The Defense Department Office of Inspector General is recommending that DOD propose legislation that would provide only those commercial items that are “sold in substantial quantities to the general public” be exempt from requirements for the submission of certified cost or pricing data.  Under current law an item qualifies for the commercial item exemption to Truth in Negotiations Act (TINA) requirement to submit certified cost or pricing data merely when being offered for sale to the general public.  The DOD IG said that requiring actual sales in substantial quantities would provide an “appropriate basis to establish a fair and reasonable price.”  

The IG recommendation follows a recent DOD IG report that found that COs of the military services had awarded $3.5 billion in commercial procurements where the commercial nature of the items was not adequately justified.  In such cases, representing about 83 percent of the dollar value of the sample selected, the IG concluded the government did not receive the expected benefit of buying truly commercial products while it relinquished protections against excessive pricing that TINA provides.  The IG attention follows similar findings echoed by concerns raised by Sen. John McCain (R-Ariz) as well as a recent GAO report concluding that significant increased use of commercial item purchases by the Air Force has not resulted in increased participation by non-traditional contractors – one of the key rationales for using commercial items.

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