Report of the Advisory Panel on Streamlining and Codifying Acquisition Regulations

Volume 1 of 3 | January 2018

Commercial Buying Volume 1

Recommendation 2: Minimize government-unique terms applicable to 

commercial buying.

Problem

FASA was intended to give the government the ability to be more commercial-like in its dealings with 

the commercial marketplace. By substantially streamlining standard federal government procurement 

practices, and adopting a much lighter touch in its buying practices, DoD would have the tools to gain 

greater access to a broad range of commercial products and commercial services, and in particular, 

rapidly evolving state-of-the-art technologies.

Looking back over the 24 years since FASA, success in implementing this light touch has been limited. 

The number of government-unique clauses that may be applicable to commercial-item and COTS 

contracts has expanded rapidly—from 57 in 1995 to 165 today—threatening the simplicity and 

commercial-like terms and practices that were supposed to be a cornerstone of the federal 

government’s commercial buying process. 

One safeguard included in FASA intended to help avoid this outcome—a statutory prohibition on 

applying new clauses to commercial buying except under specific, limited circumstances—provided 

the government with a control in applying those statutes. This statutory mechanism, however, has not 

effectively limited the applicability of government-unique clauses to commercial procurements. 

Although these government-unique clauses and requirements serve a worthwhile purpose, and can 

often be justified in a vacuum, the aggregate effect creates unnecessary cost, complexity, and risk on 

commercial contractors that discourages their participation in the DoD supply chain and undermines 

the central tenet of commercial buying. 

Background

The federal government has two distinct, and often conflicting, roles when procuring commercial 

items. In one role, the federal government acts as a buyer, imposing terms that more closely reflect 

typical terms and conditions found in the commercial marketplace dealing with such matters as 

inspection, acceptance, risk of loss, title transfer, terminations, invoicing, and so forth. In the other role, 

the federal government acts as the sovereign, responsible for promoting public policies and imposing 

unique requirements to further those public policies. These policies, while serving an important 

purpose and promoting the public good, carry with them costs that affect both sides of the buyer–seller 

relationship by going well beyond the nature of the product or service being procured and focusing on 

the contractor’s business practices and systems. By imposing such terms, the government often limits 

the number of entities willing to participate, and may also pay higher prices for its goods and services 

because it is limited to only those companies willing and capable of complying with the unique terms. 

Complex rules and terms also often make the procurement process exceedingly complex for 

government procurement staffs.

Sellers bear considerable costs of accepting the government’s unique terms. For example, sellers often 

must modify their existing business processes or create new processes that satisfy the unique terms and 

conditions. Sellers may also need to modify their manufacturing processes, which can be especially 

costly if doing so disrupts manufacturing of its products to be sold in the commercial marketplace. 
Report of the Advisory Panel on Streamlining and Codifying Acquisition Regulations

Volume 1 of 3 | January 2018

Commercial Buying Volume 1

Sellers also accept the risks, resulting costs, and other negative effects of noncompliance. For a 

commercial entity doing business in both the commercial and DoD market, the additional costs of 

compliance are typically indirect costs borne by both their commercial and government business. For 

contractors selling only commercial products or services, the costs associated with compliance unique 

to government customers are borne by all commercial customers, often driving establishment of 

separate legal entities and cost structure solely to serve the government customers and segregate 

related compliance costs. Contractor expenditure spent on unique business systems and compliance 

costs show up in higher prices and are not available for meeting DoD mission needs.

From the 1960s through the 1980s, Congress encouraged DoD to pursue greater engagement with the 

commercial marketplace to reduce the costs and risks associated with developing and supporting 

government-unique items. It was not until the passage of FASA in 1994 that Congress meaningfully 

addressed the obstacles to expanding use of commercial items.

