Defense Contracts: Recent Legislation and DOD Actions Related to Commercial Item Acquisitions
Published: 2017-07-17T00:00:00

Fast Facts:
By buying directly from the commercial marketplace, DOD can take advantage of the latest innovations and reduce its purchasing costs.
We found that, as a portion of DOD's total contract spending, contracts awarded using federal procedures to purchase commercial items (for both products and services) have declined slightly between fiscal years 2007 and 2016, roughly in line with the decline in DOD's total spending. We also found that 54% of these contracts were for products and 46% were for services in FY 2016.
Recent legislation has, among other things, prompted DOD to improve its guidance on standards for purchasing commercial items.

Highlights:
section_title: Why GAO Did This Study
paragraphs: DOD purchases commercial items—generally defined as products and services readily available in the commercial marketplace—to meet many of its requirements. Relying on the commercial marketplace, when appropriate, enables DOD to take advantage of market innovations and reduce acquisition costs. Since 2013, Congress has enacted changes in the way DOD is to purchase commercial items.
GAO was asked to review the acquisition of commercial items by DOD. This report describes (1) what federal procurement data indicate about trends in DOD's acquisition of commercial items; and (2) recent legislative changes in the National Defense Authorization Acts (NDAAs) from fiscal years 2013 to 2017 related to the procurement of commercial items and DOD's actions in response to this legislation.
To obtain a longer term view, GAO analyzed data from FPDS-NG—the government's procurement database— for contracts awarded from fiscal years 2007 through 2016, reviewed applicable legislation and regulations, and interviewed DOD officials.
section_title: What GAO Found
paragraphs: Data from the Federal Procurement Data System-Next Generation (FPDS-NG) show that as a proportion of the Department of Defense's (DOD) total contracting obligations, contracts awarded using commercial item procedures have gradually declined in a narrow range from fiscal years 2007 to 2016 (see figure). These numbers, however, do not reflect the full extent to which DOD acquires commercial items because FPDS-NG only captures information on whether or not commercial item acquisition procedures were used to acquire the product or service, and not whether items purchased are commercial or not commercial.
DOD's Use of Commercial Item Procedures, Fiscal Years 2007-2016
In addition, GAO found that for fiscal year 2016:
54 percent of DOD's spending using commercial item procedures was on products, with the highest category being sustainment supplies and equipment;
46 percent of the remaining spending was for services, with knowledge-based services such as engineering and technical support accounting for the highest obligations; and
68 percent of DOD's commercial spending was competitive, slightly higher than DOD's past competition rate for overall contract spending.
Recent legislation from Congress includes a number of provisions related to commercial item acquisitions, including provisions intended to ensure contracting officers are negotiating fair and reasonable prices for commercial items. DOD has taken a number of actions to address this legislation, including updating its Guidebook for Acquiring Commercial Items and proposing Defense Federal Acquisition Regulation Supplement rules. When implemented, these rules will promote consistency in making commercial item determinations, among other things. Additionally, DOD has created six Commercial Item Centers of Excellence—a cadre of experts within DOD to provide advice to the acquisition workforce with regard to commercial item authorities.
section_title: What GAO Recommends
paragraphs: GAO is not making recommendations in this report. The Department of Defense had no comments on a draft of this report.

section_title: Letter
paragraphs: The Department of Defense (DOD) purchases commercial items to meet  many of its requirements. Relying on the commercial marketplace, when  appropriate, enables DOD to take advantage of market innovations, avoid  the costs of product development, increase the supplier base, and reduce  acquisition costs, among other benefits. Many government-unique  purchasing requirements do not apply when DOD buys commercial items,  which generally include both products and services available in the  commercial market.
Since 2013, Congress has provided legislation on various aspects of how  DOD defines and purchases commercial items, and how DOD makes  commercial item and price reasonableness determinations, through the  National Defense Authorization Acts (NDAAs). You asked us to review  the acquisition of commercial items by DOD. This first report describes (1)  what federal procurement data indicate about trends in DOD’s acquisition  of commercial items; and (2) recent legislative changes in the NDAAs  from fiscal years 2013 to 2017 related to the procurement of commercial  items and actions taken by DOD in response to this legislation. We plan  to complete additional work in this area in response to your request.
