Last Reviewed/Updated: 01/02/2014. A COTS item is an item sold in substantial quantities in the commercial marketplace and offered to the government in the same form that is available in the commercial marketplace, or with minor modifications. Federal contracts for COTS items are exempt from the E-Verify federal contractor rule. Federal contracts for food and agricultural products shipped as bulk cargo, but that otherwise would be considered COTS items, such as grains, oils and produce, are also exempt.