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  • Question

    Can you do a construction contract on a commercial form- SF1449?


    Answer

    The FAR defines commercial items, in part, as "services of a type offered and sold competitively in substantial quantities in the commercial marketplace." There have been arguments over the years on whether construction fits this definition of commercial items. In fact, in 2003, the Office of Federal Procurement Policy (OFPP) issued a memorandum encouraging agencies not to overuse commercial item contracting practices for construction and warned agency officials that the commercial items rules (FAR Part 12) "should rarely, if ever, be used for new construction acquisitions or non-routine alteration and repair services." Instead, OFPP said, officials should use the rules for construction contracting (FAR Part 36) in those situations. To date, there is no indication that OFPP has reversed this guidance.

    The main problem with using the commercial items procedures in FAR Part 12 to acquire construction remains the clause set. The FAR clauses that are currently applicable to construction already reflect commercial practices, for the most part. In a construction contract, the rules for construction contracting apply, as does the Miller Act, Davis Bacon Act, and the changes clauses at FAR 52.243-1 among others. The Miller Act requires submission of Payment and Performance Bonds which protect both the Government and the Subcontractors and Suppliers, Davis Bacon requires wages to be paid in accordance with specified Wage Decisions, and the Changes Clause allows unilateral changes by the Contracting Officer. These provisions are critical for Construction Contracts.

    We recommend you consult with your Contracting Officer as well as your legal representative. This decision is ultimately a Contracting Officer decision.

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