Commerciality In The Time Of Coronavirus—DCMA Issues New Class Commercial Item Determination And Guidance

McCarter & English - Government Contracts & Export Controls

On March 31, 2020, the Office of the Under Secretary of Defense for Acquisition and Sustainment issued a memorandum attaching a class Commercial Item Determination (CID) promulgated by the Defense Contract Management Agency Commercial Item Group (DCMA CIG) identifying as commercial items specific products and services needed by the Department of Defense (DoD) to address the COVID-19 pandemic (Memorandum). The Memorandum is specifically intended to “allow contracting officers maximum flexibility” in awarding critical contracts for supplies and services needed for the DoD to combat the COVID-19 pandemic. The Memorandum is expected to facilitate the award of “urgent commercial item procurements,” and the class CID is specifically “limited to the information pertaining to the 2020 COVID-19 pandemic.”

The list of supplies and services in the CID includes those pertaining to the following activities:

  • Efforts associated with R&D or procurement of FDA-approved COVID-19 vaccination(s) or anti-viral medications (e.g., vaccine treatments);
  • Efforts associated with establishing and setting up temporary booths, testing stations, or hospitals for possible COVID-19 surges (other than real property);
  • Emergency medical supplies (e.g., ventilators, masks, gloves, disinfectants, thermometers, beds, blankets) and services for COVID-19 relief efforts; and
  • Services related to orderly shutdowns, and associated equipment and building maintenance (e.g., cleaning and disinfecting services).

A complete list of the items can be found in the DCMA CIG CID.

The Memorandum makes clear that the items included in the CID meet the requirements of the commercial item definition in FAR 2.101 and “are determined commercial items.” Accordingly, their acquisition can be subject to expedited simplified acquisition procedures permitted by FAR Part 13 (permitting purchases up to $13 million in value for commercial items, per previous guidance in OMB Memorandum M-20-18) and emergency acquisitions under FAR Part 18. Moreover, as commercial items, they are subject to more streamlined and favorable terms and conditions codified in FAR Part 12.

Despite the urgency of the need, the DCMA CIG did not relax the requirements for commercial items—meaning that, in theory, these crucial supplies and services could retain the “commercial item” designation once the pandemic wanes. Indeed, the determination explicitly does not apply to products or services being procured for non-COVID-19 activities, “except for future procurement(s) of the same supplies and/or services that were previously procured using this CID.”

As noted, commercial item status can be highly advantageous to a supplier in the government supply chain. As contractors step up to provide products and services in response to the desperate and growing need, they must take the necessary steps to ensure that—as much as possible—the products and services fit the definition of “commercial item” set forth in FAR in 2.101 for non-COVID-19 sales and future sales once the pandemic recedes. If offering the services listed in the CID in response to COVID-19, offerors must also ensure that the terms and conditions offered to the government mirror those provided to the general public. In addition, if products and/or services, whether in development or already available for offering, do not appear on the CID but are related to COVID-19 emergency requirements, the Memorandum encourages dialogue with the DCMA CIG so that the proper products and/or services can be added. While the easing of commercial item restrictions by an eager government customer is intended to help everyone, it is imperative contractors remember that it is not a free-for-all. Careful attention must continue to be paid in the offering, sales, and provision of goods and services to the government—do not assume that easier for the government necessarily makes everything easier for contractors.

[View source.]

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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