H. R. 1107—79 
a law properly listed in the Federal Acquisition Regulation 
pursuant to section 1906 of this title. 
(b) PREFERENCE.—The head of each executive agency shall ensure 
that, to the maximum extent practicable— 
(1) requirements of the executive 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) those requirements are defined so that commercial items 
or, to the extent that commercial items suitable to meet the 
executive agency’s needs are not available, nondevelopmental 
items other than commercial items may be procured to fulfill 
those requirements; and 
(3) offerors of commercial items and nondevelopmental items 
other than commercial items are provided an opportunity to 
compete in any procurement to fill those requirements. 
(c) IMPLEMENTATION.—The head of each executive agency shall 
ensure that procurement officials in that executive agency, to the 
maximum extent practicable— 
(1) acquire commercial items or nondevelopmental items 
other than commercial items to meet the needs of the executive 
agency; 
(2) require that prime contractors and subcontractors at all 
levels under contracts of the executive agency incorporate 
commercial items or nondevelopmental items other than 
commercial items as components of items supplied to the execu-
tive agency; 
(3) modify requirements in appropriate cases to ensure that 
the requirements can be met by commercial items or, to the 
extent that commercial items suitable to meet the executive 
agency’s needs are not available, nondevelopmental items other 
than commercial items; 
(4) state specifications in terms that enable and encourage 
bidders and offerors to supply commercial items or, to the 
extent that commercial items suitable to meet the executive 
agency’s needs are not available, nondevelopmental items other 
than commercial items in response to the executive agency 
solicitations; 
(5) revise the executive agency’s procurement policies, prac-
tices, and procedures not required by law to reduce any impedi-
ments in those policies, practices, and procedures to the acquisi-
tion of commercial items; and 
(6) require training of appropriate personnel in the acquisi-
tion of commercial items. 
(d) MARKET RESEARCH.— 
(1) WHEN TO BE USED.—The head of an executive agency 
shall conduct market research appropriate to the cir-
cumstances— 
(A) before developing new specifications for a procure-
ment by that executive agency; and 
(B) before soliciting bids or proposals for a contract in 
excess of the simplified acquisition threshold. 
(2) USE OF RESULTS.—The head of an executive agency shall 
use the results of market research to determine whether 
commercial items or, to the extent that commercial items suit-
able to meet the executive agency’s needs are not available,
H. R. 1107—80 
nondevelopmental items other than commercial items are avail-
able that— 
(A) meet the executive agency’s requirements; 
(B) could be modified to meet the executive agency’s 
requirements; or 
(C) could meet the executive agency’s requirements if 
those requirements were modified to a reasonable extent. 
(3) ONLY
MINIMUM
INFORMATION
REQUIRED
TO
BE
SUB-
MITTED.—In conducting market research, the head of an execu-
tive agency should not require potential sources to submit 
more than the minimum information that is necessary to make 
the determinations required in paragraph (2). 
(e) REGULATIONS.— 
(1) IN GENERAL.—The Federal Acquisition Regulation shall 
provide regulations to implement this section, sections 102, 
103, 105, and 110 of this title, and chapter 140 of title 10. 
(2) CONTRACT CLAUSES.— 
(A) DEFINITION.—In this paragraph, the term ‘‘sub-
contract’’ includes a transfer of commercial items between 
divisions, subsidiaries, or affiliates of a contractor or sub-
contractor. 
(B) LIST OF CLAUSES TO BE INCLUDED.—The regulations 
prescribed under paragraph (1) shall contain a list of con-
tract clauses to be included in contracts for the acquisition 
of commercial end items. To the maximum extent prac-
ticable, the list shall include only those contract clauses 
that are— 
(i) required to implement provisions of law or execu-
tive orders applicable to acquisitions of commercial 
items or commercial components; or 
(ii) determined to be consistent with standard 
commercial practice. 
(C) REQUIREMENTS OF PRIME CONTRACTOR.—The regula-
tions shall provide that the Federal Government shall not 
require a prime contractor to apply to any of its divisions, 
subsidiaries, affiliates, subcontractors, or suppliers that are 
furnishing commercial items any contract clause except 
those that are— 
(i) required to implement provisions of law or execu-
tive orders applicable to subcontractors furnishing 
commercial items or commercial components; or 
(ii) determined to be consistent with standard 
commercial practice. 
(D) CLAUSES THAT MAY BE USED IN A CONTRACT.—To 
the maximum extent practicable, only the contract clauses 
listed pursuant to subparagraph (B) may be used in a 
contract, and only the contract clauses referred to in 
subparagraph (C) may be required to be used in a sub-
contract, for the acquisition of commercial items or commer-
cial components by or for an executive agency. 
(E) WAIVER OF CONTRACT CLAUSES.—The Federal Acquisi-
tion Regulation shall provide standards and procedures 
for waiving the use of contract clauses required pursuant 
to subparagraph (B), other than those required by law, 
including standards for determining the cases in which 
a waiver is appropriate. 
