A business entity that does not currently have a full contract or subcontract covered by the CAS or that has not had one year may be considered a non-traditional defence contractor (NDC). The final regulations of the Ministry of Defence seem to eliminate some uncertainties regarding the determination of commercial items. Nevertheless, the proof lies in the pudding and modification of the DoD`s procedures, guidelines and information (PGI) to comply with the new rules. Disputes will inevitably persist, and the Defense Contract Management Agency`s centers of excellence, which are supposed to deal with exceptions for commercial items, are unlikely to be decommissioned. In fact, there is an increased likelihood that more contracts will be considered commercial items, and the assessment of price suitability will be simplified for commercial goods contractors. Contractors who do or wish to do business with the DoD as a non-traditional defense contractor should therefore carefully review the new rule to determine how it might affect their business. This permissive authority is designed to encourage innovation and investment in defense, allow the Department of Defense to acquire items that might not otherwise have been available, and create incentives for CDNs to do business with the DoD. The rule clarifies that commercial property entrepreneurs include both entrepreneurs who are considered industrial property entrepreneurs after a previous determination of commercial items and companies that have not done business with the DoD under accounting standards at total cost one year prior to the application and are therefore considered non-traditional defense contractors. Both groups will benefit from these rules as their products and services will be treated as goods. But these changes also raise other questions, including how long such treatment will last. It seems to me that the question is whether a Part 12 CO method would or could be used without the use of the Part 15 methods if a market study reveals that at least one potential supplier was a non-traditional defence contractor (`the NTDC`). If the OC believes that some suppliers are NTDCs but others are not, could the OC use Part 15 for the others, but use the Part 12 procedures for NTDCs? For some reason, I think that would be problematic. I think this leaves our CO with the same option – use the procedures in Part 12 or Part 15, but choose one and stick to it.

If the CO uses Part 15, the NTDC seems to be stuck with that choice. The rule adds a determination of the reasonableness of the price of the commercial item for purchases subject to DFARS. Non-traditional defense contractors are also used in the Federal Procurement Regulatory Supplement (DFARS) 212.102(a)(iii) to purchase commercial items. In this context, it allows Ministry of Defense contract agents to treat supplies and services purchased from NDCs as commercial items. A small business is a non-traditional defense contractor under the new DFARS rule. Such is a segment of a traditional defense contractor if qualified. Contract agents may use the procedures set out in Part 12 to purchase goods and services from non-traditional defence contractors without establishing that the goods or services purchased are commercial items, regardless of their dollar value. In the first scenario, I think I understood correctly, but what about the second? It appears that the DoD forgot or intentionally failed to give COs the “may” option with respect to DFARS clause 252.215-7010 because there is no exception available for CO if the supplier is a non-traditional DoD contractor.

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