(a)(2)(iii) Generally, DLA activities will not delay the instant acquisition to conduct market research when the estimated dollar value is less than the simplified acquisition threshold, (SAT), unless the contracting officer determines it is cost-effective to do so, or unless a bundling analysis must be performed pursuant to FAR 10.001(a)(2)(iv). Note that acquisitions valued below the SAT are automatically reserved and set aside exclusively for small business concerns, unless the contracting officer does not have a reasonable expectation that two or more small businesses will submit competitive offers. Therefore, unless there is an exception to the set-aside requirement, or it is withdrawn or dissolved because small businesses failed to offer, bundling analysis shall not be required below the SAT. In case of exception to or withdrawal or dissolution of a set-aside, this market research requirement can generally be satisfied by:
- identifying two or three small businesses that recently provided the item or service; and
- calling them to determine why they failed to respond to the request for quotations.
If the new acquisition strategy caused them to decline to participate, additional sources should be sought, using such resources as the SADBU office and the Procurement Marketing and Access Network (PRO-Net) of the Small Business Administration (http://pro-net.sba.gov/). If this subsequent step also fails to yield any small business sources, you must perform a bundling analysis.
(90) Buying activities do not have to refer every solicitation over the simplified acquisition threshold for a full technical evaluation. Buying activities should use an incremental approach to market research, depending on what is most appropriate under the circumstances (see 10.001(a)(2)). Alternative, less extensive forms of market research could include, for example, contacting the manufacturer, contacting the technician, contacting some other source, or letting Numbered Note 26 in the synopsis notice serve as the market research (see 5.207(e)(4)).
(a)(2)(iv) Market research must be performed before the contracting officer may proceed with an acquisition strategy that could lead to a bundled or consolidated contract. (See sections 7.107 and 7.170.) Even if services are combined with supplies in a new strategic sourcing procurement, different from the way either was purchased before, this represents an aggregation within the meaning of the statutes sufficient to trigger the market research requirement. The fact that this is a new requirement does not remove it from consideration as a bundling or consolidation, if aspects or portions of it were previously performed as separate, smaller contracts. Market research must be conducted to determine whether the aggregation is necessary and justified, even for acquisitions that are ultimately found not to be bundled or consolidated. (It is not bundling or consolidation, though - and does not require performance of this type of market research - when the entire requirement has been revised, as, for example, when engineering or safety studies dictate that a different part be substituted for an item previously acquired for that application. Even if only small businesses supplied the previous part, and even if only large businesses produce the new part, it cannot be considered a bundle, regardless of the aggregate size of the new requirement. That is, nobody, including any small business, would previously have performed any portion of the requirement as a separate, smaller contract.)
(a)(2)(90) For market research requirements related to establishing and maintaining long term contracts (LTCs), see 11.302(b)(91). Additional business rules for LTCs are addressed in the Procurement Business Rule for Long Term Contracting, which can be accessed at https://polh.bsm.dla.mil/.
The Comptroller General has stated that the specific market research techniques listed and factors to be considered (see FAR 10.002(b)(1)) reflect that the purpose of market research is to “generate a meaningful exchange of information between the agency and industry.” Market research “appropriate to the circumstances” means the extent of market research that is appropriate, depending on such factors as urgency, estimated dollar value, complexity, and past experience. The FAR does not specify what circumstances agencies must consider. Buying activities should prioritize market research efforts based on anticipated benefits and cost effectiveness. Factors that buying activities may consider include, for example, problems with customer wait time and/or pricing, dollar value, volume, and the likelihood that the item or service is commercial. If market research was recently conducted and the information is still current, buying activities need not conduct additional market research; or can update previously collected market research information. (See 90.1601.)
(91) If an individual technical review is performed, the results will take precedence over the results of a review conducted on a group basis; this is because an individual review is a more thorough analysis, specific to the particular item or service. However, when determining if the Government’s requirement can be satisfied by a commercial item, researching an item or service on an individual basis is not always required. Buying activities should use the methods described at 10.001(a)(2)(91)(A)-(C) to determine commerciality on a group basis whenever it is impracticable to conduct individual reviews, such as when adequate resources are not available or when a large number of items or services will be included on a solicitation. Buying activities should conduct commerciality reviews on a group basis whenever possible, to accelerate the pace at which items and services can be identified as commercial. Buying activities must ensure that the results of its market research efforts are entered into the Contracting Technical Data File (see DLAD 10.002(e)(90)). The contracting officer retains the authority to make the final determination of commerciality (see DLAD 12.102(90)(1)(ii)).
(A) Logical Item Groupings. Whenever possible, buying activities should identify logical groupings of items or services that can reasonably be presumed to be “commercial,” or “noncommercial,” and that can be identified in an automated system. Buying activities can then code those entire groups of items or services in the system, without conducting an individual technical review of each one. When there are items or services that are known to be an exception to the larger group, the buying activity can identify those and code them as a subgroup after coding the larger group; or code them individually on an exception basis as individual acquisitions arise. Examples of groupings of items that could logically be presumed to be commercial are:
(1) Items or services that use Industry Standards (ASTM, SAE, etc.) as the sole procurement document;
(2) Items described by Commercial Item Descriptions (CIDs);
(3) Items with Acquisition Method Suffix Code (AMSC) “Z,” which includes commercial, nondevelopmental, and off-the-shelf items (see DFARS Appendix E, Part 2, Breakout Coding), if the contracting activity buys virtually all nondevelopmental items (such as DLA);
(4) Federal Stock Classes (FSCs) that can reasonably be presumed to be commercial in their entirety.