The drafters of FASA recognized the excessive number of procurement-related statutes, executive 

orders, and agency-driven clauses prescribed for incorporation in virtually every contract were among 

the major obstacles to accessing the commercial marketplace. It was not unusual for a relatively simple 

contract for a commercial item to include 50 or more prescribed clauses based solely on dollar value or 

some other criteria completely unrelated to the product or service being procured. It was the collective, 

rather than individual, effect of all the unique clauses and the associated compliance requirements that 

pushed companies with commercial products and services away from doing business with DoD, or 

into government-unique business entities, thereby limiting access to the commercial marketplace.

FASA took a novel approach to addressing this problem: Title VIII, section 8002 of FASA stated that the 

FAR shall contain:

a list of contract clauses to be included in contracts for the acquisition of commercial end items. Such list 

shall, to the maximum extent practicable, include only those contract clauses – (A) that are required to 

implement provisions of law or executive orders applicable to acquisitions of commercial items...; or 

(B) that are determined to be consistent with standard commercial practice.

With regard to clauses “required to implement provisions of law or executive order,” also took a novel 

approach. For laws in effect at the time FASA was enacted (October 13, 1994), Section 8003 (codified at 

41 U.S.C. § 1906(b)(1)) directed creation in the FAR of a “list of provisions of law that are inapplicable 

to contracts for the procurement of commercial items.” Established at FAR 12.5, Applicability of 

Certain Laws to the Acquisition of Commercial Items and Commercially Available Off-The-Shelf Items,

this list included a number of laws in effect on October 13, 1994 that Congress deemed inapplicable to 

contracts for commercial items (see Section 8103). Congress also directed the creation of a list of clauses 

that may be applicable to contracts for commercial items, which is located at FAR 52.212-5, Contract 

Terms and Conditions Required to Implement Statutes and Executive Orders – Commercial Items. The 

combination of these two lists created a streamlined approach to government-unique clauses for 

acquiring commercial items. 

With a framework for existing laws in place, Congress then established a streamlined set of clauses 

based on provisions of law and executive orders in place at the time FASA was enacted, Congress then 

established a process in 41 U.S.C. § 1906, List of Laws Inapplicable to Procurements of Commercial 
Report of the Advisory Panel on Streamlining and Codifying Acquisition Regulations

Volume 1 of 3 | January 2018

Commercial Buying Volume 1

Items, to protect this framework in the future. 41 U.S.C. § 1906 addresses provisions of law enacted in 

the future by stating that no provision of law enacted after October 13, 1994 will be applicable to 

procurement of commercial items unless one of the following applies:

§ The law provides for criminal or civil penalties.

§ The law specifically refers to 41 U.S.C. § 1906 and provides that, notwithstanding § 1906, it shall 

be applicable to contracts for the procurement of commercial items.

§ The FAR Council determines in writing that it would not be in the best interests of the 

government to exempt contracts for the procurement of commercial items from the provision.

The FY 1996 NDAA (also referred to as the Federal Acquisition Reform Act [FARA]), added 41 U.S.C.

§ 1907, List of Laws Inapplicable to Procurements of Commercially Available Off-The-Shelf (COTS) 

items. This section is a mirror image of Section 1906 applicable specifically to COTS items. 

In addition to protecting the framework by limiting applicability of laws in place at the time of FASA’s 

enactment, and laws enacted subsequent to FASA, it was also necessary to protect this framework from 

agency supplementation that might run counter to congressional intent to make selling commercial 

items to the federal government as simple as possible. FASA implementation on October 1, 1995, 

included at FAR 12.301 (f) a restriction on agency supplementation of Part 12, Acquisition of 

Commercial Items: 

Agencies may supplement the provisions and clauses prescribed in this part (to require use of additional 

provisions and clauses) only as necessary to reflect agency unique statutes applicable to the acquisition of 

commercial item or as may be approved by the agency senior procurement executive, or the individual 

responsible for representing the agency on the FAR Council, without power of delegation.

With the enactment of FASA and FARA, Congress created, for the first time, a mechanism to limit 

government-unique terms and conditions applicable to the government’s procurement of commercial 

items.

