Six Essential Tips for Selling Commercial Products and Commercial Services to the Federal Government

In celebration of the release of the 6th Edition of the Government Contracts Compliance Handbook, we are sharing six essential tips for selling commercial products and commercial services to the federal government. While legislative reforms have simplified the process of selling commercial products and commercial services to government agencies, federal contracts still present unique requirements and risks. These tips are designed to help contractors effectively and efficiently navigate the regulatory landscape.

1. Understand the Definitions of Commercial Products and Commercial Services

The Federal Acquisition Regulation (FAR) provides detailed definitions for commercial products and commercial services, which are distinct from the previous umbrella term “commercial items.” Those definitions are set forth in FAR 2.101, but in general:

Commercial products are items customarily used by the general public or nongovernmental entities that are sold or offered for sale in the commercial marketplace. They may include minor modifications to meet government needs.

Commercial services are services that support commercial products or are competitively sold in the marketplace based on established pricing models.

Contractors must ensure their offerings meet the detailed definitions found in FAR 2.101 prior to representing that their product or service is a “commercial product” or “commercial service,” as a failure to accurately categorize products or services may lead to compliance issues.

2. Leverage Exemptions for Commercial Contracts

One of the key advantages of selling commercial products and commercial services to the government is the statutory exemptions provided under the Federal Acquisition Streamlining Act (FASA) and the Clinger-Cohen Act. These reforms reduce the administrative burden for contractors by exempting commercial acquisitions from certain government-specific clauses and certifications. For example:

The certified cost or pricing data requirements under Truthful Cost or Pricing Data (formerly known as Truth in Negotiations Act, or TINA) are waived for commercial contracts.

Certain socioeconomic requirements, such as small business subcontracting goals, may also not apply.

Understanding these exemptions allows contractors to streamline compliance efforts while maintaining adherence to applicable laws and regulations.

3. Pay Close Attention to Contract Clauses and Certifications

Federal contracts for commercial products and commercial services include specific clauses tailored to these acquisitions. Key clauses include:

FAR 52.212-4: Contract Terms and Conditions—Commercial Products and Commercial Services.

FAR 52.212-5: Contract Terms and Conditions Required to Implement Statutes or Executive Orders—Commercial Products and Commercial Services.

These requirements incorporate by reference additional requirements, so it is critical to review and identify the specific requirements in your contract.

4. Understand “Most Favored Customer” Pricing Obligations

Selling commercial products and commercial services through programs like the GSA Multiple Award Schedule (MAS) requires contractors to adhere to fair and reasonable pricing standards. Contractors may be required to provide the government with pricing equal to or better than their best commercial customer pricing.

To comply with these obligations:

Maintain detailed records of pricing and discount practices;

Regularly audit commercial sales to ensure consistency with GSA contract terms; and

Disclose any special pricing arrangements that may impact your government pricing obligations.

Failing to disclose accurate pricing information can lead to penalties under the Price Reductions Clause or allegations of defective pricing.

5. Safeguard Technical Data and Intellectual Property Rights

When selling commercial products or commercial services, contractors typically retain their standard commercial rights to technical data and software. However, the government may negotiate for additional rights depending on the nature of the acquisition.

To protect intellectual property:

Use standard commercial licenses for software and technical data;

Clearly mark proprietary information and include appropriate legends in documentation provided to the government; and

Ensure that licensing terms align with FAR and Defense Federal Acquisition Regulation Supplement (DFARS) requirements for commercial acquisitions.

Understanding the limits of the government’s rights to technical data reduces the risk of unintentional disclosure or unauthorized use.

6. Train Teams on Differences Between Commercial and Government Sales

Selling to the federal government requires a nuanced understanding of compliance standards that may not exist in purely commercial sales. Employees involved in contract administration, pricing, and compliance must be trained on various topics, including:

FAR and agency-specific requirements for commercial acquisitions;

Restrictions on offering gifts or gratuities to government employees; and

The importance of maintaining accurate and complete records for audits and reporting.

A tailored compliance program can help bridge the gap between commercial practices and government regulations, reducing risks and ensuring adherence to federal standards.

Selling commercial products and commercial services to the federal government offers lucrative opportunities but requires careful navigation of regulatory requirements. By following these six essential tips, contractors can align their practices with government expectations, reduce compliance risks, and build successful relationships with federal agencies.

These strategies are derived from the 6th Edition of the Government Contracts Compliance Handbook, in which Seyfarth provides actionable guidance for government contractors. For tailored advice and support, our government contracts practice group is ready to assist.