Overview
FAR 25.502 prescribes the sequential procedures for evaluating offers when foreign end products are involved, establishing how to apply price preferences under the Buy American statute and various international trade agreements. It provides a decision-making framework for ranking offers and applying evaluation factors to determine which proposal represents the best value or lowest evaluated price.
Key Rules
- Evaluation Sequence: Contracting officers must first eliminate technically unacceptable or debarred offerors, rank the remainder by price, and then apply specific trade-related evaluation factors.
- WTO GPA Acquisitions: Under the World Trade Organization Government Procurement Agreement, agencies generally consider only U.S.-made or designated country end products; if none are received, a formal nonavailability determination is required before considering other foreign offers.
- Buy American/Trade Act Logic:
- If the low offer is a domestic offer or an "eligible" offer (under a Free Trade Agreement or the Israeli Trade Act), award is made to that offer.
- If a "noneligible" foreign offer is the low offer, a price evaluation factor (penalty) is applied to that offer for comparison against the lowest domestic offer.
- Evaluation Factors: If the foreign offer remains lower than the domestic offer after the evaluation factor is applied, the foreign offer wins. If the domestic offer becomes lower after the factor is applied to the foreign bid, the domestic offer wins.
- Tie-Breaking:
- A tie between a domestic and foreign offer after applying evaluation factors is resolved in favor of the domestic offer.
- Ties not involving evaluation preferences (nondiscriminatory treatment) are resolved by a witnessed drawing of lots.
- Small businesses offering foreign products are treated as foreign offers for the purpose of resolving ties.
Practical Implications
- Pre-Evaluation Determination: Contracting Officers must identify which trade agreements apply to a specific procurement before price analysis, as "eligible" status exempts foreign offers from the Buy American price penalty.
- Hypothetical Pricing: The price evaluation factor (typically 20% or 30%) is used for comparison purposes only; if the foreign offeror wins, the contract is awarded at their actual bid price, not the "evaluated" price.