USC Chapter 247

in effect

10 U.S.C. § 3451 Definitions

In this chapter: (1) The terms “commercial product”, “commercial service”, “nondevelopmental item”, “component”, and “commercial component” have the meanings provided in sections 103, 103a, 110, 105, and 102, respectively, of title 41. (2) The term “head of an agency” means the Secretary of Defense, the Secretary of Homeland Security, and the Administrator of the National Aeronautics and Space Administration. (3) The term “agency” means the Department of Defense, the Coast Guard, and the National Aeronautics and Space Administration.

10 U.S.C. § 3452 Relationship of other provisions of law to procurement of commercial products and commercial services

(a) Applicability of Government-wide Statutes.—(1) No contract for the procurement of a commercial product or commercial service entered into by the head of an agency shall be subject to any law properly listed in the Federal Acquisition Regulation pursuant to section 1906(b) of title 41. (2) No subcontract under a contract for the procurement of a commercial product or commercial service entered into by the head of an agency shall be subject to any law properly listed in the Federal Acquisition Regulation pursuant to section 1906(c) of title 41. (3) No contract for the procurement of a commercially available off-the-shelf item entered into by the head of an agency shall be subject to any law properly listed in the Federal Acquisition Regulation pursuant to section 1907 of title 41. (b) Applicability of Defense-unique Statutes to Contracts for Commercial Products and Commercial Services.—The Department of Defense Supplement to the Federal Acquisition Regulation shall include a list of defense-unique contract clause requirements based on laws, executive orders, or acquisition policies that may be applied to contracts for the procurement of commercial products and commercial services entered into by the Department of Defense. (c) Applicability of Defense-unique Statutes to Subcontracts for Commercial Products and Commercial Services.—(1) The Department of Defense Supplement to the Federal Acquisition Regulation shall include a list of defense-unique contract clause requirements based on laws, executive orders, or acquisition policies that may be applied to subcontracts for the procurement of commercial products and commercial services. (2) In this subsection, the term “subcontract”—(A) includes a transfer of commercial products and commercial services between divisions, subsidiaries, or affiliates of a contractor or subcontractor; and (B) does not include any agreement entered into by a contractor or subcontractor for the supply of products or services that are intended for use in the performance of multiple contracts with the Department of Defense or with other parties, and that are not identifiable to any particular contract. (3) This subsection does not authorize the waiver of the applicability of any provision of law or contract clause requirement with respect to any first-tier subcontract under a contract with a prime contractor reselling or distributing commercial products and commercial services of another contractor without adding value. (d) Applicability of Defense-unique Statutes to Contracts or Subcontracts for Commercially Available, Off-the-shelf Items.—The Department of Defense Supplement to the Federal Acquisition Regulation shall include a list of defense-unique contract clause requirements based on laws, executive orders, or acquisition policies that are applicable to contracts or subcontracts for the procurement of commercially available off-the-shelf items entered into by the Department of Defense. (e) Applicable Requirements.—The Secretary of Defense shall ensure that the lists required by subsections (b) and (c)(1) shall include any contract clause to implement the requirements of—(1) chapter 385 of this title; (2) section 5949 of the National Defense Authorization Act for Fiscal Year 2023 (Public Law 117–263; 41 U.S.C. 4713 note); (3) section 805 of the National Defense Authorization Act for Fiscal Year 2024 (Public Law 118–31); or (4) a statute that specifically refers to this section and provides that, notwithstanding this section, such statute shall be applicable to contracts for the procurement of commercial products and commercial services.

