP) office recently issued revised

guidance regarding the determination of fair and reasonable contract prices, particularly with respect to sole source or noncompetitive commercial item acquisitions. The revised guidance, or Procedures, Guidance and Instruction (PGI), highlights the requirement for contracting officers to

obtain whatever information or cost data is necessary to determine a fair and reasonable price when

the Truth In Negotiation Act (TINA) does not require the submission of certified cost or pricing data.

For commercial item vendors doing business with the Department of Defense or one of its components, this guidance will likely generate increased requests by contracting officers for “information other than cost or pricing data,” and thus, make it more difficult for commercial companies to do business with the government. Moreover, the PGI directs contracting officers to

use the Contractor Performance Assessment Reporting System to document a contractor’s refusal to provide requested pricing or cost data.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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