Commercial-Off-the-Shelf (COTS)

Benefits

The use of commercial-off-the-shelf (COTS) items, including Non-Developmental Items, can provide significant opportunities for efficiencies during system development but also can introduce certain issues that should be considered and mitigated if the program is to realize the expected benefits.

The primary benefits of using COTS components in system design are to:

Reduce development time.
Allow faster insertion of new technology.
Lower life-cycle costs by taking advantage of the more readily available and up-to-date commercial industrial base.

Concerns

However, regardless of the extent to which a system is made up of commercial items, the Program Manager (PM) and Systems Engineer still develop, integrate, test, evaluate, deliver, sustain and manage the overall system.

Among concerns with using COTS products are:

Subtle differences in product use can significantly affect system effectiveness, suitability, and survivability for achieving mission needs, Human System Integration (HSI), Environment, Safety and Occupational Health (ESOH); cybersecurity, reliability, and durability. More detailed analyses are required to understand trade-offs for implementing NDI/COTS solution to determine design considerations??? impacts and communicate any associated risks to the PM.

Example: The graphical user interface design may not completely support user tasks or the Target Audience Description, which can cause an increased training burden, inefficient workarounds, and improper use of the system by the user, leading to human error and system or mission failures.

If integration requires a "modified COTS product," meaning that a COTS product may not be designed for many military environments (which, by definition, is not a COTS product under 41 USC 104, but is allowed under 41 USC 1907), then the program may lose the ability to use the vendor???s subsequent product upgrades or to find a suitable replacement for the product from other commercial sources.
The vendors can embed proprietary functions into COTS products, limiting supply sources.
Vendors do not have to provide design information and often restrict purchasers from reverse engineering their intellectual property.
Licensing agreements vary and can be very restrictive while limiting the vendor???s liability for merchantability for intended purposes.
Supply chain risk management of COTS items is limited by the vendor, who is under no obligation to the purchaser to provide such information.
Incorporating COTS products places constraints on the rest of the design and reduces trade space; functionality, interfaces and reliability and maintainability characteristics are embedded in the choice of a COTS system element.
Difficulty in finding suitable replacements and/or alternate items if the COTS vendor stops manufacturing the product or changes the configuration drastically, requiring the need to maintain different configurations of a single product.
The program needs to understand the "pedigree" of the qualified vendors for the COTS product.

Product Lifecycle

The marketplace drives COTS product definition, application and evolution. COTS products presume a flexible architecture and often depend on product releases that are designed to be used "as is" to meet general business needs and not a specific organization's needs. The commercial product life cycle is usually much shorter than the equivalent military product life cycle.

Programs should consider the potential availability of suitable replacement and/or alternative items throughout the longer, military life cycle, and should monitor the commercial marketplace through market research activities and ongoing alignment of business and technical processes. This necessary activity imposes additional cost, schedule, and performance risks for which the acquisition community should plan. COTS products should be evaluated to meet all performance and reliability requirements during all environmental conditions and service life requirements specified by the intended application requirements documents.

P.L. 103-355 (SEC 8104) and P.L. 104-106 (SEC 357), both endorse the use of COTS products by the Federal Government but have slightly different definitions, with the latter allowing for modifications to COTS products.

Role of the PM and SE

The Systems Engineer should ensure open system design, identification and mitigation of HSI, ESOH and security risks, survivable technology insertion, or refresh throughout the projected system life cycle.

The PM, Systems Engineer and Lead Software Engineer should consider the following when evaluating use of COTS products:

The intended product-use environment and the extent to which this environment differs from (or is similar to) the commercial-use environment
Integration, documentation, security, Human System Integration, ESOH, hardware/software integrity, reliability risk, program protection and corrosion susceptibility/risk
Planning for life-cycle activities (including sustainment, supply chain risks, obsolescence, and disposal)
Developing relationships with vendors, Foreign Ownership Control, and Influence (FOCI) (see Defense Counterintelligence and Security Agency for the latest policy regarding COTS products from FOCI sources)
Supportability, if product modifications are made or if vendor or marketplace changes occur
Test and evaluation of COTS items (including early identification of screening, functionality testing and usability assessments) (See Test & Evaluation Enterprise Guidebook, (forthcoming))
Protecting intellectual property rights by being aware of pertinent intellectual property rights issues associated with commercial items acquisitions, especially with the acquisition of commercial software products. When acquiring Intellectual Property (IP) license rights, the acquisition community should consider the core principles described in the DoD guide: "Intellectual Property: Navigating through Commercial Waters."
Ability to modify or interface COTS software with other software even if Government-generated or owned
Ability to have insight into configuration management, and the features and functions of upgrades and changes
Ability to instrument and/or test aspects of COTS products

