Entering into business with the U.S. Government provides companies, including those in the automotive industry, with the opportunity to expand their business base, with tremendous potential. Even with the current budget cuts and the evolving effects of sequestration, the U.S. Government continues to spend a significant amount of money each year procuring goods and services. In fact, federal procurement spending on goods and services is estimated to exceed $500 billion in fiscal year 2013. Moreover, the U.S. Government procures a wide variety of goods and services from contractors, ranging from typical government purchases such as weapons and aircraft, to what may be considered atypical purchases, such as advertising, consulting, and construction services as well as mundane goods, such as office supplies, clothing and food.
The concerns of companies who are wary of entering into the government marketplace, however, are well-founded. Government-unique auditing and accounting requirements, specifications and standards, and other requirements have dissuaded many commercial contractors from selling their goods and services to the federal government. What many commercial companies do not realize, however, is that due to acquisition reform in the 1990’s and the concept of commercial item contracting, the government can procure commercial supplies and services from contractors on terms and conditions that are very similar to commercial contracts, and the government’s definition of a commercial item is very broad.
For those commercial companies in the automotive industry that currently do business with the federal government, or are interested in diversifying by doing business with the federal government, the attached Practice Note explains the concept of commercial item contracting, its benefits and how contractors can exploit this aspect of procurement reform. It contains a discussion of:
- Statutory reforms in the 1990’s that established commercial item contracting.
- What qualifies as a commercial item.
- Required contract clauses applicable to commercial item contracts.
- Government specific requirements that still apply to commercial item contracts.
- The differences between commercial item contracts and traditional government contracts.
- Finding and responding to commercial item solicitations from the federal government.
- The benefits and risks of commercial item contracting.