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Background: It is customary in the commercial aviation industry to customize aircraft to meet the
customer’s preferences, similar to the optional packages offered for commercial cars.
The military services have acquired several aircraft, such as the C-17, the C-130J, the
P-8, the KC-46, and trainers that have commercial equivalents. Although these
aircraft might not be determined to be commercial themselves, they contain a
significant amount of commercial components. Although the developmental contracts
cover initial spares, obsolescence may occur decades later.
Analysis: In the case of spare parts, one must consider and document COTS status, as well as
commerciality if the COTS status is critical to Government procurement of the part.
When DLA procured replacement engines for an aircraft, it procured COTS engines
that were widely sold in substantial quantities in the commercial marketplace and
used in many commercial aircraft types. When an inspector questioned if all of the
parts in the COTS engine were still COTS, or if a small number of military variant
parts were now obsolete, the contracting officer replied that the engine was clearly
COTS and met the criteria of the FAR definition. DLA maintained that the engine
may have some customizing preferences, but that did not preclude the COTS
designation of the engine any more than a truck with a ruggedized cargo bed
precluded it from receiving a COTS designation. Although obsolescence for an
individual part might be an issue in some cases, those same parts were still COTS
when embedded in the COTS engine.
Results: All parts of the widely sold COTS engine were judged to be COTS parts, and DLA
saw the value of documenting COTS determinations in such circumstances.
Takeaways:
Components of a COTS assembly may be presumed to be COTS for the
economic life of the assembly, but the corollary is not necessarily true; COTS
parts usually, but not always, indicate that the more complex assembly or system
also will be COTS.
Upon receipt of the prime contractor’s proposal, the analyst should review the
documentation of all parts, not simply for commercial item determination, but
also for COTS status if COTS status is a concern. Some laws differentiate
between COTS and commercial items. Be careful that you examine the
contractor’s certification regarding compliance with the Buy American Act and
Restrictions on DoD Procurement of Specialty Metals when procuring COTS
items.
DFARS clause 252.225-7009 is required by law to be included in all applicable
contracts and flow down from the primes to the lowest tier of the supply chain.
When obtaining information from the offeror, it may be best to submit an official
RFI to obtain the required documentation.
Summary Highlights
CID is the first part of a two-step process for evaluating commercial items, and it is the foundation for effective
commercial item pricing. By applying the concepts in this guide and other resources as available, a CID can be
completed efficiently in approximately ten business days. The Guide serves as a tool in promoting competition
by conducting effective market research and improving CID decision making and documentation. The
examples included herein illustrating the policy and concepts should help you understand the breakdown of the
commercial item definition and how it should be applied to your commercial item analysis. Part B of this Guide
addresses strategies and techniques to establish a fair and reasonable price for commercial items and services.