Products and Tasks

Product	Tasks
10-4-1: Evaluate and document COTS and NDI use	1. Determine requirements for use of commercial-off-the-shelf (COTS) and non-developmental items (NDI) in accordance with current guidance. 2. Obtain the analysis of alternatives and system design documentation for the acquisition. 3. Assess technical feasibility for use of COTS and NDI in the system. 4. Develop an open system architecture approach in the system performance specification that enables the use of COTS and NDI to the maximum extent practicable. 5. Evaluate proposed use of COTS and NDI in engineering trade studies conducted for the system design. 6. Identify verification requirements for COTS and NDI in the program???s specifications. 7. Identify COTS and NDI unique supportability issues and risks in the life cycle sustainment plan, risk management plan, and systems engineering plan. 8. Document use of COTS and NDI in systems engineering planning documents.

Product

Tasks

10-4-1: Evaluate and document COTS and NDI use

1. Determine requirements for use of commercial-off-the-shelf (COTS) and non-developmental items (NDI) in accordance with current guidance.
2. Obtain the analysis of alternatives and system design documentation for the acquisition.
3. Assess technical feasibility for use of COTS and NDI in the system.
4. Develop an open system architecture approach in the system performance specification that enables the use of COTS and NDI to the maximum extent practicable.
5. Evaluate proposed use of COTS and NDI in engineering trade studies conducted for the system design.
6. Identify verification requirements for COTS and NDI in the program???s specifications.
7. Identify COTS and NDI unique supportability issues and risks in the life cycle sustainment plan, risk management plan, and systems engineering plan.
8. Document use of COTS and NDI in systems engineering planning documents.

Source: AWQI eWorkbook

Resources

Key Terms

Commercial Contracting
Commercial Item
Commercially Available-Off-The-Shelf Item (COTS)
Government-Industry Data Exchange Program (GIDEP)
Parts Management
Supply Chain Management (SCM)
Supply Chain Risk Management (SCRM)

Policy and Guidance

Systems Engineering (SE) Guidebook, Section 5.4 Commercial-Off-the-Shelf (COTS)
P.L. 103-355, Federal Acquisition Streamlining Act of 1994, Section 8104, Preference for acquisition of commercial items
P.L. 104-106, National Defense Authorization Act for Fiscal Year 1996, Section 357, Increased reliance on private-sector sources for commercial products and services
41 U.S.C. Section 104, Commercially Available Off-the-Shelf Item
41 U.S.C. Section 1907, List of Law Inapplicable to Procurements of Commercially Available Off-the-Shelf Items
SD-2, DoD Acquisitions: Buying Commercial Items and Non-developmental Items, 1 Nov 18
SD-5, Market Research, 12 Dec 18
SD-19, Parts Management Guide
DoD Guidebook for Acquiring Commercial items, Part A: Commercial Item Determination, Revised July 2019
DoD Guidebook for Acquiring Commercial items, Part B: Pricing Commercial Items

DAU Training Courses

ETM 1050: Design Considerations Fundamentals, Lesson 4 Commercial-Off-the-Shelf (COTS)
CLC 020: Commercial Item Determination
CLE 028: Market Research for Engineering and Technical Personnel
CLE 080: SCRM for Information and Communications Technology (ICT)
CLM 025: Commercial-Off-the-Shelf (COTS) Acquisition for Program Managers
CLCL 014A: Parts & Material Life Cycle Management Credential???
LOG 0370: DoD Supply Chain Fundamentals
LOG 0630: Introduction to Parts Management