The acquisition reforms of the mid-1990s resulted in a number of regulatory changes that promoted the acquisition of commercial items and services. These reforms grew out of the belief that (1) ever- increasing procurement laws and regulations resulted in federal contracting processes that were overly burdensome and time consuming; and (2) acquiring commercial items would improve quality and cost outcomes by leveraging the innovation of the commercial market and using market forces to lower prices. Commercial items and services are those generally available in the commercial marketplace in contrast with items developed to meet specific federal government requirements. Figure 1 identifies key laws related to the commercial item test program. As part of the acquisition reform efforts, the Federal Acquisition Streamlining Act of 1994 (FASA) authorized agencies to use simplified procedures for the acquisition of supplies and services not exceeding $100,000. Simplified procedures for purchasing commercial items allow agencies to select contractors using expedited evaluation and selection procedures and to keep documentation to a minimum, which can reduce the government’s administrative costs. For example, evaluation of a contractor’s past performance may be based on one or more of the following: the contracting officer’s knowledge and previous experience with the supply or service being acquired, customer surveys, and past performance questionnaire replies. Additionally, FASA established a statutory preference for the acquisition of commercial items and defined the term “commercial item.” For example, FASA required agencies to conduct market research to determine whether commercial items are available to meet agency needs; to define requirements in terms of functions to be performed, performance required, or essential physical characteristics so that commercial items can be procured; and to acquire commercial items to the maximum extent practicable to meet agency needs. The definition of commercial item includes items customarily used by and sold (or offered) to the general public, including with minor modifications “of a type” not necessarily available in the commercial marketplace made to meet federal government requirements, or services “of a type” offered and sold competitively in substantial quantities in the commercial marketplace. Including “of a type” items allows vendors to make adjustments to commercial products so that they meet government requirements even if those products have not been sold in a commercial setting or subjected to competitive price pressures. FAR § 2.101. nuclear, biological, chemical, or radiological attack. These thresholds have been changed periodically to take inflation into account, resulting in the current thresholds of $6.5 million for commercial acquisitions and $12 million for commercial acquisitions in support of contingency-related operations. The authority lapsed in 2012, but was subsequently reauthorized by Congress until January 1, 2015. Various provisions of the FAR govern the policies and contracting methods for commercial item acquisitions. FAR Part 12—Acquisition of Commercial Items prescribes the policies unique to the acquisition of commercial items. For example, contracting officers can use streamlined posting and solicitation procedures, which can reduce the time needed to advertise actions and solicit offers, respectively. Contracting officers are also required to use firm-fixed-price contracts or fixed-price contracts with economic adjustments, though the FAR also allows for the use of time- and-materials contracts or labor-hour contracts under certain circumstances. FAR Part 12 also instructs contracting officers to use the policies in conjunction with the solicitation, evaluation, and award policies and procedures described in other parts of the FAR, specifically FAR Part 13—Simplified Acquisition Procedures, FAR Part 14—Sealed Bidding, or FAR Part 15—Contracting by Negotiation, that the contracting officer believes are most appropriate. As shown in table 1, the combination of the procedures provided for under FAR Parts 12 and 13 generally constitute the flexibilities provided under test program. By contrast, contracting by negotiated procedures requires more steps during the evaluation process and more detailed contract file documentation, but can provide contracting officers with greater visibility into the costs and technical capabilities of the offerors, if needed. The FAR states that contracting activities must use the simplified procedures authorized by the test program to the maximum extent practicable. However, when buying goods and services, federal contracting officers are required to procure from or through required government supply sources, which are listed in order of priority. For example, one of the required government supply sources for both supplies and services is the General Services Administration’s federal supply schedule program. The schedule program provides federal agencies with a simplified method for procuring various quantities of a wide range of commercially available goods and services. Further, agencies can use existing indefinite-delivery contracts which allow them to issue task orders for services or delivery orders for supplies. Similarly, agencies may have pre-existing blanket purchase agreements which also provide a simplified method of fulfilling repetitive needs for supplies and services. In the absence of a required government supply source, contracting officers can generally use existing contracts or award new contracts for commercial items using either simplified or negotiated procedures