Findings

Despite these efforts, the framework and mechanisms created in 1994 failed to limit the burden on 

contractors from increasing over time. The FAR has been amended more than 100 times to address 

various aspects of commercial buying, adding to some of the confusion regarding commercial buying 

policies. The applicability of various statutes has been a frequent subject of amendment. For example, 

in 1995, the FAR and DFARS contained a combined total of 57 provisions and clauses applicable to the 
Report of the Advisory Panel on Streamlining and Codifying Acquisition Regulations

Volume 1 of 3 | January 2018

Commercial Buying Volume 1

procurement of commercial items.1 Today there are 165, including 122 originating in statute, 

20 originating in executive orders, and 23 originating in agency-level regulations or policies.2 

Of the 122 statutes that may be applicable to procurements of commercial products and services, eight

are prescribed in FAR 52.212-4, Contract Terms and Conditions – Commercial Item (January 2017), 

paragraph (r), Compliance with Laws Unique to Government Contracts. In FASA, Congress exempted 

certain laws from the requirement for a contract clause when procuring commercial items, but did not 

exempt commercial items from the requirement to comply with the statute, for example, 49 U.S.C. 

40118, Fly American Requirements. It is unclear how exempting commercial contracts from a clause, 

but not the underlying statute, might relieve the burden of compliance on contractors selling 

commercial items.

In 1995, FAR 52.212-5(e) required prime contractors selling commercial items to flow down 

four commercial buying clauses to subcontractors at various tiers; today that number is 22.

3 In 1995, 

FAR 52.244-6(c) required contractors selling noncommercial items to flow down four commercial 

buying clauses to commercial subcontractors at all tiers; today that number is 20.

4 Table 1-1

summarizes the increase in commercial clauses between the implementation of FASA in 1995 and the 

present day.

Table 1-1. Government-Unique Clauses Applicable to the Acquisition of Commercial Items

1995 2017

Regulatory Site

FAR 52.212-5 28 FAR 52.212-5 73

FAR 52.212-4(r) 6 FAR 52.212-4(r) 7

DFARS 252.212-7001 23 DFARS 212.301 85

Total 57 Total 165

Clause Origin

Statute 57 Statute 122

Executive Order 0 Executive Order 20

Agency-level Policy 0 Agency-level Policy 23

Flow Downs

FAR 52.212-5(e) 4 FAR 52.212-5(e) 22

FAR 52.244-6(c) 4 FAR 52.244-6(c) 20

 

1 The total includes commercial item clauses required to comply with laws unique to government contracts in FAR 52.212-4(r) and 

commercial items clauses required to implement statutes or executive orders in FAR 52.212-5 and DFARS 252.212-7001, but does not 

include any alternate clauses. 2 The total includes commercial item clauses required to comply with laws unique to government contracts in FAR 52.212-4(r) and 

commercial items clauses required to implement statutes or executive orders in FAR 52.212-5, and DFARS 252.212-7001, but does not 

include any alternate clauses or the clause at 52.212-5(b)(35) which is enjoined indefinitely. 3 The total does not include any alternate clauses or the clause at 52.212-5(e)(1)(xvii), which is enjoined indefinitely. 4 The Section 809 Panel’s analysis of commercial flow down clauses is limited to the FAR which specifically lists each flow down clause at 

FAR 52.212-5(e) and FAR 52.244-6(c).
Report of the Advisory Panel on Streamlining and Codifying Acquisition Regulations

Volume 1 of 3 | January 2018

Commercial Buying Volume 1

Federal Acquisition Regulation

To assess the effectiveness of this mechanism, the Section 809 Panel reviewed clauses prescribed in the 

most recent version of FAR 52.212-5, Contract Terms and Conditions Required to Implement Statutes 

and Executive Orders—Commercial Items (January 2017). The panel found substantial growth in the 

number of FAR clauses (and statutes in 52.212-4(r)) applicable to commercial items and commercial 

services since FASA:

§ October 1995: 34 clauses (6 of which have since been removed or replaced)

§ January 2017: 80 clauses

All 80 clauses are not applicable to any particular contract. When acquiring commercial products or 

commercial services, contracting officers choose applicable clauses from among those 80 clauses. 