(B) Sampling. Acquiring large populations of items on a single contract makes it impracticable to conduct a technical review of each individual item to determine whether it meets the commercial item definition. As an alternative, buying activities can identify a sample of items that is representative of the requirement and only conduct a technical review of each of the items in the sample. When selecting a sample, buying activities should consider factors including, for example, the current stock position of the items in the sample, what percentage of the total estimated demand and the total estimated contract dollar value is represented by the sample, and the results of the individual technical reviews (e.g., what percentage of the items in the sample were determined to be commercial). Buying activities should generally combine sampling techniques with other market research methods and use sampling to verify other market research. The buying activity must be able to support the sampling technique or approach. The buying activity’s rationale should identify the business risks of using the sampling technique and what was done to mitigate those risks.
(C) Computer model. J-73 and the DLA Office of Operations Research and Resource Analysis (DORRA) have developed an adaptation of the On-Demand Manufacturing (ODM) Neural Network to identify hardware items having a very high or very low probability of being commercial. This adapted computer model can be made available for use as a market research tool and is especially useful for reviewing extremely large populations of items. Interested persons can contact [email protected], J-71, for further information and for detailed guidance on how to properly apply the model.
(a)(2)(92) Private-sector entities contacted during market research pertaining to FPI product comparability must be notified that information they provide will be used by the contracting officer in comparing their products in terms of price, delivery, and quality with items listed on the FPI Schedule. They must be made aware that, depending on the outcome of the comparability determination, FPI could still receive the award.
(a)(2)(93) To gain familiarity and knowledge of the most current capabilities of the domestic marketplace, buying activities shall conduct market research, on an ongoing basis, and to the extent practicable, to identify potential domestic sources for acquisitions to which DFARS 225.7002-2(c) and/or FAR 25.104(a), Nonavailable Articles, apply.
(a)(3)(iv)(90) The contracting officer, not the offeror or contractor, has the authority to determine what constitutes customary commercial practice for the item or service being acquired. The contracting officer may consider a requirement in an agency solicitation to be consistent with customary commercial practice when market research indicates it is at least sometimes used in the commercial marketplace for items or services that are the same as or similar to the ones being acquired by the agency. A business practice does not have to be used by the majority of trading partners in an industry to be considered customary commercial practice. If even one company in a market has repetitively used a particular practice with a significant number of trading partners in that market, the contracting officer can consider that practice to be a customary commercial practice.
(91) To meet the market research standards affirmed by the Comptroller General (see 10.001(a)(2)(90)), buying activities must ensure that any solicitation requirement that may be inconsistent with commercial practice is specifically discussed at a preproposal conference; highlighted by a notice in the solicitation; or otherwise identified to prospective offerors in a manner that generates a “meaningful exchange of information.” The GAO has found that -
(A) When conducting an acquisition under FAR Part 12, buying activities cannot rely on the fact that industry representatives have not objected to a solicitation requirement as an indication that the requirement is consistent with customary commercial practice. Silence from prospective contractors is not an acceptable substitute for the agency’s obligation to conduct appropriate market research to confirm customary industry practice concerning a proposed solicitation term.
(B) If a buying activity includes a requirement in a solicitation and subsequently determines it is not consistent with customary commercial practice, the buying activity must either remove the requirement (see FAR 15.206) or execute approval of a waiver pursuant to FAR 12.302(c). The FAR does not prohibit granting a waiver following the issuance of the solicitation.
(92) Contracting officers may use an incremental approach to determining the level of market research that is appropriate for the particular acquisition. When it is not cost effective to conduct an extensive amount of market research to determine what commercial practices are available that could potentially replace Government requirements, contracting officers should include previous solicitation requirements, to ensure that the Government’s needs are met. These requirements could include, for example, in-process inspection, special packaging, or Government marking. If offerors challenge a solicitation requirement, the contracting officer must research it more extensively at that time, but still only to the extent appropriate to the circumstances. For more complex buys when it is appropriate to conduct more extensive market research, contracting officers may identify to prospective offerors those solicitation requirements (1) with previously existing blanket waivers or other regulatory authorization; (2) that the contracting officer has identified as consistent with customary commercial practice for the item or service being acquired; and (3) that the contracting officer has identified as inconsistent with customary commercial practice and for which a waiver has been obtained. Contracting officers should then solicit industry input, revise the solicitation as appropriate, and obtain additional waivers when needed. When market research appropriate to the circumstances has not indicated a solicitation or contract requirement is inconsistent with customary commercial practice, the contracting officer may elect, at his or her discretion, to obtain a waiver documenting the need for the requirement, in the event it is later determined to be inconsistent with customary commercial practice. To support their market research, buying activities must maintain documentation appropriate to the size and complexity of the acquisition.
(c)(2) The procuring activity, at least 30 days prior to solicitation issuance for a bundled requirement, must notify each incumbent small business concern (i.e., current contracting partner) that it intends to aggregate the requirement that the incumbent is currently filling with one or more other requirements. This cannot be fulfilled solely via Federal Business Opportunities (FedBizOpps) notice, although such notice should also be provided, to facilitate small business teaming. This must be accomplished by separate notification of each affected small business: that is, of every small contractor who received an award on the last procurement for any portion of the aggregated requirement. This notice requirement also pertains to small businesses who receive award for a portion of the requirement (i.e., a separate, smaller contract) after performance of the bundling analysis, but prior to solicitation of the bundled requirement. You may use any written medium, including FAX, e-mail, or hard copy, to provide notice to individual contractors.
