CHAPTER 8 USING MARKET RESEARCH
A relatively new and important addition to the FAR is Part 10, Market Research. Conducting market research is required by law for all planned acquisitions other than simplified acquisitions. While FAR Part 10 outlines the goals of market research and, to some extent, the manner in which it can be conducted, it does not specify the amount of money and time that can or should be spent on market research. Agency officials determine how much market research to conduct based on their own business judgment. Spending $200,000 on market research might be overkill for a relatively straightforward acquisition of modest value, but an expenditure of that amount may not be enough for a complex multimillion-dollar acquisition.
Market research is required whenever:
• A new requirements document is being generated
• Offers are to be solicited for acquisitions for which the estimated value is in excess of the simplified acquisition threshold
• Offers are to be solicited for requirements of a lesser value than the simplified acquisition threshold when circumstances justify the cost of market research
• Offers are to be solicited for acquisitions that could lead to a bundled contract.
One of the major goals of market research is to determine if commercial items, modified commercial items, or nondevelopmental items (NDI) are available to meet government needs, either totally or at component levels. Commercial items and NDI, if available, can help the government avoid the expense of reinventing the wheel.
Other goals are to identify industry practices in the commercial marketplace (when applicable), to ensure maximum use of recovered materials and promote energy conservation and efficiency, to determine whether bundling would be appropriate, and to assess the availability of technology that meets applicable accessibility standards issued by the Architectural and Transportation Barriers Compliance Board.
THE SMART BUYER CONCEPT
The primary goal of market research is to make the government a smart buyer by identifying what is actually available to meet government needs before the government attempts to buy it. Market research efforts should include consideration of socioeconomic issues such as the availability of various categories of small business sources capable of meeting the government requirement. Researchers should also consider the extent to which competition is available in the marketplace or can be developed. Further, as previously stated, it should seek to identify commercial items and NDIs to avoid reinventing the wheel.
Identified market conditions may sometimes result in the government’s considering possible cost, quality, and performance tradeoffs in its requirement documents, to accommodate market conditions.
FAR 10.002 identifies the following techniques for conducting market research:
• Contacting knowledgeable individuals in government or industry
• Reviewing the results of previous market research for the same or similar requirements
• Publishing formal requests for information in technical, scientific, or business publications
• Querying governmentwide databases to identify procurement instruments, such as task order contracts, intended for use by multiple agencies
• Participating in interactive, online communications with industry, acquisition personnel, and customers
• Obtaining source lists for similar requirements from government or industry sources
• Reviewing print or online product literature
• Conducting interchange meetings or holding presolicitation conferences to involve potential offerors early in the acquisition process.
Because FAR Part 10 also indicates that market research should be conducted on “an ongoing basis,” and because Part 10 clearly applies to both the program and contracting communities, program personnel should work closely with the contracting officer to avoid inadvertently releasing protected procurement information whenever a solicitation has been issued or is imminent. Communications with potential competitors must, by regulation, be controlled by the contracting officer after a solicitation is issued.
DOCUMENTATION OF MARKET RESEARCH
FAR 10.002(e) requires that agencies document the results of market research in an appropriate manner. Agency regulations may require or suggest a particular format. Exhibit 8-1 shows a suggested format used by NASA. The NASA format, which is available online (http://www.hq.nasa.gov/office/procurement/market), has been slightly modified here for general use.
EXHIBIT 8-1 Market Research Report Format
1. Purchase request # _____________
2. Title [of the planned contracting requirement] ______________
3. Product or service code [e.g., the North American Industry Classification System code] ______________________
4. Estimated contract value (including options) ____________________________
5. The following market research techniques were used (check all that apply):
___ Personal knowledge in procuring supplies/services of this type.
___ Contact with the requester and/or other knowledgeable people in government and industry regarding the commercial nature of this requirement and standard industry practices in this area of supply/service.
___ Review of recent market research results for similar or identical supplies/services (cite contract or order number).
___ Publication of a formal request for information at the governmentwide point of entry (GPE), www.fedbizopps.gov, and/or in appropriate technical journals.
___ Publication of a formal request for information at the GPE, in review of government, and/or in commercial databases for relevant information.
___ Publication of a formal request for information at the GPE and/or in review of Internet resources.
___ Publication of a formal request for information at the GPE and/or in use of source lists for identical or similar items obtained from government, professional, or industry sources.
___ Publication of a formal request for information at the GPE and/or in view of catalogs and other generally available product literature (online or print).
___ Interchange meetings or presolicitation conferences with potential offerors.
Other: ___________________________
6. Based on the results of the above research, it is determined that this requirement (select one):
___ Can be met by commercial items, commercial items with customary or minor modifications, or nondevelopmental items.
or
___ Cannot be met by commercial items, commercial items with modifications, or nondevelopmental items. Further, a reevaluation has been made in accordance with the FAR, and this requirement cannot be modified to permit fulfillment by any of the above types of items.
or
__________________________________________
__________________________________________
__________________________________________
(Example: Market research may reveal that a combination of commercial/non commercial items can meet the government’s needs.)
Address items 7 through 9 below if the requirement can be met (either in whole or in part) by commercial items, commercial items with modifications, or nondevelopmental items. Continue on additional sheets if necessary.
7. Standard industry terms and conditions (e.g., warranty, maintenance, discounts, buyer financing, freight, delivery, acceptance/rejection) under which commercial sales of the required supplies/services are made:
__________________________________________
__________________________________________
__________________________________________
8. Laws or regulations unique to the required supplies/services:
__________________________________________
__________________________________________
__________________________________________
9. Based on the above information, the basic clauses and provisions prescribed in FAR Part 12:
___ Are sufficient for use in this acquisition and do not require any tailoring to be consistent with industry’s commercial practices.
or
___ Require tailoring to be consistent with industry’s commercial practices. All such tailoring will be included in the solicitation issued for the required supplies/services.
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Contracting Officer Date