10 U.S.C. § 3453 Preference for commercial products and commercial services

(a) Preference.—The head of an agency shall ensure that, to the maximum extent practicable—(1) requirements of the agency with respect to a procurement of supplies or services are stated in terms of—(A) functions to be performed; (B) performance required; or (C) essential physical characteristics; (2) such requirements are defined so that commercial services or commercial products or, to the extent that commercial products suitable to meet the agency’s needs are not available, nondevelopmental items other than commercial products, may be procured to fulfill such requirements; and (3) offerors of commercial services, commercial products, and nondevelopmental items other than commercial products are provided an opportunity to compete in any procurement to fill such requirements. (b) Implementation.—The head of an agency shall ensure that acquisition officials in such agency and prime contractors and subcontractors (at any tier) performing contracts with such agency (including those performing consulting, research, and advisory services to acquisition officials of such agency) to the maximum extent practicable—(1) acquire commercial services, commercial products, or nondevelopmental items other than commercial products to meet the needs of the agency; (2) require such prime contractors and subcontractors to incorporate commercial services, commercial products, or nondevelopmental items other than commercial products as components of items supplied to the agency; (3) modify requirements in appropriate cases to ensure that the requirements can be met by commercial services or commercial products or, to the extent that commercial products suitable to meet the agency’s needs are not available, nondevelopmental items other than commercial products; (4) state specifications in terms that enable and encourage bidders and offerors to supply commercial services or commercial products or, to the extent that commercial products suitable to meet the agency’s needs are not available, nondevelopmental items other than commercial products in response to the agency solicitations; (5) revise the agency’s procurement policies, practices, and procedures not required by law to reduce any impediments in those policies, practices, and procedures to the acquisition of commercial products and commercial services; (6) require training of appropriate personnel in the acquisition of commercial products and commercial services; and (7) establish criteria in performance evaluations for appropriate personnel to reward risk-informed decisions that maximize the acquisition of commercial products, commercial services, or nondevelopmental items other than commercial products. (c) Preliminary Market Research.—(1) The head of an agency shall conduct market research appropriate to the circumstances—(A) before developing new specifications for a procurement by that agency; (B) before soliciting bids or proposals for a contract in excess of the simplified acquisition threshold; and (C) before awarding a task order or delivery order in excess of the simplified acquisition threshold. (2) The head of an agency shall use the results of market research to determine whether there are commercial services or commercial products or, to the extent that commercial products suitable to meet the agency’s needs are not available, nondevelopmental items other than commercial products available that—(A) meet the agency’s requirements; (B) could be modified to meet the agency’s requirements; or (C) could meet the agency’s requirements if those requirements were modified to a reasonable extent. (3) In conducting market research, the head of an agency should not require potential sources to submit more than the minimum information that is necessary to make the determinations required in paragraph (2). (4) The head of an agency shall document the results of market research in a manner appropriate to the size and complexity of the acquisition. (5) The head of an agency shall take appropriate steps to ensure that any prime contractor of a contract (or task order or delivery order) in an amount in excess of $5,000,000 for the procurement of products other than commercial products or services other than commercial services engages in such market research as may be necessary to carry out the requirements of subsection (b)(2) before making purchases for or on behalf of the Department of Defense. (d) Non-commercial Determination Required.—(1) The head of an agency shall establish a process for determinations regarding the non-availability of commercial products or commercial services, including that—(A) a product or service that is not a commercial product or commercial service may not be procured until the head of the agency determines that the market research conducted in accordance with subsection (c)(2) resulted in a determination that no commercial product, commercial service, or nondevelopmental item exists that is suitable to meet the needs of the agency; and (B) prior to acquiring a product or service that is not a commercial product or commercial service, the relevant program manager shall submit a written memorandum confirming the results of the determination in subparagraph (A), which shall be signed by the portfolio acquisition executive; and (2) ensure the determination in paragraph (1)(A) does not inhibit the ability of a contracting officer to determine whether a product, component of a product, or service is a commercial product or commercial service (as applicable). (e) Market Research for Price Analysis.—The Secretary of Defense shall ensure that procurement officials in the Department of Defense conduct or obtain market research to support the determination of the reasonableness of price for commercial products or commercial services contained in any bid or offer submitted in response to an agency solicitation. To the extent necessary to support such market research, the procurement official for the solicitation may require the offeror to submit relevant information. (f) Market Research Training Required.—The Secretary of Defense shall provide mandatory training for members of the armed forces and employees of the Department of Defense responsible for the conduct of market research required under subsections (c) and (d). Such mandatory training shall, at a minimum—(1) provide comprehensive information on the subject of market research and the function of market research in the acquisition of commercial products and commercial services; (2) teach best practices for conducting and documenting market research; and (3) provide methodologies for establishing standard processes and reports for collecting and sharing market research across the Department.

10 U.S.C. § 3456 Commercial product and commercial service determinations by Department of Defense

(a) In General.—The Secretary of Defense shall—(1) establish and maintain a centralized capability with necessary expertise and resources to provide assistance to the military departments and Defense Agencies in making commercial product and commercial service determinations, conducting market research, and performing analysis of price reasonableness for the purposes of procurements by the Department of Defense; and (2) assist each Secretary of a military department and each head of a Defense Agency with performing market research in accordance with the requirements of section 3453 of this title relating to market research and the determination regarding the non-availability of commercial products or commercial services, and other analysis, used to determine the reasonableness of price for the purposes of procurements by the Department of Defense. (b) Determinations Regarding the Commercial Nature of Products or Services.—(1) In general.—In making a determination whether a particular product or service offered by a contractor meets the definition of a commercial product or commercial service, a contracting officer of the Department of Defense may—(A) request support from the Director of the Defense Contract Management Agency, the Director of the Defense Contract Audit Agency, or other appropriate experts in the Department to make a determination whether a product or service is a commercial product or commercial service; and (B) consider the views of appropriate public and private sector entities. (2) Memorandum.—Within 30 days after a contract award, the contracting officer shall, consistent with the policies and regulations of the Department, submit a written memorandum summarizing the determination referred to in paragraph (1), including a detailed justification why the product or service was determined to be commercial or noncommercial. The contracting officer shall consider the results in the memorandum of the program manager required under section 3453(d)(1)(B) of this title when developing the memorandum required under this paragraph. Upon the request of the contractor or subcontractor offering the product or service for which such determination is summarized in such memorandum, the contracting officer shall provide to such contractor or subcontractor a copy of such memorandum. (c) Items Previously Acquired Using Commercial Acquisition Procedures.—(1) Determinations.—A contract or subcontract for a product (including a product without a part number or a product with a prior part number that has the same functionality as the product had with the prior part number) or service acquired using commercial acquisition procedures under part 12 of the Federal Acquisition Regulation shall serve as a prior commercial product or commercial service determination with respect to such product or service for purposes of this chapter, including when subject to minor modifications, unless—(A) the prior determination was not issued or approved by a contracting officer of the Department of Defense; or (B) the senior procurement executive of the military department or the Department of Defense as designated for purposes of section 1702(c) of title 41 determines in writing that it is no longer appropriate to acquire the product or service using commercial acquisition procedures. (2) Limitation.—(A) Except as provided under subparagraph (B), funds appropriated or otherwise made available to the Department of Defense may not be used for the procurement under part 15 of the Federal Acquisition Regulation of a product or service that was previously acquired under a contract using commercial acquisition procedures under part 12 of the Federal Acquisition Regulation. (B) The limitation under subparagraph (A) does not apply to the procurement of a product or service that was previously acquired using commercial acquisition procedures under part 12 of the Federal Acquisition Regulation following—(i) a written determination by the head of contracting activity pursuant to section 3703(d)(2) of this title that the use of such procedures was improper; or (ii) a written determination by the senior procurement executive of the military department or the Department of Defense as designated for purposes of section 1702(c) of title 41 that it is no longer appropriate to acquire the product or service using such procedures.