within the test program thresholds. When using the test program, the FAR also requires competition to the maximum extent practicable, which can generally be achieved by posting the proposed contract action to the governmentwide point of entry located at Federal Business Opportunities (FedBizOpps), or by soliciting sources from the local trade area. Noncompetitive awards are permissible under certain circumstances such as when only one responsible source and no other supplies or services will satisfy agency requirements, or when competition is precluded by the terms of an international agreement. Noncompetitive awards are also permissible under Section 8(a) of the Small Business Act which authorizes the Small Business Administration (SBA) to enter into contracts on a competitive or noncompetitive basis with other agencies and award subcontracts for performing those contracts to firms eligible for program participation. SBA’s subcontractors are referred to as “8(a) contractors.” Our prior reports on the initial use of the test program found that there was limited data to assess its use or benefits. For example, in 2001 we reported that the agencies had not collected data to provide a basis for measuring whether the test program was maximizing efficiency and economy and minimizing administrative burden and cost. Similarly, in 2003, we reported that the test program data reported in FPDS were not reliable and recommended that agencies take action to ensure data reliability. Subsequently, DOD requested a change in 2007 to FPDS-NG to improve test program reporting. As a result, FPDS-NG was modified in 2009 to include a specific, single reporting field to identify test program contracts. We also recommended that DOD and the Office of Federal Procurement Policy (OFPP), which provides overall direction for government-wide procurement policies, develop evaluation mechanisms for measuring test program benefits. DOD stated that it would develop a methodology to evaluate the benefits of the test program on the basis of such metrics as contracting lead time, and share the results with OFPP. However, according to DOD and OFPP officials, no action has been taken to do so. Our work and that of others has shown that government contracting officials face risks in using commercial acquisitions in certain circumstances. For example, in 2006 we reported that improper classification of an item as commercial can leave the government vulnerable to accepting prices that may not be the best value if the item is not sold in numbers sufficient for the government to determine the reasonableness of the vendor’s prices as the government is precluded from requesting certified cost or pricing information. The DOD Inspector General also issued a report in 2006 that found that contracting officials did not adequately justify the commercial nature of the items or services being acquired and concluded that the commercial item definition was too broad and allowed contracting officials to award contracts for defense systems and subsystems that had no commercial market and no meaningful price history. The Inspector General recommended that DOD propose a legislative change to tighten the commercial item definition to state that the commercial item exception to submission of certified cost or pricing data must only apply to the acquisition of commercial items that are sold in substantial quantities to the general public. At the time, DOD did not concur with the recommendation. In January 2007, the Acquisition Advisory Panel issued a report that concluded that the broadness of the commercial item definition, specifically the “of a type” provision for commercial services disadvantages the government in pricing, particularly when there is limited or no competition. To ensure that an item meets the commercial item definition, DOD amended the Defense Federal Acquisition Regulation Supplement (DFARS) in 2008 to require DOD contracting officers to include a written determination in the contract file that an acquisition meets the definition of “commercial item” specified in the FAR when using commercial item procedures for acquisitions exceeding $1 million. DOD amended this requirement in 2012 to require approval one level above the contracting officer when the commercial item determination is based on the “of a type” commercial procurements or items “offered for sale,” but not yet sold to the general public. In 2006, we also noted the risks associated with commercial item acquisitions in a noncompetitive environment such as when there is only one responsible source and there are no other supplies or services that will satisfy agency requirements. We found that similar to misclassifying acquisitions as commercial, the lack of market-based competition for commercial items for which there is only one responsible source may result in prices that may not be the best value for the government. In situations when the government is acquiring a commercial item noncompetitively, agencies may use various means to determine that that the proposed price is reasonable, such as by comparison with prices found reasonable on previous purchases, or comparison with a commercial price list. In 2010, we also found that for services supporting DOD weapons programs, the government’s lack of access to proprietary technical data—information used to define a design and to produce, support, maintain or operate an item—and a heavy reliance on specific contractors for expertise limit, or even preclude the possibility of, competition. Federal agencies’ use of the commercial item test program represents a relatively small portion of all commercial buying activity.