Using the FASA framework, the Section 809 Panel analyzed the origins of the applicability of 80 FAR 

clauses (see Appendix F, Tables F-5, F-6, F-7, and F-8):

§ 0 clauses are based on a statute that provides for civil or criminal penalty

§ 0 clauses are based on a statute that addresses the applicability to commercial items and COTS 

by specifically referring to 41 U.S.C. § 1906 and/or § 1907 and providing that it be applicable.

§ 14 clauses implement a statute, policy, regulation, or executive order that make no mention of 

commercial items or COTS, but has a written FAR Council determination that it was not in the 

best interests of the government to exempt contracts for commercial items or COTS.

§ 66 clauses implement a statute, policy, regulation, or executive order, but meet none of the 

41 U.S.C. § 1906 criteria.

Defense Federal Acquisition Regulation Supplement

FAR 12.301(f) authorizes agencies, such as DoD, to supplement Part 12, but only as necessary to reflect 

agency-unique statutes, or as may be approved by the Senior Procurement Executive or agency 

member of the FAR Council. DFARS 212.301, Solicitation Provisions and Contract Clauses for the 

Acquisition of Commercial Items, prescribes which clauses and provisions may be included in DoD 

contracts for commercial items and COTS items. 41 U.S.C. §§ 1906 and 1907 do not specifically refer to 

statutes applicable only to a single agency (such as DoD), but do speak more generally to including in 

the Federal Acquisition Regulation a list of provisions of law that are applicable and inapplicable to 

contracts for the procurement of commercial items and provisions of law that are excluded from that 

list. Because the DFARS is part of the Federal Acquisition Regulations Systems described in FAR Part 1, 

an argument can be made that the limitation provisions of 41 U.S.C. §§ 1906 and 1907 would also apply

to the DoD-unique statutes listed in the DFARS. 
Report of the Advisory Panel on Streamlining and Codifying Acquisition Regulations

Volume 1 of 3 | January 2018

Commercial Buying Volume 1

In the 2017 NDAA, Congress enacted 10 U.S.C § 2375, Relationship of Commercial Item Provisions to 

Other Provisions of Law. This statute established a framework and a similar mechanism to 41 U.S.C.

§§ 1906 and 1907 for statutes and contract clauses specifically applicable to DoD.

This report previously discussed the authority of OFPP in 41 U.S.C. §§ 1906/1907 to make 

determinations that certain governmentwide statutes should not be exempted from applicability to

procurements of commercial items. DoD was given a similar authority in 10 U.S.C. § 2375 to determine 

whether certain defense-unique statutes and clauses should apply to the department’s commercial item 

and COTS contracts:

The Defense Federal Acquisition Regulation Supplement shall include a list of defense-unique provisions 

of law and of contract clause requirements based on government-wide acquisition regulations, policies, or 

executive orders not expressly authorized in law that are inapplicable to contracts for the procurement of 

commercial items.5

10 U.S.C. § 2375 (e) states that a defense-unique statute, regulation, policy, or executive order is 

inapplicable to procurements of commercial products or services unless it:

§ Provides for criminal or civil penalties; 

§ Requires that certain articles be bought from American sources pursuant to section 2533a of title 

10, or requires that strategic materials critical to national security be bought from American 

sources pursuant to section 2533b of title 10; or 

§ Specifically refers to 10 U.S.C. § 2375 and provides that, notwithstanding this section, it shall be 

applicable to contracts for the procurement of commercial items.

In addition to these three criteria, 10 U.S.C § 2375 codifies a defense-unique determination authority for 

the Under Secretary of Defense for Acquisition, Technology, and Logistics [USD(AT&L)] to “make a 

written determination that it would not be in the best interest of the Department of Defense” to exempt 

contracts or subcontracts for the procurement of commercial items or COTS items from a provision or 

contract clause that did not meet the criteria above. This authority permits the USD(AT&L), through 

the exercise of individual judgment, to apply statutes and clauses to DoD contracts for commercial 

items or COTS items that would not otherwise apply.

