Commercially Available Off-the-Shelf (COTS)

Commercially Available Off-the-Shelf (COTS) means a commercially marketed product that is readily available for procurement and normally used without modification. NATO's procurement policy uses this meaning for COTS products, and NATO glossary material gives substantially the same definition under the expansion "Commercial Off-The-Shelf".

The term separates products that already exist in the marketplace from items developed or customized for one government buyer. It appears in defence, information technology, communications, software and equipment procurement. Bid teams meet it in solicitation documents, contract terms and requirements lists, where it sets what kind of offering the buyer will accept.

How NATO defines COTS

NATO's common-funded procurement policy addresses COTS products and commercial services, and it defines a COTS product by three features: it is commercially marketed, it is readily available for procurement, and it is normally used without modification. Each feature is a test. A product sold only to one customer, or one that needs significant changes before it can be used, does not meet the definition. Read the full wording in the NATO procurement policy. A NATO Allied Command Transformation glossary repeats the same definition.

The more specific U.S. defence-acquisition definition

The U.S. defence-acquisition definition is tighter. A COTS item must be a commercial item. It must be sold in substantial quantities in the commercial marketplace. It must be offered to the government without modification, in the same form in which it is sold commercially. The text is in the Defense Federal Acquisition Regulation Supplement.

The difference from the NATO wording is the explicit requirement for substantial commercial sales and for delivery in the commercially sold form. A supplier whose product is marketed commercially but is altered for the buyer may satisfy a broad reading and still fail a strict one.

What COTS covers in NATO contract terms

NATO Communications and Information Agency contract terms apply COTS to supplies, software, products and goods that are customarily used for non-governmental purposes and sold, leased or licensed to the general public. The same terms extend the concept to services that are offered and sold competitively in substantial quantities in the commercial marketplace. The wording is in the NCIA contract general terms and conditions.

• Products and goods: items used for non-governmental purposes and sold, leased or licensed to the public.
• Software: covered where it is sold, leased or licensed to the general public.
• Services: covered where they are offered and sold competitively in substantial quantities in the commercial marketplace.

Terms related to COTS

Several neighbouring terms describe similar ideas: commercial item, commercial product, commercial service, non-developmental item and off-the-shelf procurement. They are not interchangeable. The legal effect of any of them depends on the buyer's procurement rules and on the wording of the solicitation or contract. Suppliers should treat the definition printed in the bid document as the controlling one.

What COTS means for a supplier bidding on Canadian public contracts

When a solicitation or contract expressly requires a COTS product or service, the offering must satisfy the definition that applies to that document. Check three points before you bid: whether the product is commercially available, whether it is sold in substantial quantities in the commercial marketplace, and whether you would deliver it without modification in the form in which it is commercially sold. If your offer includes customization, say so plainly and confirm that the buyer's wording still allows it. Where a Canadian tender uses the term, find its definition in the tender documents and answer to that text.