To determine what federal procurement data indicate about trends in  DOD’s acquisition of commercial items, we analyzed contract obligation  data from the Federal Procurement Data System-Next Generation  (FPDS-NG)—the government’s procurement database—during the 10- year period from October 1, 2006 to September 30, 2016. To access the  reliability of the FPDS-NG data, we reviewed related documentation and  electronically tested for missing data, outliers, and inconsistent coding.  Based on these steps we determined the data were sufficiently reliable to  present commercial contract obligations for the 10-year period. We  analyzed DOD obligations in FPDS-NG that were coded as having used  Federal Acquisition Regulation (FAR) Part 12—Commercial Item  Procedures.
To determine recent legislative changes related to DOD’s acquisition of  commercial items, we reviewed and summarized applicable sections of  fiscal years 2013 to 2017 NDAAs. To determine actions taken by DOD in  response to this legislation, we examined policy documents from the  office of the Under Secretary of Defense for Acquisition, Technology, and  Logistics (USD(AT&L)) and interviewed DOD officials from USD(AT&L)  and the Defense Contract Management Agency (DCMA). We also  examined relevant sections of the FAR and corresponding Defense  Federal Acquisition Regulation Supplement (DFARS) sections.  Additionally, to gain an understanding of what was being procured under  commercial item contracts, we reviewed selected Air Force contract files.  As part of our follow-on work we plan to look more in-depth across DOD  at how the department makes commercial item determinations by  reviewing selected contracts.
We conducted this performance audit from December 2016 to July 2017  in accordance with generally accepted government auditing standards.  Those standards require that we plan and perform the audit to obtain  sufficient, appropriate evidence to provide a reasonable basis for our  findings and conclusions based on our audit objectives. We believe that  the evidence obtained provides a reasonable basis for our findings and  conclusions based on our audit objectives.
subsections: section_title: Background
paragraphs: The Federal Acquisition Streamlining Act of 1994 established a  preference within the federal government to procure commercial items  rather than items developed exclusively for the government. FAR Part  12—Acquisition of Commercial Items—prescribes the policies that apply  to commercial item acquisitions. For example, contracting officers can  use streamlined solicitation procedures, which can reduce the time  needed to solicit offers. Contracting officers are required to use fixed- price contracts to buy commercial items, though the FAR also allows for  the use of other contract types under certain circumstances. We have  previously reported on various aspects of commercial item procurements  at DOD, including pricing and the commercial item test program.
During the pre-award process for most procurement actions, a contracting  officer must determine whether the product or service being procured is  commercial. Once the product or service is deemed commercial, the  contracting officer, prior to award, must determine that the price is fair and  reasonable.
subsections: section_title: Commercial Item Determinations
paragraphs: The commercial item definition includes items customarily used by and  sold (or offered) to the general public, including products and services  with minor modifications. The decision to fulfill a government requirement  using a commercial item is based on market research to determine  whether an item satisfies the commercial item definition. Under DOD  guidance, a DOD contracting officer must document the market research  and commercial item determination in the contract file. According to  DOD’s Commercial Item Guidebook, the commerciality determination  should clearly identify which elements of the definition qualify the item as  commercial and therefore eligible for procurement under FAR Part 12  procedures.
section_title: Price Reasonableness Determinations
paragraphs: Prior to contract award, contracting officers must determine that the price  of the product or service the government is buying is fair and reasonable  and document the determination. When purchasing commercial items,  firm knowledge of market pricing information is necessary and the  contracting officer must obtain sufficient information to negotiate a fair  and reasonable price. At a minimum, the contracting officer must use  some type of price analysis—such as comparing proposed prices in  response to a competitive solicitation. As stated in DOD’s Commercial  Item Guidebook, the fact that a price is included in a catalog does not  necessarily establish that the catalog price is fair and reasonable.
If, after market research has been conducted, additional information has  been obtained from sources other than the offeror, and the appropriate  price analysis techniques have been applied, the contracting officer still  cannot make the determination that the offeror’s price for a commercial  item is fair and reasonable, then the contracting officer must obtain  additional data from the offeror to support further analysis. According to  DOD guidance, contracting officers should not request more data than  necessary to make the price reasonableness determination and they may  not require contractors to certify any supporting cost information. DOD  contracting officers must document any response to their request for  additional data, including a contractor’s failure to provide the requested  data.
section_title: DOD’s Use of Commercial Item Procedures Has Gradually Declined Over 10 Years Within a Narrow Range DOD’s Use of Commercial Item Procedures Was Consistently Less than 25 Percent of Total Obligations
paragraphs: FPDS-NG data show that obligations under DOD contracts awarded  using commercial item procedures (i.e. FAR Part 12) declined since fiscal  year 2007, yet as a proportion of DOD’s total contracting obligations they  have remained within a narrow range from 22 to 16 percent. Figure 1  depicts DOD’s total obligations and commercial item obligations from  fiscal years 2007 through 2016. To obtain a more in-depth view of  commercial item spending, we analyzed spending for fiscal year 2016.  For that year, DOD spent $47.6 billion in commercial item obligations—a  decrease of $35.1 billion since fiscal year 2007. However, overall DOD  contract obligations also declined during this time frame.