10 U.S.C. § 2375 parallels 41 U.S.C. §§ 1906/1907 in another important way. It creates a clear line by 

establishing that a provision of law or contract clause enacted after January 1, 2015, be included on the 

list of provisions of law or clauses inapplicable to the procurement of commercial items or COTS unless 

it meets one of the criteria noted above. This provision parallels similar provisions of 41 U.S.C. §§ 1906 

and 1907, which established October 13, 1994 (the date of the enactment of FASA), as the date after 

which certain governmentwide statutes would be inapplicable to procurement of commercial items 

unless the statute met one of the criteria in 41 U.S.C. § 1906 or § 1907. Statutes enacted prior to these 

 

5 Applicability of Defense-Unique Statutes to Contracts for Commercial Items, 10 U.S.C. § 2375(b).
Report of the Advisory Panel on Streamlining and Codifying Acquisition Regulations

Volume 1 of 3 | January 2018

Commercial Buying Volume 1

dates would remain applicable to procurements of commercial items unless some other action is taken 

to make then inapplicable.

In assessing how well this DoD-unique process has worked, the Section 809 Panel reviewed the 

85 provisions and clauses based on a statute, executive order, or DoD regulation that are currently 

listed in DFARS 212.301 as applicable to procurements of commercial items. The following identifies 

the rationale used by DoD to determine that the clauses and provisions should be applicable to DoD’s 

procurement of commercial items:

§ 0 clauses impose a civil or criminal penalty.

§ 6 clauses implementing statutes that satisfy one of the three criteria in 41 U.S.C. §§.1906/1907 

and 10 U.S.C. § 2375 for applicability to DoD’s procurements of commercial items.

§ 8 clauses implementing statutes, regulations, polices, and executive orders with a DoD 

determination (using the 41 U.S.C. §§ 1906/1907 criteria) that, notwithstanding that the clause or 

provision does not meet any of the three criteria, the clause or provision should apply to DoD’s 

procurements of commercial items.

§ 71 clauses implementing statutes, regulations, policies, and executive orders that do not satisfy 

any of the three criteria, and DoD made no written determination explaining its rationale.

In assessing the DFARS clauses, the Section 809 Panel adopted the same approach for defense-unique 

determination authority of 10 U.S.C § 2375 as it did for the governmentwide determination authority of 

41 U.S.C. §§ 1906 and 1907. 

Congress clearly asserted in 41 U.S.C. §§ 1906 and 1907, and again in 10 U.S.C. § 2375, that it has a deep 

interest in simplifying the procurement of commercial products and services to attract the best and the 

brightest in the commercial marketplace to solve the government’s most difficult problems. Congress 

has shown its willingness to minimize those statutes that would apply to procurements of commercial 

items by establishing a process that presumes a statute would not apply to commercial items unless it 

met one of a small number of specific criteria. Most importantly, Congress retained the primary 

responsibility to formally designate which statutes it wants applied. Congress gave OFPP and DoD 

limited authority to make determinations if other clauses, not specifically designated by Congress, 

should also apply. It appears Congress intended that limited authority to be used sparingly.

As indicated by the above data, DoD has frequently used its authority, with or without a formal written 

determination, to impose conditions on commercial and COTS contracts other than those mandated by 

Congress. The overuse of this flexibility has undermined the expansion of DoD access to the 

commercial marketplace and contradicts congressional intent to support implementation of commercial 

policies within DoD. In much the same way as OFPP, DoD’s overuse of its defense-unique authority 

has not promoted commercial buying.

Conclusions

Stakeholders with whom the Section 809 Panel has interacted have been clear: Contracting with the 

federal government to sell commercial products and services needs to be much simpler and more 
Report of the Advisory Panel on Streamlining and Codifying Acquisition Regulations

Volume 1 of 3 | January 2018

Commercial Buying Volume 1

closely reflect standard commercial practices, especially regarding use of unique terms and conditions 

imposed on commercial suppliers to the federal government. The government market is different from 

the commercial market. If the federal government and DoD need to have unfettered access to 

technologies available in the commercial marketplace, they must take bold and dramatic steps to 

simplify processes, policies, and approaches to interacting in the commercial marketplace, even if 

doing so means shedding worthwhile, but unnecessarily costly and administratively complex,

government-unique requirements. 

