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Breakout Session # 809 Doris Gray, Sr. Contracts Manager Avnet, Inc. April 16, 2008 10:50 AM – 11:50 AM

Waiting to Exhale:  Subcontractors Selling Commercial Items to Government Prime Contractors . Breakout Session # 809 Doris Gray, Sr. Contracts Manager Avnet, Inc. April 16, 2008 10:50 AM – 11:50 AM. About The Company. > Electronics Marketing 57%. Double digit growth annually

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Breakout Session # 809 Doris Gray, Sr. Contracts Manager Avnet, Inc. April 16, 2008 10:50 AM – 11:50 AM

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  1. Waiting to Exhale:  Subcontractors Selling Commercial Items to Government Prime Contractors Breakout Session # 809 Doris Gray, Sr. Contracts Manager Avnet, Inc. April 16, 2008 10:50 AM – 11:50 AM

  2. About The Company >Electronics Marketing 57% • Double digit growth annually • 12,600 employees • 300 Suppliers • 70 countries • More than 275 locations • Serving 100,000 customers in the technology supply chain through two operating groups: • Electronics Marketing • Technology Solutions • Primarily Commercial Business >Technology Solutions 43%

  3. The Value ofCommercial Suppliers • Shorter lead times • Best commercial practices • Quality products • Latest technology • Lower costs • Improved supply chain management

  4. Laws and Regulations Governing the Sale of Commercial Items to the Government • Federal Acquisition Streamlining Act of 1994 (FASA), Public Law 103-355 • Federal Acquisition Circular (FAC) 90-32 (10/1994) • Clinger-Cohen Act of 1996 (CCA), Public Law 104-106 • FAR Part 12, Acquisition of Commercial Items

  5. FASA • Established a preference for the acquisition of commercial items (CIs) and non-developmental items (NDIs) • Expanded the definition of CIs • Directed the FAR to contain a list of clauses to be included in contracts and subcontracts for CIs • Eliminated the applicability of many government-unique laws and clauses to CIs

  6. FAC 90-32 • Promulgated 3 FAR clauses to implement the directive of FASA: • 52.212-4 Contract Terms and Conditions— Commercial Items • 52.212-5 Contract Terms and Conditions Required to Implement Statutes or Executive Order—Commercial Items • 52.244-6 Subcontracts for Commercial Items

  7. CCA • Defined the term “Commercial-off-the-shelf” items (COTS) • Exempted the acquisition of CIs from the Truth In Negotiations Act and Cost and Accounting Standards • Allowed CI purchases to be made under the simplified acquisition procedures of FAR Part 13

  8. FAR Part 12 • Implements FASA, CCA and FAC 90-32 • Must be used for the acquisition of supplies and services that meet the definition of CIs in FAR 2.101 • Prescribes the terms and conditions to be used for and the policies and procedure that apply to contracts and subcontracts for CIs • Requires the use of FFP or FFP with economic price adjustment for the acquisition of CIs.

  9. Definitions Used for Commercial Items FAR 2.101 defines CIs very broadly: • COTS • Any item that evolved from COTS • Modifications: • Modifications of a type customarily available in the marketplace • Minor modifications of a type not customarily available in the market place • Any combination of items of the 1st three CIs

  10. Definitions Used for Commercial Items (con’t.) There are 8 categories of CIs • Services procured in support of a CI • Stand alone services • Any item, combination of items or services that meet the criteria of CI • NDIs

  11. Commercial Item Determination Flow Chart for Products and Supplies

  12. Commercial Item Determination Flow Chart for Services

  13. Commercial Item Determination“Of A Type” The following items and service need only be “of a type” sold to the general public in order to qualify as a CI • COTS items • Modifications and minor modifications • Items evolved from COTS items • Any combination of the first three categories • Stand-alone services • Modifications to NDIs

  14. Terms and Conditions Applicable to Prime Contracts for Commercial Items • FAR 52.212-3 Offerors Representations and Certifications—Commercial Items • FAR 52.212-4 Contract Terms and Conditions—Commercial Items • FAR 52.212-5 Contract Terms and Conditions Required to Implement Statutes or Executive Orders—Commercial Items

  15. Terms and Conditions Applicable to Subcontracts for Commercial Items • FAR 52 244-6 Subcontracts for Commercial Items • FAR 52.212-5 Contract Terms and Conditions Required to Implement Statutes or Executive Orders—Commercial Items Additionally, if under DOD prime contract: • DFARS 252.244-7000, Subcontracts for Commercial Items and Commercial Components

  16. Impediments to Subcontracts for Commercial Items • Lack of training in the acquisition of CIs • Do not possess the knowledge to make CI determinations • Do not know which terms apply to CIs • Inapplicable flow down of non-commercial terms and conditions • Inapplicable flow down of representations and certifications • Inflexible procurement organizations

  17. Consequences of Impediments • More commercial subcontractors at every tier will refuse to accept Government business • Higher costs will be paid by the Government for commercial items • Great liability imposed on commercial subcontractors • Breach of contracts • False Claims Act • False Statements Act

  18. How Primes and Subs Can Work Together to Achieve the Goals of FASA • Subcontractors • Determine which of 8 categories for CIs apply to your products and services • Prime contractors • Request support from subcontractors in making CI determination • Flow down the clauses prescribed by Part 12 • Prime contractor and subcontractor • Determine what additional clauses are needed to accomplish contractual intent

  19. Contact Information Doris Gray Doris.Gray@Avnet.com Office: (480) 794-6334

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