(3) MARKET ACCEPTANCE.—
H. R. 1107—81 
(A) REQUIREMENT OF OFFERORS.—The Federal Acquisi-
tion Regulation shall provide that under appropriate condi-
tions the head of an executive agency may require offerors 
to demonstrate that the items offered— 
(i) have achieved commercial market acceptance or 
been satisfactorily supplied to an executive agency 
under current or recent contracts for the same or 
similar requirements; and 
(ii) otherwise meet the item description, specifica-
tions, or other criteria prescribed in the public notice 
and solicitation relating to the contract. 
(B) REGULATION TO PROVIDE GUIDANCE ON CRITERIA.— 
The Federal Acquisition Regulation shall provide guidance 
to ensure that the criteria for determining commercial 
market acceptance include the consideration of— 
(i) the minimum needs of the executive agency con-
cerned; and 
(ii) the entire relevant commercial market, including 
small businesses. 
(4) PROVISIONS RELATING TO TYPES OF CONTRACTS.— 
(A) TYPES OF CONTRACTS THAT MAY BE USED.—The Fed-
eral Acquisition Regulation shall include, for acquisitions 
of commercial items— 
(i) a requirement that firm, fixed price contracts 
or fixed price with economic price adjustment contracts 
be used to the maximum extent practicable; 
(ii) a prohibition on use of cost type contracts; and 
(iii) subject to subparagraph (B), authority for use 
of a time-and-materials or labor-hour contract for the 
procurement of commercial services that are commonly 
sold to the general public through those contracts and 
are purchased by the procuring agency on a competitive 
basis. 
(B) WHEN
TIME-AND-MATERIALS
OR
LABOR-HOUR
CON-
TRACT MAY BE USED.—A time-and-materials or labor-hour 
contract may be used pursuant to the authority referred 
to in subparagraph (A)(iii)— 
(i) only for a procurement of commercial services 
in a category of commercial services described in 
subparagraph (C); and 
(ii) only if the contracting officer for the procure-
ment— 
(I) executes a determination and findings that 
no other contract type is suitable; 
(II) includes in the contract a ceiling price that 
the contractor exceeds at its own risk; and 
(III) authorizes a subsequent change in the 
ceiling price only on a determination, documented 
in the contract file, that it is in the best interest 
of the procuring agency to change the ceiling price. 
(C) CATEGORIES
OF
COMMERCIAL
SERVICES.—The cat-
egories of commercial services referred to in subparagraph 
(B) are as follows: 
(i) Commercial services procured for support of a 
commercial item, as described in section 103(5) of this 
title.
H. R. 1107—82 
(ii) Any other category of commercial services that 
the Administrator for Federal Procurement Policy des-
ignates in the Federal Acquisition Regulation for the 
purposes of this subparagraph on the basis that— 
(I) the commercial services in the category are 
of a type of commercial services that are commonly 
sold to the general public through use of time- 
and-materials or labor-hour contracts; and 
(II) it would be in the best interests of the Fed-
eral Government to authorize use of time-and- 
materials or labor-hour contracts for purchases of 
the commercial services in the category. 
(5) CONTRACT
QUALITY
REQUIREMENTS.—Regulations pre-
scribed under paragraph (1) shall include provisions that— 
(A) allow, to the maximum extent practicable, a con-
tractor under a commercial items acquisition to use the 
existing quality assurance system of the contractor as a 
substitute for compliance with an otherwise applicable 
requirement for the Federal Government to inspect or test 
the commercial items before the contractor’s tender of those 
items for acceptance by the Federal Government; 
(B) require that, to the maximum extent practicable, 
the executive agency take advantage of warranties 
(including extended warranties) offered by offerors of 
commercial items and use those warranties for the repair 
and replacement of commercial items; and 
(C) set forth guidance regarding the use of past perform-
ance of commercial items and sources as a factor in contract 
award decisions. 
§ 3308. Planning for future competition in contracts for 
major systems 
(a) DEVELOPMENT CONTRACT.— 
(1) DETERMINING WHETHER PROPOSALS ARE NECESSARY.—In 
preparing a solicitation for the award of a development contract 
for a major system, the head of an agency shall consider 
requiring in the solicitation that an offeror include in its offer 
proposals described in paragraph (2). In determining whether 
to require the proposals, the head of the agency shall consider 
the purposes for which the system is being procured and the 
technology necessary to meet the system’s required capabilities. 
If the proposals are required, the head of the agency shall 
consider them in evaluating the offeror’s price. 
(2) CONTENTS OF PROPOSALS.—The proposals that the head 
of an agency is to consider requiring in a solicitation for the 
award of a development contract are the following: 
(A) Proposals to incorporate in the design of the major 
system items that are currently available within the supply 
system of the Federal agency responsible for the major 
system, available elsewhere in the national supply system, 
or commercially available from more than one source. 
(B) With respect to items that are likely to be required 
in substantial quantities during the system’s service life, 
proposals to incorporate in the design of the major system 
items that the Federal Government will be able to acquire 
competitively in the future. 
(b) PRODUCTION CONTRACT.—