Streamlining contracts for commercial items will require discipline on the part of Congress and DoD. 

Both parties speak often about the need for DoD to be more commercial-like in its procurement 

practices to attract cutting-edge companies in the rapidly evolving commercial marketplace. Without a 

well-defined structure and the discipline to stick to that structure, DoD will find itself a few years in the 

future struggling with the same issues of unique terms and conditions that confront it today. 

Statutes Applicable to Procurements of Commercial Items

The framework Congress established in FASA in 1994 for limiting the unique terms and conditions 

typical of the government marketplace is a sound one, but should be further narrowed to ensure it 

produces the results needed. 

No statute should be applicable to procurements of commercial items unless that statute specifically 

refers to 41 U.S.C. § 1906 or 10 U.S.C. § 2375 and provides that, notwithstanding § 1906 or § 2375, it 

should be applicable to contracts for procurement of commercial items (governmentwide statutes).

Other statutes, including those that provide for criminal or civil penalties, or that require certain 

articles be bought from American sources pursuant to 10 U.S.C. § 2533a, or require that strategic 

materials critical to national security be bought from American sources pursuant to 10 U.S.C. § 2533b 

must also include the reference to 41 U.S.C. § 1906 or 10 U.S.C. § 2375. 

The current mechanism is clearly not achieving its full potential. Only six of 158 clauses that are 

currently applicable to procurements of commercial products and services have the prescribed 

language from 41 U.S.C. § 1906 or 10 U.S.C. § 2375. If Congress believes a specific matter of public 

policy is so important that it should be included in an otherwise commercial transaction between DoD 

and a commercial supplier, then it should be specifically stated in the statute as prescribed in 41 U.S.C.

§ 1906 or 10 U.S.C. § 2375. The FAR Council should not be left to interpret Congress’ silence on these 

matters. If Congress does not state that a statute applies to procurements for commercial products, then 

it should not apply.

FAR Council Authority

The need for a well-defined structure and the discipline to adhere to it raises another issue regarding 

the process for FAR Council determinations. The Section 800 Panel indicated there were legitimate 

reasons why DoD could not purchase commercial items in precisely the same way as commercial firms. 

Thus, it recommended that DoD have flexibility in determining whether it was in its best interest to 
Report of the Advisory Panel on Streamlining and Codifying Acquisition Regulations

Volume 1 of 3 | January 2018

Commercial Buying Volume 1

buy commercial items.6 FASA allows for those flexibilities in 41 U.S.C. §§ 1906 and 1907, which limit 

the applicability of government-unique provisions of law to contracts for commercial products and 

commercial services under certain prescribed circumstances.

As noted above, Congress has on only six occasions specified that a statute should apply to commercial 

products and services as prescribed in 41 U.S.C. §§ 1906 and 1907. Alternatively, it could be argued that 

Congress did consider that none of the other statutes should be applied to contracts for commercial 

products and services. For whatever reason, Congress did not designate these statutes as applicable to 

procurements of commercial items, yet the FAR Council acted to make them applicable. Regardless, 

there has been too much reliance on using the authority of the FAR Council in 41 U.S.C. §§ 1906 and

1907 regarding the applicability of statutes to acquisitions of commercial items and services, which has 

contributed to a greater burden on contractors and subcontractors offering commercial items.

Defense-Unique Authority 

Congress made it clear in Title VIII of FASA that the federal government has a preference for procuring 

commercial items. Congress underscored that to implement this preference, the federal government 

should use commercial-like procurement practices to the maximum extent and only impose 

government-unique term and conditions under very limited circumstances. In a unique way, Congress 

retained the responsibility in 41 U.S.C. §§ 1906/1907 and then 10 U.S.C. § 2375 for limiting governmentunique terms based on governmentwide and DoD-unique statute by establishing very specific criteria 

for those limited circumstances. 