In fiscal year 2016, DOD obligated $4.5 billion of its $47.6 billion in  commercial item obligations through the General Services  Administration’s (GSA) Federal Supply Schedule (FSS) program. The  GSA’s FSS program provides agencies a simplified method of purchasing  commercial products and services at prices associated with volume  buying. This $4.5 billion includes nearly $1.1 billion obligated through  blanket purchase agreements. Blanket purchase agreements can be  established under any FSS contract to fill repetitive needs for supplies or  services.
We could not determine the full extent to which DOD is procuring  commercial items because FPDS-NG only captures information on  whether or not commercial item acquisition procedures were used to  acquire the product or service, and not whether items purchased are  commercial or not commercial. Further, DOD can purchase commercial  items through a subcontract. Also, the data we present above do not  include obligations on contracts awarded by other agencies on behalf of  DOD through interagency agreements. We were unable to obtain reliable  data in this area for our 10-year time frame; however, in fiscal year 2016,  $2.1 billion were obligated on contracts awarded using FAR Part 12  procedures, through interagency agreements, on behalf of DOD.
subsections: section_title: DOD Procures a Broad Variety of Products and Services, Most Competitively Under Firm- Fixed-Price Contracts, Using Commercial Item Procedures
paragraphs: DOD procures a broad range of products and services, using commercial  procedures, from the relatively simple, such as office furnishings and  housekeeping services, to the more complex, such as space vehicles and  maintenance services. In fiscal year 2016, products accounted for 54  percent of DOD’s commercial item obligations, while services accounted  for 46 percent. Figure 2 depicts DOD’s commercial item obligations by top  three types of products and top three types of services in fiscal year 2016.
Four components within DOD make up 82 percent—or $39.1 billion—of  DOD’s total commercial item obligations in fiscal year 2016.
According to FPDS-NG data, 68 percent of DOD’s commercial item  obligations were awarded competitively in fiscal year 2016. Competition  helps agencies get lower prices on products and services, and get the  best value for taxpayers. The remaining 32 percent of obligations were  coded as noncompetitive, such as sole source contracts or follow-on  purchases. For example, we reviewed a $295,000 sole source contract  for a commercial geolocation system for the National Air and Space  Intelligence Center. The Air Force justified this as a sole source contract  because the contractor is the only provider of the geolocation system, and  this system is the only one fully compatible with existing hardware that the  agency previously purchased from the same contractor through a  competed contract.
Finally, FAR Part 12 requires that agencies use firm-fixed-price contracts  or fixed-price contracts with economic price adjustment for acquiring  commercial items, with some exceptions. In fiscal year 2016, $46.8  billion, or 98 percent, of DOD’s commercial item obligations were on firm- fixed-price contracts ($40.8 billion) and fixed-price contracts with  economic price adjustment ($6 billion). The remaining $738.6 million, or 2  percent, were on time and materials or labor hour contracts.
section_title: DOD Has Taken Action in Response to Recent Commercial Item Acquisition Legislation
paragraphs: Recent legislation from Congress includes a number of provisions related  to commercial item acquisitions, including both commercial item  determinations and price reasonableness determinations. The provisions  touch on a variety of areas, from ensuring DOD uses commercial  standards instead of military standards when possible, to developing a  database of commercial item determinations, to improving guidance and  training on how to determine the reasonableness of a commercial item  price.
Figure 3 shows the distribution of NDAA sections containing provisions  related to DOD’s acquisition of commercial items for fiscal years 2013  through 2017. Although this figure highlights the increase in activity in the  fiscal year 2016 and 2017 NDAAs, section 831 of the fiscal year 2013  NDAA resulted in a substantive shift in how DOD is to buy commercial  items.
