25.1002 Use of foreign currency
Source: FAR 25.1002 on acquisition.gov
Contracting officers must ensure fair evaluation and proper funding when foreign currency is used in overseas contracts, converting offers to U.S. dollars as required and safeguarding against currency fluctuation risks.
Overview
FAR 25.1002 outlines the requirements for the use of foreign currency in government contracts performed outside the United States. It directs contracting officers to determine the appropriate currency for solicitations, typically requiring offers to be priced in the same currency unless an international agreement or the WTO GPA mandates otherwise. If offers in multiple currencies are allowed, the regulation specifies how to convert foreign currency offers to U.S. dollars for evaluation, using current market exchange rates at specific points in the acquisition process. Additionally, it requires agencies to ensure sufficient funds are available to cover potential currency fluctuations when contracts are priced in foreign currency, to prevent violations of the Anti-Deficiency Act.
Key Rules
- Currency Determination
- Contracting officers must decide if offers should be submitted in U.S. dollars or a specified foreign currency for contracts performed outside the U.S., unless an agreement requires a specific currency.
- Uniform Pricing Requirement
- Solicitations should generally require all offers to be priced in the same currency for fair evaluation.
- Currency Conversion for Evaluation
- If offers in different currencies are permitted, contracting officers must convert all offers to U.S. dollars using the current market exchange rate on the relevant date (bid opening, receipt of offers, or final proposal revisions).
- Funding for Currency Fluctuations
- Agencies must ensure adequate funds are available to cover currency fluctuations in foreign currency contracts to avoid Anti-Deficiency Act violations.
Responsibilities
- Contracting Officers: Decide on solicitation currency, ensure fair evaluation, perform currency conversions, and verify funding for currency fluctuations.
- Contractors: Submit offers in the required currency and understand how currency conversion may affect evaluation.
- Agencies: Monitor and manage funds to cover potential currency fluctuations in foreign currency contracts.
Practical Implications
- This section ensures fairness and consistency in evaluating offers for overseas contracts and protects agencies from financial risk due to currency fluctuations. Contractors must pay close attention to solicitation instructions regarding currency and be aware of how their offers will be evaluated if multiple currencies are allowed. Failure to manage currency risks can lead to funding shortfalls and legal violations.
(a) Unless an international agreement or the WTO GPA (see 25.408(a)(4)) requires a specific currency, contracting officers must determine whether solicitations for contracts to be entered into and performed outside the United States will require submission of offers in U.S. currency or a specified foreign currency. In unusual circumstances, the contracting officer may permit submission of offers in other than a specified currency.
(b) To ensure a fair evaluation of offers, solicitations generally should require all offers to be priced in the same currency. However, if the solicitation permits submission of offers in other than a specified currency, the contracting officer must convert the offered prices to U.S. currency for evaluation purposes. The contracting officer must use the current market exchange rate from a commonly used source in effect as follows:
(1) For acquisitions conducted using sealed bidding procedures, on the date of bid opening.
(2) For acquisitions conducted using negotiation procedures-
(i) On the date specified for receipt of offers, if award is based on initial offers; otherwise
(ii) On the date specified for receipt of final proposal revisions.
(c) If a contract is priced in foreign currency, the agency must ensure that adequate funds are available to cover currency fluctuations to avoid a violation of the Anti-Deficiency Act (31 U.S.C. 1341, 1342, 1511-1519).