Congress went a step further with DoD by requiring in 10 U.S.C § 2375 that DoD establish a list in the 

DFARS of provisions of law and contract clauses based on “government-wide acquisition regulations, 

policies, or executive orders not expressly authorized in law that are inapplicable to contracts for the 

procurement of commercial items.”

Congress demonstrated its deep interest in simplified, commercial-like procurement practices for 

commercial products and services with its authority to specifically designate those statutes that apply 

to commercial procurements, and by directing that DoD establish a list of “government-wide 

acquisition regulations, policies, or executive orders not expressly authorized in law that are 

inapplicable to contracts for the procurement of commercial items.” Given this clear message, OFPP 

and DoD should follow Congress’ lead and impose in procurements of commercial products and 

services only those statutes, executive orders, regulations, and associated clauses that specifically 

mention 41 U.S.C. §§ 1906/1907 and 10 U.S.C § 2375. 

Clause Applicability

Based on this framework, and on the Section 809 Panel’s own assessment of commercial buying 

practices, all existing commercial clauses (including those that were included in the initial 

implementations of FASA [FAC 90-32 and DAC 91-9]) should be removed from FAR 52.212-4(r), 

52.212-5, and DFARS 212.301. All but six statutes do not adhere to the framework established by 

Congress in 41 U.S.C. §§ 1906/1907 and 10 U.S.C § 2375, which seek to prevent the unnecessary 

 

6 Acquisition Law Advisory Panel to the United States Congress, Streamlining Defense Acquisition Laws, AD-A262699, January 1993, 

accessed June 6, 2017, http://www.dtic.mil/docs/citations/ADA262699.
Report of the Advisory Panel on Streamlining and Codifying Acquisition Regulations

Volume 1 of 3 | January 2018

Commercial Buying Volume 1

accumulation of government-unique aspects within DoD commercial buying practices. The small 

number of clauses that satisfy the 41 U.S.C. § 1906 and 10 U.S.C. § 2375 criteria are, nonetheless,

inconsistent with Congress’s intention to minimize the hand of the government in commercial markets

and restrain DoD’s ability to access the full extent of the commercial marketplace.

These recommendations should give DoD the flexibility and streamlined procurement authority it 

needs to simplify its procurement processes and attract more participants from the commercial market. 

For those contractors that sell both commercial and noncommercial products and services to the federal 

government, these recommendations will offer a measure of relief and encouragement that the 

government has taken steps to simplify its procurement process. The government-unique requirements 

imposed through their noncommercial contracts will continue, many of which affect all contracts in a 

given business segment.

These recommended changes will make a substantial difference for those firms that currently sell only 

commercial products and services to the federal government, or those that do not yet sell to the 

government. These businesses, many that have consciously avoided the administrative and compliance 

complexities of government business, will be encouraged by this major step forward. Making these

changes presents an opportunity for Congress and DoD to demonstrate that after 24 years of 

experience with commercial-like practices, the government is now ready to take the next step and 

participate as a peer in the commercial marketplace.

Implementation

Legislative Branch

§ Revise 41 U.S.C. § 1906 (d) to remove “provides for civil and criminal penalties” as a rationale 

for imposing a statute on procurements of commercial products and services. Such statutes 

should also be required to contain the language of 41 U.S.C. § 1906 or § 1907.

§ Revise 41 U.S.C. § 1906 to remove the authority of the FAR Council to make a written 

determination that it is not in the best interest of the government to exempt commercial 

products or commercial services from the provision of law. 

§ Revise 10 U.S.C. § 2375 (e) to remove “provides for civil and criminal penalties” and “requires 

that certain articles be bought from American sources pursuant to section 2533a of this title, or 

requires that strategic materials critical to national security be bought from American sources 

pursuant to section 2533b of this title” as rationale for imposing a statute on procurements of 

commercial products or services. Such statutes should also be required to contain the language 

of 10 U.S.C. § 2375.