Several of the key actions DOD has taken in response to the recent  legislation are highlighted below. For more details on all sections within  the 2013, 2015, 2016, and 2017 NDAAs related to DOD’s acquisition of  commercial items, see Appendix I.
subsections: section_title: Fiscal Year 2013 NDAA
paragraphs: As noted above, section 831 of the fiscal year 2013 NDAA resulted in a  substantive shift in DOD commercial item practices. This section required  DOD to:  issue guidance on standards for determining price reasonableness; ensure that requests for uncertified cost information, for the purposes  of evaluating price reasonableness, are sufficiently documented; develop and begin implementation of a plan to train the acquisition  workforce in the use of certain authorities for evaluating price  reasonableness when procuring commercial items; and develop a cadre of experts within DOD to provide advice to the  acquisition workforce with regard to commercial item authorities.
As a result, DOD issued memorandums in February 2015 and September  2016, which provided specific guidance to contracting officers on  commercial items and price reasonableness determinations such as  specific information that should be included in the contract file for  ensuring that requests for cost information are sufficiently documented.  DOD is also in the process of updating its Guidebook for Acquiring  Commercial Items. The purpose of the Guidebook is to assist acquisition  personnel in developing sound acquisition strategies for procuring  commercial items.
To address the issue of training the acquisition workforce, according to  Defense Procurement Acquisition Policy officials, all commercial item  courses are being assessed and will be revised to be consistent with the  legislation concerning commercial items as well as the DOD Guidebook  for Acquiring Commercial Items. We have previously reported on the  status of DOD’s actions to develop guidance and training on determining  price reasonableness. We also reported on circumstances under which  DOD requested cost or pricing information from contractors for use in  determining price reasonableness for noncompetitive contracts for  commercial items awarded between January 2, 2013 and January 1,  2015. Overall, we found that contracting officials faced challenges when  determining price reasonableness, such as data currency and contractor  reluctance to share data.
To develop a cadre of experts within the Department to provide advice to  the acquisition workforce, DCMA’s Commercial Item Group created six  Commercial Item Centers of Excellence, aligned to various contractor  market sectors, to assist in both the timeliness and consistency of  commercial item determinations. The centers are staffed with engineers  and price/cost analysts to advise procuring contracting officers in their  determinations of commerciality. Specifically, these centers assist with  and make recommendations on market analysis, commercial item  reviews and determinations, and commercial pricing analysis.  Additionally, the centers provide training and assistance to the DOD  acquisition community on various techniques and tools used to evaluate  commercial items and commercial item pricing. According to DCMA  officials, experts at these centers began reviewing cases in June 2016  and since then have examined 437 cases that contained approximately  2300 items. They recommended that the contracting officer make a  determination that an item was commercial in 94 percent of the cases  reviewed. Results are included in a final report prepared by DCMA and  provided to the requesting official. According to DCMA officials the  average turnaround time to complete a review, for both a commercial item  recommendation and a price reasonableness determination, is 46 days.
section_title: Fiscal Year 2015 NDAA
paragraphs: The fiscal year 2015 NDAA had only one provision relevant to commercial  items, which made permanent DOD’s authority to use simplified  acquisition procedures for certain commercial items.
section_title: Fiscal Year 2016 NDAA
paragraphs: The fiscal year 2016 NDAA included provisions that required DOD to  provide guidance related to commercial items and price reasonableness  determinations, among other things. For example, a contracting officer  must consider recent prices paid by the government to determine price  reasonableness of a commercial item if the prices previously paid are  valid references for comparison, based on factors such as the quantities  purchased by the government and how long ago the prices were paid. In  2016 DOD issued a proposed DFARS rule, which, when finalized, is  intended to address many of these provisions by providing guidance to  contracting officers for making price reasonableness determinations and  promoting consistency in making commercial item determinations. It also  is intended to expand opportunities for nontraditional defense contractors  to do business with DOD by treating products and services offered by  these companies as commercial items.
The 2016 legislation also required the Secretary of Defense to establish  and maintain a centralized capability to oversee commercial item  determinations for DOD procurements, and provide public access to  these determinations. Subsequent legislation in fiscal year 2017 removed  public access to this information and expanded the scope to include  market research and price reasonableness analysis. Originally, DCMA  intended to leverage the Contract Business Analysis Repository (CBAR),  a DCMA database that captures contract-related information about  companies, but DCMA officials later concluded that using CBAR would  not be feasible due to the high cost of implementing technical changes.  Instead, according to DCMA officials, they plan to create a new database;  however, the system they will use for the database has not been  determined, and there is no funding or timeline to complete the database.  As an interim solution, DCMA has created a publically available source  that identifies certain items and services acquired by DOD where  commercial item recommendations and determinations have been made.
