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                            Subpart 25.5 - Evaluating Foreign Offers-Supply Contracts
        
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FAC Number: 2024-03 Effective Date: 02/23/2024
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Subpart25.025.125.225.325.425.525.625.725.825.925.1025.11
Section25.50125.50225.50325.504
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Subpart 25.5 - Evaluating Foreign Offers-Supply ContractsSubpart 25.5 - Evaluating Foreign Offers-Supply Contracts    **Parent topic:**  Part 25 - Foreign Acquisition25.501 General.       The contracting officer-                                       (a) 						            Must apply the evaluation procedures of this subpart to each line item of an offer unless either the offer or the solicitation specifies evaluation on a group basis (see  25.503);                                          (b) 						            May rely on the offeror’s certification of end product origin when evaluating a foreign offer;                                          (c) Must identify and reject                   offers of end products that are prohibited in accordance with                        subpart  25.7;                   and                                          (d)                   When trade agreements are                      involved,                      must                   not use the Buy American statute evaluation factors prescribed in this subpart to                   provide a preference for one foreign offer over another foreign offer.25.502 Application.       (a) 						            Unless otherwise specified in agency regulations, perform the following steps in the order presented:                                                         (1) 								                Eliminate all offers or offerors that are unacceptable for reasons other than price; *e.g.,* nonresponsive, debarred or suspended, or a prohibited source (see  subpart  25.7).                                                            (2) 								                Rank the remaining offers by price.                                                            (3) 								                If the solicitation specifies award on the basis of factors in addition to cost or price, apply the evaluation factors as specified in this section and use the evaluated cost or price in determining the offer that represents the best value to the Government.                                                                             (b) 						            For acquisitions covered by the WTO GPA (see  subpart  25.4)-                                                         (1) 								                Consider only offers of U.S.-made or designated country end products, unless no offers of such end products were received;                                                            (2) 								                If the agency gives the same consideration given eligible offers to offers of U.S.-made end products that are not domestic end products, award on the low offer. Otherwise, evaluate in accordance with agency procedures; and                                                            (3) 								                If there were no offers of U.S.-made or designated country end products, make a nonavailability determination (see  25.103(b)(2)) and award on the low offer (see  25.403(c)).                                                                             (c) 						            For acquisitions not covered by the WTO GPA, but subject to the Buy American statute (an FTA or the Israeli Trade Act also may apply), the following applies:                                                         (1)                         If the low offer is a domestic offer or an eligible offer under                            an FTA or the Israeli Trade Act, award on that offer.                                                            (2)                         If the low offer is a                            noneligible offer and there were no domestic offers (see  25.103(b)(3)), award on the low offer. The procedures at  25.106(b)(2) and  25.106(c)(2) do not                            apply.                                                            (3)                         If the low offer is a                            noneligible offer and there is an eligible offer that is lower than the                            lowest domestic offer, award on the low offer. The procedures at  25.106(b)(2) and  25.106(c)(2) do not                            apply.                                                            (4)                         Otherwise, apply the                            appropriate evaluation factor provided in  25.106 to the low offer. The procedures at  25.106(b)(2) and  25.106(c)(2) do not                            apply.                                                                             (d)                   *Ties.*                                                         (1) 								                If application of an evaluation factor results in a tie between a domestic offer and a foreign offer, award on the domestic offer.                                                            (2) 								                If no evaluation preference was applied (*i.e.,* offers afforded nondiscriminatory treatment under the Buy American statute), resolve ties between domestic and foreign offers by a witnessed drawing of lots by an impartial individual.                                                            (3) 								                Resolve ties between foreign offers from small business concerns (under the Buy American statute, a small business offering a manufactured article that does not meet the definition of "domestic end product" is a foreign offer) or foreign offers from a small business concern and a large business concern in accordance with  14.408-6(a).25.503 Group offers.       (a)                    						            If the solicitation or an offer specifies that award can be made only on a group of line items or on all line items contained in the solicitation or offer, reject the offer-                                                         (1) If any part of the award                         would consist of prohibited end products (see  subpart  25.7);                         or                                                            (2)                          								                If the acquisition is covered by the WTO GPA and any part of the offer consists of items restricted in accordance with  25.403(c).                                                                             (b)                    						            If an offer restricts award to a group of line items or to all line items contained in the offer, determine for each line item whether to apply an evaluation factor (see  25.504-4, Example 1).                                                         (1)                          								                First, evaluate offers that do not specify an award restriction on a line item basis in accordance with  25.502, determining a tentative award pattern by selecting for each line item the offer with the lowest evaluated price.                                                            (2)                          								                Evaluate an offer that specifies an award restriction against the offered prices of the tentative award pattern, applying the appropriate evaluation factor on a line item basis.                                                            (3)                          								                Compute the total evaluated price for the tentative award pattern and the offer that specified an award restriction.                                                            (4)                          								                Unless the total evaluated price of the offer that specified an award restriction is less than the total evaluated price of the tentative award pattern, award based on the tentative award pattern.                                                                             (c)                    						            If the solicitation specifies that award will be made only on a group of line items or all line items contained in the solicitation, determine the category of end products on the basis of each line item, but determine whether to apply an evaluation factor on the basis of the group of items (see  25.504-4, Example 2).                                                         (1)                          								                If the proposed price of domestic end products exceeds 50 percent of the total proposed price of the group, evaluate the entire group as a domestic offer. Evaluate all other groups as foreign offers.                                                            (2)                          								                For foreign offers, if the proposed price of domestic end products and eligible products exceeds 50 percent of the total proposed price of the group, evaluate the entire group as an eligible offer.                                                            (3)                          								                Apply the evaluation factor to the entire group in accordance with  25.502.                                                                             (d)                   If no trade agreement applies to a                      solicitation and the solicitation specifies that award will be made only on a                      group of line items or all line items contained in the solicitation, determine                      the category of end products ( *i.e.,* domestic or foreign) on the basis                      of each line item, but determine whether to apply an evaluation factor on the                      basis of the group of items ( *see*                    25.504-4(c), Example                      3).                                                         (1)                         If the proposed price of domestic end                            products exceeds 50 percent of the total proposed price of the group,                            evaluate the entire group as a domestic offer. Evaluate all other groups                            as foreign offers.                                                            (2)                         Apply the evaluation factor to the                            entire group in accordance with  25.502, except where  25.502(c)(4) applies and the evaluated price of the low offer                            remains less than the lowest domestic offer. Where the evaluated price of                            the low offer remains less than the lowest domestic offer, treat as a                            domestic offer any group where the proposed price of end products with a                            domestic content of at least 55 percent exceeds 50 percent of the total                            proposed price of the group.                                                            (3)                         Apply the evaluation factor to the                            entire group in accordance with  25.502(c)(4).25.504 Evaluation examples.       The following examples illustrate the application of the evaluation procedures in  25.502 and  25.503. The examples assume that the contracting officer has eliminated all offers that are unacceptable for reasons other than price or a trade agreement (see  25.502(a)(1)). The evaluation factor may change as provided in agency regulations.    25.504-1 Buy American statute.       (a)                                                         (1)                         *Example                            1*.                      Offer A                                  $16,000                                  Domestic end product, small businessOffer B                                  $15,700                                  Domestic end product, small businessOffer                                        C                                  $10,100                                  U.S.-made                                        end product (not domestic), small business                                                            (2)                         *Analysis:* This acquisition is for end products for use in the United States and is set aside for small business concerns. The Buy American statute applies. Since the acquisition value is less than $50,000 and the acquisition is set aside, none of the trade agreements apply. Perform the steps in  25.502(a). Offer C is of 50 percent domestic content, therefore Offer C is evaluated as a foreign end product, because it is the product of a small business but is not a domestic end product ( *see*                          25.502(c)(4)). Since Offer B is a domestic offer, apply the 30 percent factor to Offer C ( *see*                          25.106(b)(2)). The resulting evaluated price of $13,130 remains lower than Offer B. The cost of Offer B is therefore unreasonable ( *see*                          25.106(b)(1)(ii)). The  25.106(b)(2) procedures do not apply. Award on Offer C at $10,100 ( *see*                          25.502(c)(4)(i)).                                                                             (b)                                                         (1)                         *Example 2*.                      Offer A                                  $11,000                                  Domestic end product, small businessOffer B                                  $10,700                                  Domestic end product, small businessOffer C                                  $10,200                                  U.S.-made end product (not domestic), small business                                                            (2)                         *Analysis*: This acquisition is for end products for use in the United States and is set aside for small business concerns. The Buy American statute applies. Perform the steps in  25.502(a). Offer C is evaluated as a foreign end product because it is the product of a small business but is not a domestic end product (see  25.502(c)(4)). After applying the 30 percent  factor, the evaluated price of Offer C is $13,260. Award on Offer B at $10,700 (see  25.502(c)(4)(ii)).                                                                             (c)                                                         (1)                         *Example 3*.                      Offer A                                  $14,000                                  Domestic end product (complies with the required                                     domestic content), small business.Offer B                                  12,500                                  U.S.-made end product (not domestic, exceeds 55%                                     domestic content), small business.Offer C                                  10,100                                  U.S.-made end product (not domestic, with less                                     than 55% domestic content), small business.                                                            (2)                         *Analysis.* This acquisition is for end products for use in the United States and is set aside for small business concerns. The Buy American statute applies. Since the acquisition value is less than $50,000 and the acquisition is set aside, none of the trade agreements apply. Perform the steps in  25.502(a). Offers B and C are initially evaluated as foreign end products, because they are the products of small businesses but are not domestic end products ( *see*                          25.502(c)(4)). Offer C is the low offer. After applying the 30 percent factor, the evaluated price of Offer C is $13,130. The resulting evaluated price of $13,130 remains lower than Offer A. The cost of Offer A is therefore unreasonable. Offer B is then treated as a domestic offer, because it is for a U.S.-made end product that exceeds 55 percent domestic content ( *see*                          25.106(b)(2)). Offer B is determined reasonable because it is lower than the $13,130 evaluated price of Offer C. Award on Offer B at $12,500.25.504-2 WTO GPA/Caribbean Basin Trade Initiative/FTAs.       *Example 1*.          Offer A                      $304,000                      U.S.-made end product (not domestic)Offer B                      $303,000                      U.S.-made end product (domestic), small businessOffer C                      $300,000                      Eligible productOffer D                      $295,000                      Noneligible product (not U.S.-made)                    *Analysis*: Eliminate Offer D because the acquisition is covered by the WTO GPA and there is an offer of a U.S.-made or an eligible product (see  25.502(b)(1)). If the agency gives the same consideration given eligible offers to offers of U.S.-made end products that are not domestic offers, it is unnecessary to determine if U.S.-made end products are domestic (large or small business). No further analysis is necessary. Award on the low remaining offer, Offer C (see  25.502(b)(2)).25.504-3 FTA/Israeli Trade Act.       (a)                   *Example 1*.                Offer A                            $105,000                            Domestic end product, small businessOffer B                            $100,000                            Eligible product                *Analysis*: Since the low offer is an eligible offer, award on the low offer (see  25.502(c)(1)).                                          (b)                   *Example 2*.                Offer A                            $105,000                            Eligible productOffer B                            $103,000                            Noneligible product                *Analysis*: Since the acquisition is not covered by the WTO GPA, the contracting officer can consider the noneligible offer. Since no domestic offer was received, make a nonavailability determination and award on Offer B (see  25.502(c)(2)).                                          (c)                   *Example 3*.                Offer A                            $105,000                            Domestic end product, large businessOffer B                            $103,000                            Eligible productOffer C                            $100,000                            Noneligible product                                 *Analysis*: Since the acquisition is not covered by the WTO GPA, the contracting officer can consider the noneligible offer. Because the eligible offer (Offer B) is lower than the domestic offer (Offer A), no evaluation factor applies to the low offer (Offer C). Award on the low offer (see  25.502(c)(3)).25.504-4 Group award basis.       (a)                   *Example 1*.                