§ Revise 10 U.S.C. § 2375 to remove the authority of the Under Secretary of Defense for 

Acquisition, Technology, and Logistics to make a written determination that it is not in the best 

interest of DoD to exempt contracts for commercial products and services from the applicability 

of a defense-unique statutes, regulations, polices or executive orders. 
Report of the Advisory Panel on Streamlining and Codifying Acquisition Regulations

Volume 1 of 3 | January 2018

Commercial Buying Volume 1

§ Revisit any provision of law that currently specifically references 41 U.S.C. § 1906, § 1907 or 

10 U.S.C. § 2375 to determine if those statutes are of such importance that they should be 

inserted into commercial transactions between DoD and commercial suppliers (see Appendix F, 

Table F-5). 

Executive Branch

The FAR Council should do the following:

§ Strike all clauses from 52.212-5, Contract Terms and Conditions Required to Implement Statutes 

or Executive Orders – Commercial items, based on statute that specifically refer to 41 U.S.C.

§ 1906, but are inconsistent with commercial practices (see Appendix F, Table F-5). 

§ Strike all clauses from FAR 52.212-4 (r), Contract Terms and Conditions – Commercial Items; 

and strike all clauses from FAR 52.212-5, Contract Terms and Conditions Required to 

Implement Statutes or Executive Orders – Commercial Items, based on statute that do not 

specifically refer to 41 U.S.C. § 1906 and provides that, notwithstanding § 1906, it should apply 

to contracts for the procurement of commercial items (see Appendix F, Table F-6). 

§ Strike all clauses from FAR 52.212-5, Contract Terms and Conditions Required to Implement 

Statutes or Executive Orders – Commercial Items, which are derived from executive orders and 

agency policy or regulations (see Appendix F, Table F-7). 

§ Transfer certain clauses in FAR 52.212-5 to FAR 52.212-4 Part 12 (see Appendix F, Table F-8). 

§ Going forward, only include in FAR 52.212-5, Contract Terms and Conditions Required to 

Implement Statutes or Executive Orders – Commercial Items, those clauses that are based on 

statutes, executive orders, policies or regulations that specifically refer to 41 U.S.C. § 1906 and 

state that, notwithstanding section 1906, they are applicable to procurements for commercial 

products or services.

The Defense Acquisition Regulations (DAR) Council should do the following:

§ Strike all clauses in DFARS 212.301, Solicitation Provisions and Contract Clauses for the 

Acquisition of Commercial Items, based on statute that specifically refer to 41 U.S.C. § 1906 or 

10 U.S.C. § 2375, but are inconsistent with commercial practices. 

§ Strike all clauses from DFARS 212.301, Solicitation Provisions and Contract Clauses for the 

Acquisition of Commercial Items, based on statute that do not specifically refer to 10 U.S.C.

§ 2375 and provides that, notwithstanding § 2375, it should apply to contracts and subcontracts 

for the procurement of commercial items (see Appendix F, Table F-4). 

§ Strike all clauses from DFARS 212.301, Solicitation Provisions and Contract Clauses for the 

Acquisition of Commercial Items, which are derived from executive orders, agency policy, or 

regulations (see Appendix F, Table F-5). 

§ Going forward, only include in DFARS 212.301, Solicitation Provisions and Contract Clauses for 

the Acquisition of Commercial Items, those clauses that are based on statutes, executive orders, 
Report of the Advisory Panel on Streamlining and Codifying Acquisition Regulations

Volume 1 of 3 | January 2018

Commercial Buying Volume 1

policies or regulations that specifically refer to 10 U.S.C. § 2375 and state that, notwithstanding 

§ 1906, they are applicable to procurements for commercial products or services.

Implications for Other Agencies

§ All federal agencies subject to the FAR procure commercial items or commercial services to one 

degree or another. Similarly, all agencies desire to make procurements for commercial goods 

and services easier for both the agency and the offerors and contractors. The recommendations 

above will serve to improve the acquisition of commercial goods and services across the federal 

government.