10 U.S.C. § 3457 Treatment of certain products and services as commercial products and commercial services

(a) Goods and Services Provided by Nontraditional Defense Contractors.—Notwithstanding section 3451(1) of this title, products and services provided by nontraditional defense contractors (as that term is defined in section 3014 of this title) may be treated by the head of an agency as commercial products and commercial services, respectively, for purposes of this chapter. (b) Services Provided by Certain Nontraditional Contractors.—Notwithstanding section 3451(1) of this title, services provided by a business unit that is a nontraditional defense contractor (as that term is defined in section 3014 of this title) shall be treated as commercial services for purposes of this chapter, to the extent that such services use the same pool of employees as used for commercial customers and are priced using methodology similar to methodology used for commercial pricing. (c) Commingled Items Purchased by Contractors.—Notwithstanding section 3451(1) of this title, items valued at less than $10,000 that are purchased by a contractor for use in the performance of multiple contracts with the Department of Defense and other parties and are not identifiable to any particular contract shall be treated as a commercial product for purposes of this chapter.

10 U.S.C. § 3458 Authority to acquire innovative commercial products and commercial services using general solicitation competitive procedures

(a) Authority.—The Secretary of Defense and each Secretary of a military department may acquire commercial products, commercial services, or nondevelopmental items through a competitive selection of proposals resulting from a general solicitation and a peer review, technical review, or operational review (as appropriate) of such proposals. (b) Treatment as Competitive Procedures.—Use of general solicitation competitive procedures under subsection (a) shall be considered to be use of competitive procedures for purposes of chapter 221 of this title. (c) Follow-on Production Agreements.—With respect to a product, service, or item acquired through the competitive procedures described under subsection (a), the Secretary of Defense or each Secretary of a military department may enter into—(1) a follow-on production contract (including a sole source contract), subject to the approval requirements of section 3204(e) of this title; or (2) a follow-on production contract or transaction, as defined in section 4022 of this title. (d) Limitations.—(1) Contracts or agreements entered into using the authority under subsection (a) shall be fixed-price, including fixed-price incentive contracts. (2) Notwithstanding section 3451(1) of this title, products and services acquired using the authority under subsection (a) shall be treated as commercial products and commercial services. (e) Congressional Notification Required.—(1) Not later than 45 days after the award of a contract for an amount exceeding $100,000,000 using the authority in subsection (a), the Secretary shall notify the congressional defense committees of such award. (2) Notice of an award under paragraph (1) shall include the following:(A) Description of the commercial product, commercial service, or nondevelopmental item acquired. (B) Description of the requirement, capability gap, or potential technological advancement with respect to which the commercial product, commercial service, or nondevelopmental item acquired provides a solution or a potential new capability. (C) Amount of the contract awarded. (D) Identification of the contractor awarded the contract.

10 U.S.C. § 3459 Limitation on required flowdown of contract clauses to subcontractors providing commercial products or commercial services

(a) In General.—The Secretary of Defense may not require that a clause be included in a subcontract for the acquisition of commercial products or commercial services other than a clause that is on the lists required by section 3452 of this title or unless otherwise applicable pursuant to subsection (e) of such section. (b) Applicability to Other Supply Agreements.—The Secretary of Defense may not require the application of any contract clauses to other supply agreements unless otherwise applicable pursuant to subsection (e) of section 3452 of this title. (c) Definitions.—In this section, the terms “other supply agreement” and “subcontract” have the meanings given such terms, respectively, in section 3452(c)(2) of this title. (d) Applicability.—Subsection (a) shall apply only with respect to subcontracts entered into after the earliest date on which the lists required by section 3452 of this title are published in the Defense Federal Acquisition Regulation Supplement.