New Pentagon guidance clamps down on procurement of non-commercial products

A new memo issued Tuesday to Defense Department acquisition leaders will require greater oversight and justification for the procurement of non-commercial products.

The guidance directs the implementation of an executive order that President Donald Trump issued to federal agencies last month.

“It is the policy of my Administration that agencies shall procure commercially available products and services, including those that can be modified to fill agencies’ needs, to the maximum extent practicable,” Trump wrote in the EO, which called for pursuing “more cost-effective” solutions and services for taxpayers in federal contracting.

Pentagon officials “must redouble our efforts to establish requirements in a way that avoids inadvertently disqualifying commercial solutions,” John Tenaglia, DOD’s principal director for defense policy, contracting, and acquisition policy, wrote in the new memo to acquisition executives at the Departments of the Army, Navy and Air Force, Cyber Command, Special Operations Command, Transportation Command, and DOD agency and field activity directors. “Requiring activities, program managers, and contracting officers must work together to identify commercial solutions to fulfill DoD mission requirements.”

He warned against “casting truly non-commercial products or services as ‘commercial’ for the purpose of misapplying policies and procedures unique to the acquisition of commercial products and commercial services.”

Tenaglia emphasized the importance of continuous market research so that the DOD acquisition community can stay abreast of commercially available solutions.

The EO implementation guidance calls for high-level oversight of proposed procurements, noting that contracting officers don’t have the authority to independently determine whether a commercial product or service is sufficient to satisfy a requirement owner’s needs.

The authority to approve or deny proposed non-commercial procurements will rest with DOD components’ senior procurement executives unless they delegate that authority to a general officer, flag officer, or member of the Senior Executive Service within their respective agencies.

“Any delegation(s) shall only be granted to acquisition officials possessing the necessary acumen to determine whether a proposed non-commercial procurement serves the best interests of the agency,” an attachment to Tenaglia’s memo states.

In the near term, contracting officers will be tasked to conduct a review, no later than June 15, of pending Federal Acquisition Regulation actions — including all open solicitations, pre-solicitation notices, solicitation notices, award notices, and sole source notices — for prime contract awards for non-commercial products or services valued at or above the “Simplified Acquisition Threshold.” That threshold is currently $250,000, according to the Defense Acquisition University.

The reviews don’t have to include contracts that have already been awarded, according to the new implementation guidance.

“Contracting officers are to either consolidate or create an application for each solicitation, pre-solicitation notice, solicitation notice, award notice, and sole source notice into a proposed application requesting approval to proceed with a prime contract procurement for non-commercial products or services. Applications must be submitted to the respective approval authority,” the guidance states.

In the future, program managers and requirement owners will have to submit a request for approval to procure non-commercial products or services under FAR-based prime contracts prior to releasing solicitations valued at or above the Simplified Acquisition Threshold. As part of those efforts, officials must provide a justification for pursuing a “Government-unique, custom-developed or otherwise non-commercial product or service,” as well as a report on the market research that was used to determine the availability of commercial products and services to meet the Defense Department’s needs.