Additionally, the fiscal year 2016 NDAA required the Secretary of Defense  to establish an advisory panel on streamlining the defense acquisition  process, with a focus on reviewing acquisition regulations applicable to  DOD and making recommendations for amendment or repeal. The panel  issued an interim report in May 2017, which describes the panel’s  objective as making recommendations that, if adopted, will enable the  Department of Defense to more consistently buy what it needs in a timely  and cost-effective manner—whether that be commercial items,  information technology, services, weapon systems, or the full range of  tools and equipment on which warfighters depend. The panel is working  on its final report; no date has been set for issuance.
section_title: Fiscal Year 2017 NDAA
paragraphs: The fiscal year 2017 NDAA has numerous sections that relate to DOD’s  acquisition of commercial items. For example, it establishes a preference  for certain commercial services by providing that the head of a DOD  agency cannot enter into a contract above $10 million for certain services,  such as facilities-related or knowledge-based services, that are non- commercial unless a written determination is made that no commercial  services can meet the agency’s needs. Another provision requires DOD  to use commercial or non-government standards instead of military  standards and specifications, unless no practical alternative exists to  meet user needs. DOD is drafting several proposed DFARS rules that  would implement these provisions.
section_title: DOD Is Using Memorandums of Agreement to Support Commercial Item and Price Reasonableness Determinations
paragraphs: In addition to the actions mentioned above, while not a direct action in  response to specific commercial item legislation, the Director, Defense  Pricing and the DCMA Cost & Pricing Center Director are working closely  with interested companies to define, through the use of memorandums of  agreement, the types of information needed to support commercial item  determinations and associated pricing determinations. According to  DCMA, memorandums of agreement can be useful when delineating  such processes and information. For now, DCMA has uploaded these  agreements to CBAR but plans to include these agreements in its new  commercial item database for use in the future by procuring contracting  officers. Currently, three agreements have been completed and three are  in process.
section_title: Agency Comments
paragraphs: We are not making any recommendations in this report. The Department  of Defense had no comments on a draft of this report.
We are sending copies of this report to the appropriate congressional  committee and the Secretary of Defense. In addition, the report is  available at no charge on the GAO website at http://www.gao.gov.
If you or your staff have any questions about this report, please contact  me at (202) 512-4841 or woodsw@gao.gov. Contact points for our  Offices of Congressional Relations and Public Affairs may be found on  the last page of this report. In addition, Tatiana Winger (Assistant  Director), Kathryn (Emily) Bond, Michael Grogan, Julie Hadley, Julia  Kennon, Liam O’Laughlin, Raffaele (Ralph) Roffo, Roxanna Sun, and  Carmen Yeung made key contributions to this report.
section_title: Appendix: Summary of Recent National Defense Authorization Act Sections Related to DOD’s Acquisition of Commercial Items
subsections: section_title: Fiscal Year (FY) 2013 NDAA Sections
paragraphs: Summary of Sections regarding Commercial Items  Requires DOD to develop and begin implementation of a  plan to train the acquisition workforce in the use of certain  authorities for evaluating price reasonableness in  procurements of commercial items and develop a cadre of  experts within DOD to provide advice to the acquisition  workforce.
Department of Defense (DOD) Actions  as of May 2017  Training:
Conferences addressing commercial  item pricing occurring in 2014, 2015,  2016, and 2017  Industry day on contracting with DOD  November 2014
DOD-wide pricing webinars
Week-long procurement contracting  officer training for evaluating price  reasonableness of commercial items  According to Defense Procurement  Acquisition Policy officials, the agency  is coordinating with Defense  Acquisition University to update  training to be consistent with the  DFARS and DOD Guidebook for  Acquiring Commercial Items, both of  which DOD is working to finalize.
Cadre of experts:
Defense Contract Management  Agency created six Commercial Item  Centers of Excellence.
Appendix: Summary of Recent National  Defense Authorization Act Sections Related to  DOD’s Acquisition of Commercial Items Appendix: Summary of Recent National  Defense Authorization Act Sections Related to  DOD’s Acquisition of Commercial Items Appendix: Summary of Recent National  Defense Authorization Act Sections Related to  DOD’s Acquisition of Commercial Items Summary of Sections regarding Commercial Items  Requires a contracting officer to consider recent prices paid by  the government to determine price reasonableness of a  commercial item if the officer is satisfied the prices previously  paid are a valid reference for comparison, based on factors  such as the quantities purchased by the government and how  long ago the prices were paid.
