12.503 Applicability of certain laws to Executive agency contracts for the acquisition of commercial products and commercial services
Source: FAR 12.503 on acquisition.gov
FAR 12.503 exempts or modifies the application of many federal laws for commercial product and service contracts, streamlining compliance and reducing administrative burdens for both agencies and contractors.
Overview
FAR 12.503 outlines which federal laws do not apply, only partially apply, or are modified in their application to Executive agency contracts for the acquisition of commercial products and commercial services. The section is designed to streamline the procurement process for commercial items by exempting these contracts from certain statutory requirements that typically apply to government contracts, thereby reducing administrative burden and promoting efficiency.
Key Rules
- Inapplicable Laws
- Lists specific statutes that do not apply to commercial product and service contracts, such as those related to ROTC access, veterans' employment reporting, minimum response times, personal conflicts of interest, contingent fees, GAO access, certain labor standards, drug-free workplace, payment protections for subcontractors, and change order notices.
- Partially Applicable Laws
- Identifies laws where only certain requirements are waived, such as certifications related to arms control, contract work hours and safety standards, anti-kickback clauses, and most provisions of the Fly America Act (with a noted exception for commercial services).
- Modified Applicability
- Specifies laws whose requirements are modified for commercial contracts, including those related to subcontractor direct sales, truthful cost or pricing data, and cost accounting standards.
Responsibilities
- Contracting Officers: Must ensure that solicitations and contracts for commercial products and services do not include clauses or requirements from the inapplicable or partially applicable statutes, and apply modified requirements as specified.
- Contractors: Should be aware that certain federal compliance obligations do not apply or are reduced for commercial contracts, but must still comply with applicable and modified requirements.
- Agencies: Must oversee that only the appropriate statutory and regulatory requirements are imposed on commercial item acquisitions.
Practical Implications
- This section exists to simplify and expedite the acquisition of commercial products and services by removing unnecessary regulatory burdens.
- Contractors benefit from reduced compliance requirements, but must still be vigilant about which laws and clauses remain applicable or are modified.
- Common pitfalls include mistakenly including or omitting clauses that are not required or are required in a modified form for commercial contracts.
(a) The following laws are not applicable to Executive agency contracts for the acquisition of commercial products or commercial services:
(1) https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title10-section983&num=0&edition=prelim" target="_blank">10 U.S.C. 983, Institutions of Higher Education that Prevent ROTC Access or Military Recruiting on Campus: Denial of Grants and Contracts from Department of Defense, Department of Education, and Certain Other Departments and Agencies (see 9.110).
(2) https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title31-section1354&num=0&edition=prelim" target="_blank">31 U.S.C. 1354(a), Limitation on Use of Appropriated Funds for Contracts with Entities Not Meeting Veterans' Employment Reporting Requirements (see 22.1302).
(3) https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title41-section1708&num=0&edition=prelim" target="_blank">41 U.S.C. 1708(e)(3), Minimum Response Time for Offers (see 5.203).
(4) https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title41-section2303&num=0&edition=prelim" target="_blank">41 U.S.C. 2303(b), Policy on Personal Conflicts of Interest by Contractor Employees (see subpart 3.11).
(5) https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title41-section3901&num=0&edition=prelim" target="_blank">41 U.S.C. 3901(b) and https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title10-section3321&num=0&edition=prelim" target="_blank">10 U.S.C. 3321(b), Contingent Fees (see 3.404).
(6) https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title41-section4706&num=0&edition=prelim" target="_blank">41 U.S.C. 4706(d)(1) and https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title10-section3841&num=0&edition=prelim" target="_blank">10 U.S.C. 3841(d)(1), GAO Access to Contractor Employees, section 871 of Public Law 110-417 (see 52.214-26 and 52.212-2).
(7) http://uscode.house.gov/view.xhtml?req=granuleid%3AUSC-prelim-title41-chapter65&saved=%7CZ3JhbnVsZWlkOlVTQy1wcmVsaW0tdGl0bGU0MC1jaGFwdGVyMzctZnJvbnQ%3D%7C%7C%7C0%7Cfalse%7Cprelim&edition=prelim" target="_blank">41 U.S.C. chapter 65, Contracts for Materials, Supplies, Articles, and Equipment Exceeding $10,000 (see subpart 22.6).