OFFERSItem                            A                            B                            C1                            DO                            =                            $55,000                            EL                            =                            $56,000                            NEL                            =                            $50,0002                            NEL                            =                            $13,000                            EL                            =                            $10,000                            EL                            =                            $13,0003                            NEL                            =                            $11,500                            DO                            =                            $12,000                            DO                            =                            $10,0004                            NEL                            =                            $24,000                            EL                            =                            $28,000                            NEL                            =                            $22,0005                            DO                            =                            $18,000                            NEL                            =                            $10,000                            DO                            =                            $14,000$121,500                            $116,000                            $109,000                *Key:*DO                            =                            Domestic end productEL                            =                            Eligible productNEL                            =                            Noneligible product                *Problem*: Offeror C specifies all-or-none award. Assume all offerors are large businesses. The acquisition is not covered by the WTO GPA.                *Analysis*: (see  25.503)                *STEP 1*: Evaluate Offers A & B before considering Offer C and determine which offer has the lowest evaluated cost for each line item (the tentative award pattern):                *Item 1*: Low offer A is domestic; select A.                *Item 2*: Low offer B is eligible; do not apply factor; select B.                *Item 3*: Low offer A is noneligible and Offer B is a domestic offer. Apply a 20 percent factor to Offer A. The evaluated price of Offer A is higher than Offer B; select B.                *Item 4*: Low offer A is noneligible. Since neither offer is a domestic offer, no evaluation factor applies; select A.                *Item 5*: Low offer B is noneligible; apply a 20 percent factor to Offer B. Offer A is still higher than Offer B; select B.                *STEP 2*: Evaluate Offer C against the tentative award pattern for Offers A and B:                OFFERSItem                            Low Offer                            Tentative Award Pattern from A and B                            C1                            A                            DO                            =                            $ 55,000                            *NEL                            =                            $60,0002                            B                            EL                            =                            $10,000                            EL                            =                            $13,0003                            B                            DO                            =                            $12,000                            DO                            =                            $10,0004                            A                            NEL                            =                            $24,000                            NEL                            =                            $22,0005                            B                            *NEL                            =                            $12,000                            DO                            =                            $14,000TOTAL                                                        $113,000                            $119,000                *Offer + 20 percent.                On a line item basis, apply a factor to any noneligible offer if the other offer for that line item is domestic.                For Item 1, apply a factor to Offer C because Offer A is domestic and the acquisition was not covered by the WTO GPA. The evaluated price of Offer C, Item 1, becomes $60,000 ($50,000 plus 20 percent). Apply a factor to Offer B, Item 5, because it is a noneligible product and Offer C is domestic. The evaluated price of Offer B is $12,000 ($10,000 plus 20 percent). Evaluate the remaining items without applying a factor.                STEP 3: The tentative unrestricted award pattern from Offers A and B is lower than the evaluated price of Offer C. Award the combination of Offers A and B. Note that if Offer C had not specified all-or-none award, award would be made on Offer C for line items 3 and 4, totaling an award of $32,000.                                          (b)                   *Example 2*.                OFFERSItem                            A                            B                            C1                            DO                            =                            $50,000                            EL                            =                            $50,500                            NEL                            =                            $50,0002                            NEL                            =                            $10,300                            NEL                            =                            $10,000                            EL                            =                            $10,2003                            EL                            =                            $20,400                            EL                            =                            $21,000                            NEL                            =                            $20,2004                            DO                            =                            $10,500                            DO                            =                            $10,300                            DO                            =                            $10,400TOTAL                            $91,200                            $91,800                            $90,800                *Problem:* The solicitation specifies award on a group basis. Assume the Buy American statute applies and the acquisition cannot be set aside for small business concerns. All offerors are large businesses.                *Analysis:* (see  25.503(c))                STEP 1: Determine which of the offers are domestic (see  25.503(c)(1)):                Domestic [percent]                            DeterminationA                            $50,000 (Offer A1) + $10,500 (Offer A4) = $60,500                               $60,500/$91,200 (Offer A Total) = 66.3%                            DomesticB                            $10,300 (Offer B4) /$91,800 (Offer B Total) $ = 11.2%                            ForeignC                            $10,400 (Offer C4) /$90,800 (Offer C Total) = 11.5%                            Foreign                *STEP 2*: Determine whether foreign offers are eligible or noneligible offers (see  25.503(c)(2)):                Domestic + Eligible [percent]                            DeterminationA                            N/A (Both Domestic)                            DomesticB                            $50,500 (Offer B1) + $21,000 (Offer B3) + $10,300 (Offer B4)= $81,800.                               $81,800 /$91,800 (Offer B Total) = 89.1%                            EligibleC                            $10,200 (Offer C2) + $10,400 (Offer C4) = $20,600.                               $20,600/$90,800 (Offer C Total) = 22.7%                            Noneligible                *STEP 3:* Determine whether to apply an evaluation factor (see  25.503(c)(3)). The low offer (Offer C) is a foreign offer. There is no                   eligible offer lower than the domestic offer. Therefore, apply the factor to the                   low offer. Addition of the 20 percent factor (use 30 percent if Offer A is a small                   business) to Offer C yields an evaluated price of $108,960 ($90,800 + 20 percent).                   Award on Offer A (see  25.502(c)(4)(ii)). Note that, if Offer A                   were greater than Offer B, an evaluation factor would not be applied, and award                   would be on Offer C (see  25.502(c)(3)).                                          (c)                   *Example                      3*.                OFFERSItem                            A                            B                            C1                            DO                            =                            $17,800                            FO (>55%)                            =                            $16,000                            FO (>55%)                            =                            $11,2002                            FO (>55%)                            =                            $9,000                            FO (>55%)                            =                            $8,500                            DO                            =                            $10,2003                            FO (>55%)                            =                            $11,200                            FO (>55%)                            =                            $12,000                            FO (>55%)                            =                            $11,0004                            DO                            =                            $10,000                            DO                            =                            $9,000                            FO (>55%)                            =                            $6,400Total                            $48,000                            $45,500                            $38,800.                *Key:*                DO = Domestic end product (complies with the                   required domestic content).                FO > 55% = Foreign end product with domestic                   content exceeding 55%.                FO < 55% = Foreign end product with domestic                   content of 55% or less.                *Problem:* The solicitation specifies                   award on a group basis. Assume only the Buy American statute applies (                      *i.e.,* no trade agreements apply) and the acquisition cannot be set aside                   for small business concerns. All offerors are large businesses.                *Analysis:* (see  25.503(d))                *STEP 1:* Determine which of the offers                   are domestic (see  25.503(d)(1)).                Domestic [percent]                            DeterminationA                            $17,800 (Offer A1) + $10,000 (Offer A4) =                                  $27,800                               $27,800/$48,000 (Offer A Total) = 58%                            DomesticB                            $9,000 (Offer B4)/$45,500 (Offer B Total) =                                  19.8%                            ForeignC                            $10,200 (Offer C2)/$38,800 (Offer C Total) =                                  26.3%                            Foreign                *STEP 2:* Determine which offer,                      domestic or foreign, is the low offer. If the low offer is a foreign offer,                      apply the evaluation factor (see 25.503(d)(2)). The low offer (Offer C) is a                      foreign offer. Therefore, apply the factor to the low offer. Addition of the 20                      percent factor (use 30 percent if Offer A is a small business) to Offer C                      yields an evaluated price of $46,560 ($38,800 + 20 percent). Offer C remains                      the low offer.                                *STEP 3:* Determine if there is a foreign                   offer that could be treated as a domestic offer (see  25.106(b)(2)                   and  25.503(d)(2)).                Amount of domestic content (percent)                            DeterminationA                            N/A                            N/AB                            $9,000 (Offer B4)/$45,500 (Offer B Total) $ =                                  19.8% is domestic                               AND                               $16,000 (Offer B1) + $8,500 (Offer B2) + $12,000                                  (Offer B3) = $36,500                               $36,500/$45,500 (Offer B Total) = 80.2% can be treated as                                  domestic                               19.8% + 80.2% = 100% is domestic or can be treated as domestic                            Can be treated as domestic.C                            $10,200 (Offer C2)/$38,800 (Offer C Total) = 26.3% is                               domestic                            Noneligible                *STEP 4:* If there is a foreign offer that                   could be treated as a domestic offer, compare the evaluated price of the low offer                   to the price of the offer treated as domestic ( *see*                    25.503(d)(3)). Offer B can be treated as a domestic offer ($45,500). The                   evaluated price of the low offer (Offer C) is $46,560. Award on Offer B.
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