Overview
This section prescribes the specific mathematical formulas and procedures Contracting Officers must use to evaluate offers containing foreign construction material when an exception is requested based on the unreasonable cost of domestic alternatives. It establishes price penalties that favor domestic construction materials to ensure compliance with Buy American statutes.
Key Rules
- Manufactured Material Penalty: A 25% evaluation factor is applied to the total offered price of the entire contract if the offer includes foreign manufactured construction material based on an unreasonable cost exception.
- Unmanufactured Material Penalty: A 20% evaluation factor is applied specifically to the cost of the foreign unmanufactured material itself (not the total contract price).
- Cumulative Formula: If both apply, the Total Evaluated Price = Offered Price + (25% of Offered Price) + (20% of foreign unmanufactured material cost).
- Best Value Determinations: For "Best Value" solicitations involving non-price factors, the Contracting Officer must still apply these price penalties to determine the evaluated price before making the final award decision.
- Tie-Breaking: If two offers are equal in price after evaluation, the Contracting Officer must give preference to the offer that does not rely on a foreign material exception.
- Alternate Offers: Offerors are permitted to submit an alternate proposal using domestic materials to protect themselves in case the government rejects their request for a foreign material exception.
Practical Implications
- Significant Price Disadvantage: The 25% penalty on the total contract price is a heavy burden that usually makes foreign manufactured material uncompetitive unless the domestic alternative is extraordinarily expensive.
- Risk Mitigation: Contractors should utilize the "alternate offer" provision to remain eligible for award if the Contracting Officer disagrees with their "unreasonable cost" justification for foreign materials.
- Administrative Burden: Contracting Officers must ensure that any foreign materials approved during the evaluation are explicitly listed in the final contract clauses (52.225-21 or 52.225-23) to ensure legal compliance during performance.