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Commercial Terms Means Commercial Terms
By Edward J. Kinberg, Attorney
October 26, 2012
On September 17, 2012, the Government Accountability Office (GAO) issued a decision in response to a protest by Verizon Wireless claiming part of the requirements in a commercial item acquisition by the General Services Administration (GSA) were inconsistent with “customary commercial practice.” In sustaining the protest, the GAO held that federal agencies have the burden of proving that the requirements used in an acquisition under Part 12 of the Federal Acquisition Regulation, “Acquisition of Commercial Items,” are “consistent with customary commercial practice.”
GSA defended its use of the disputed terms by arguing that the disputed clauses “were similar to other clauses used in commercial practice or have otherwise been accepted by Verizon in the past.” In rejecting GSA’s argument, the GAO noted:
".. FAR § 12.302(c) bars the tailoring of solicitations for commercial items in a manner inconsistent with customary commercial practice unless a waiver is approved in accordance with agency procedures. The waiver must describe the customary commercial practice found in the marketplace, support the need to include a term or condition that is inconsistent with that practice, and include a determination that the use of the customary commercial practice is inconsistent with the needs of the government. "
The GAO noted that the Agency must have “adequate market” research to support its contention that clauses challenged by contractors “…are consistent with industry practice.” The decision reviews the clauses challenged by Verizon and notes that Verizon has presented evidence to show the clauses were not “consistent with customary commercial practice,” the Agency failed to present any evidence that the clauses were consistent with customary commercial clauses and that the Agency did not have an approved waiver to use the clauses in dispute.
From my perspective, this is one of the most important decisions issued this year. I have seen many cases in which an agency has included clauses that do not reflect customary commercial practice. Unfortunately, these concerns are usually brought to my attention by a contractor seeking to file a post-award protest. Since the bid protest rules clearly require defects in a solicitation to be protested before offers are due, contractors are unable to challenge the rules post-award.
One of the rapidly developing trends in procurement is a push by contracting officers to find the quickest, least time consuming method for awarding work. This push is likely to result in an increase in commercial item acquisitions which will include efforts to add unique requirements agencies want in the solicitations. Offeror’s need to increase their vigilance in finding and challenging terms that are not “customary” in the commercial world and challenging those terms before an offer or bid is due.
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