Industry up in arms over new procurement rule.

• Author: Erwin, Sandra I.
• Position: Defense Insider

* Pentagon contractors are contesting Defense Department efforts to change the definition of "commercial items" in the procurement rulebook. Industry groups argue that the change, which Congress would have to approve, would narrow the field of what is considered off-the-shelf procurement, and would increase red tape for an industry that already is buried by regulations.

Pentagon procurement officials contend that the change in the language is necessary to prevent companies from overcharging the government.

Under procurement regulations, a company that sells the government an item that is defined as "commercial" does not have to share its internal cost data as it is assumed that the price is driven by free market forces.

Defense Department acquisition officials have become suspicious of contractors' prices for products and services. With budget cuts on the horizon, Pentagon buyers would like to be able to challenge contractors' pricing. If the item in dispute is commercial, the government cannot demand "certified cost and pricing data" from the...