(8) http://uscode.house.gov/view.xhtml?req=granuleid%3AUSC-prelim-title41-chapter81&saved=%7CZ3JhbnVsZWlkOlVTQy1wcmVsaW0tdGl0bGU0MC1jaGFwdGVyMzctZnJvbnQ%3D%7C%7C%7C0%7Cfalse%7Cprelim&edition=prelim" target="_blank">41 U.S.C. chapter 81, Drug-Free Workplace (see 26.501).
(9) Section 806(a)(3) of Public Law 102-190, as amended by sections 2091 and 8105 of Public Law 103-355 (https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title10-section4601&num=0&edition=prelim" target="_blank">10 U.S.C. 4601 note prec.), Payment Protections for Subcontractors and Suppliers (see 28.106-6).
(10) https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title15-section644&num=0&edition=prelim" target="_blank">15 U.S.C. 644(w), Solicitation Notice Regarding Administration of Change Orders for Construction (see 36.211).
(b) Certain requirements of the following laws are not applicable to executive agency contracts for the acquisition of commercial products and commercial services:
(1) http://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title22-section2593a&num=0&edition=prelim" target="_blank">22 U.S.C. 2593e, Requirement for a certification under Measures Against Persons Involved in Activities that Violate Arms Control Treaties or Agreements with the United States (see 9.109).
(2) http://uscode.house.gov/view.xhtml?req=granuleid%3AUSC-prelim-title40-chapter37&saved=%7CZ3JhbnVsZWlkOlVTQy1wcmVsaW0tdGl0bGU0MC1jaGFwdGVyMzctZnJvbnQ%3D%7C%7C%7C0%7Cfalse%7Cprelim&edition=prelim" target="_blank">40 U.S.C.chapter 37, Requirement for a certificate and clause under the Contract Work Hours and Safety Standards statute (see 22.305).
(3) http://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title41-section8703&num=0&edition=prelim" target="_blank">41 U.S.C. 8703 and http://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title41-section8703&num=0&edition=prelim" target="_blank">8703, Requirement for a clause and certain other requirements related to kickbacks (see 3.502).
(4) http://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title49-section40118&num=0&edition=prelim" target="_blank">49 U.S.C.40118, Requirement for a clause under provisions of the Government-financed air transportation statute, commonly referred to as the Fly America Act, except that http://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title49-section40118&num=0&edition=prelim" target="_blank">49 U.S.C.40118(g) is applicable to the acquisition of commercial services (see 47.405).
(c) The applicability of the following laws have been modified in regard to Executive agency contracts for the acquisition of commercial products and commercial services:
(1) http://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title41-section4704&num=0&edition=prelim" target="_blank">41 U.S.C.4704 and https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title10-section4655&num=0&edition=prelim" target="_blank">10 U.S.C. 4655, Prohibition on Limiting Subcontractor Direct Sales to the United States (see 3.503).
(2) http://uscode.house.gov/view.xhtml?req=granuleid%3AUSC-prelim-title41-chapter35&saved=%7CZ3JhbnVsZWlkOlVTQy1wcmVsaW0tdGl0bGU0MC1jaGFwdGVyMzctZnJvbnQ%3D%7C%7C%7C0%7Cfalse%7Cprelim&edition=prelim" target="_blank">41 U.S.C.chapter 35, and http://uscode.house.gov/view.xhtml?req=granuleid%3AUSC-prelim-title10-chapter271&saved=%7CZ3JhbnVsZWlkOlVTQy1wcmVsaW0tdGl0bGU0MC1jaGFwdGVyMzctZnJvbnQ%3D%7C%7C%7C0%7Cfalse%7Cprelim&edition=prelim" target="_blank">10 U.S.C. chapter 271, Truthful Cost or Pricing Data (see 15.403).
(3) http://uscode.house.gov/view.xhtml?req=granuleid%3AUSC-prelim-title41-chapter15&saved=%7CZ3JhbnVsZWlkOlVTQy1wcmVsaW0tdGl0bGU0MC1jaGFwdGVyMzctZnJvbnQ%3D%7C%7C%7C0%7Cfalse%7Cprelim&edition=prelim" target="_blank">41 U.S.C.chapter 15, Cost Accounting Standards (48 CFR Chapter 99) (see 12.214).