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Frequently Asked Questions about Commercial and Nondevelopmental Items

Q. What is a commercial item?

A. According to Part 2 of the Federal Acquisition Regulation (FAR), a commercial item is any product or service that is customarily used by the general public or nongovernmental entities for nongovernmental purposes. Commercial items may include the following:

  • Products, other than real property, that have been offered for sale, lease, or license to the general public. Possible indications that an item is commercial are a commercial sales history, listing in catalogs or brochures, an established price, and distributors. Examples of commercial items bought by DoD are transport aircraft, computers, medicine, and fuel. The commercial market is global; commercial items are not limited to the domestic commercial market.
  • Products that evolved through advances in technology or performance and will be available in the commercial market in time to meet the delivery requirements of the solicitation. Examples of such items are product updates, model changes, and product improvements such as new versions of software.
  • Products that have received minor modifications to meet DoD requirements. To be considered minor, a modification may not significantly alter the product’s nongovernmental function or essential physical characteristics. In determining whether a modification is minor, consider the value and size of the modification and the comparative value and size of the final product.
  • Products that were created by integrating commercial subsystems and components into a unique system. For example, a computer system composed of commercial subsystems would be considered a commercial item. Another example is industrial plant equipment that combines commercial components into a unique item based on customer needs.
  • Products developed at private expense and sold competitively in substantial quantities to state and local governments. Examples are protective vests used by police departments and rescue equipment used by fire and rescue units.
  • Installation services, maintenance services, repair services, training services, and other services procured to support a commercial product. Help desks, call centers, warranty repair services, user training, equipment installation, and other services related to item support are examples.
  • Standalone services offered and sold competitively, in substantial quantities, in the commercial marketplace based on established catalog or market prices for specific tasks performed and under standard commercial terms and conditions. Construction, research and development (R&D), warehousing, garbage collection, and transportation of household goods are examples.
  • A nondevelopmental item, if the procuring agency determines the item was developed exclusively at private expense and sold in substantial quantities, on a competitive basis, to multiple State and local governments.
The SD-2, DoD Acquisitions Buying Commercial Items and Nondevelopmental Items provides further guidance.

Q. What is a nondevelopmental item (NDI)?

A. An NDI is a product that was developed exclusively for governmental purposes. According to Part 2 of the FAR, NDIs include the following:

  • Defense products previously developed by U.S. military services or defense agencies of U.S. allies and used exclusively for governmental purposes by Federal agencies, state or local governments, or a foreign government. For example, the mechanical dereefer (a mechanism for releasing parachute reefing lines) used with the U.S.Army’s cargo parachutes was developed for and first used by the Canadian Army. Another example is the use by the other U.S. military services of trucks developed by the Army.
  • Items that require only minor modifications to meet the requirements of the procuring agency. For example, the Army’s M-119 Howitzer was a modified version of the British Light Gun.
  • Products fully developed and in production, but not yet sold and in use. Use of such items enables DoD to capture the latest product developments and new technology, but they also pose some risk because they do not have a performance history.
The SD-2, DoD Acquisitions Buying Commercial Items and Nondevelopmental Items, provides further guidance.

Q. Is commercial-off-the-shelf (COTS) the same as commercial?

A. The definition for COTS is much narrower than "commercial." According to Part 2 of the FAR for an item to be designated as COTS, it must be an item, other than real property, that is:

  • Customarily used by the general public or by non-governmental entities for purposes other than governmental purposes, AND
  • Sold in substantial quantities in the commercial marketplace; AND
  • Offered to the Government, under a contract or subcontract at any tier, without modification, in the same form in which it is sold in the commercial marketplace; AND
  • Does not include bulk cargo, such as agricultural products and petroleum products.

  Last Updated: 7/24/2013 6:42:22 PM