Department of Defense (DOD) Actions  as of May 2017  Proposed DFARS rule (case 2016-D006)  would implement this provision when  finalized.
Requires the Secretary of Defense to submit a report  identifying the defense-unique law provisions that are  applicable for commercial item procurements, at the prime  contract and subcontract levels, to the congressional defense  committees.
DOD issued “Report to Congress on  Defense-Unique Laws Applicable to the  Procurement of Commercial Items and  Commercially Available Off-The-Shelf  Items” in June 2016.
Requires DOD to issue guidance concerning market research  and commercial items, to ensure acquisition officials comply  with the legal requirements concerning preference for  acquiring commercial items. The guidance must provide that  the head of an agency cannot enter into a contract above the  simplified acquisition threshold for non-commercial IT products  or services unless he or she determines that no commercial  items are suitable to the agency’s needs.
Proposed DFARS rule (case 2016-D006)  would implement this provision when  finalized.
Limits conversion of commercial item procurements under  Federal Acquisition Regulation (FAR) Part 12 to Part 15 in  excess of $1 million. If the contracting officer wants to convert  a procurement from FAR Part 12 to Part 15, he or she must  determine, in writing, that the use of Part 12 was in error or  based on inadequate information and that converting to Part  15 would result in cost savings. For procurements above $100  million, the head of the contracting activity must approve of the  written determination and provide a copy to the Under  Secretary of Defense for Acquisition, Technology, and  Logistics.  Requires the Secretary of Defense to develop procedures to  track conversions of future contracts and subcontracts, from  Part 12 to Part 15 and to submit a report on the  implementation of Sec. 856, including any procurement  converted pursuant to this section, to the congressional  defense committees.
Proposed DFARS rule (case 2016-D006)  would implement this provision when  finalized.
Provides that items and services provided by nontraditional  defense contractors may be treated as commercial items.
Proposed DFARS rule (case 2016-D006)  would implement this provision when  finalized.
Appendix: Summary of Recent National  Defense Authorization Act Sections Related to  DOD’s Acquisition of Commercial Items Appendix: Summary of Recent National  Defense Authorization Act Sections Related to  DOD’s Acquisition of Commercial Items Establishes a preference for certain commercial services by  providing that the head of a DOD agency cannot enter into a  contract above $10 million for services that are facilities- related, knowledge-based (except engineering), construction,  medical, or transportation that are non-commercial unless a  written determination is made by specified high-level officials,  such as the service acquisition executive, that no commercial  services are suitable to meet the agency’s needs. Also, the  head of a DOD agency cannot enter into a contract for these  same services above the simplified acquisition threshold and  below $10 million unless he or she makes a written  determination that no commercial services are suitable to  meet the agency’s needs.
DOD is drafting the proposed DFARS rule  (case 2017-D020) that would implement  this provision.
Requires items valued at less than $10,000 that are  purchased by a contractor for use in the performance of  multiple contracts with DOD and others, and are not  identifiable to any particular contract, be treated as a  commercial item.
DOD is drafting the proposed DFARS rule  (case 2017-D020) that would implement  this provision.
Requires that services provided by a business unit of  nontraditional defense contractor be treated as commercial  items if they are priced using a similar method to develop  commercial pricing and are provided by a similar pool of  employees who also assist commercial customers.
DOD is drafting the proposed DFARS rule  (case 2017-D020) that would implement  this provision.
Provides the Secretary of Defense and the Service  Secretaries with the authority to carry out the “defense  commercial solutions opening pilot program,” under which the  Secretary can acquire innovative commercial items, such as  technologies and services, through the competitive selection  of proposals via peer review under a general solicitation.  Requires the Secretary to issue guidance for the  implementation of this pilot program, and to notify  congressional defense committees, within 45 days after  award, about contracts over $100 million awarded under this  pilot program.
DOD received the draft proposed DFARS  rule (case 2017-D029) that would  implement this provision.
Requires the Secretary of Defense to enter into contract with  an independent entity to conduct a review of contractual flow- down provisions related to major defense acquisition  programs on contractors, including, among other things,  determining the effect, if any, of these provisions on the  participation rate of commercial item contractors. A report on  the findings of this review is due to congressional defense  committees no later than August 1, 2017.
DOD has contracted with an independent  entity to conduct this review and plans to  brief the congressional defense  committees on the interim findings of the  independent entity by July 1, 2017.