25.504-4 Group award basis
Source: FAR 25.504-4 on acquisition.gov
FAR 25.504-4 provides step-by-step examples for applying Buy American evaluation factors and determining awards on a group basis, ensuring fair and consistent treatment of domestic and foreign offers.
Overview
FAR 25.504-4 provides detailed examples illustrating how to evaluate offers and determine awards when a solicitation specifies a group award basis under the Buy American statute and related regulations. The section walks through three scenarios, each with multiple line items and varying combinations of domestic, eligible, and noneligible products, as well as different offeror conditions (such as all-or-none awards). The examples demonstrate the application of evaluation factors (typically 20% or 30%) to noneligible foreign offers, the calculation of domestic content percentages, and the process for determining which offer should receive the award based on the lowest evaluated price. The section emphasizes the importance of following the prescribed evaluation methodology, including when to apply evaluation factors and how to handle group awards versus line item awards.
Key Rules
- Application of Evaluation Factors
- Apply a 20% (or 30% for small businesses) evaluation factor to noneligible foreign offers when a domestic offer is present and the acquisition is not covered by trade agreements.
- Group Award Determination
- When a solicitation specifies a group award, evaluate the total price and domestic content percentage for each offer to determine eligibility and whether evaluation factors apply.
- All-or-None Offers
- If an offeror specifies an all-or-none award, compare their total evaluated price to the combination of other offers for individual line items.
- Domestic Content Calculation
- Calculate the percentage of domestic content for each offer to determine if it qualifies as a domestic offer under the Buy American statute.
- Treatment of Foreign Offers as Domestic
- In some cases, foreign offers with sufficient domestic content may be treated as domestic for evaluation purposes.
Responsibilities
- Contracting Officers: Must accurately apply evaluation factors, calculate domestic content, and follow group award procedures as outlined in the examples.
- Contractors: Should clearly indicate domestic content, understand how evaluation factors may affect their competitiveness, and specify any all-or-none conditions.
- Agencies: Ensure compliance with Buy American and trade agreement statutes, and document evaluation decisions.
Practical Implications
- This section exists to clarify complex evaluation scenarios and ensure consistent application of Buy American requirements in group award situations.
- It impacts daily contracting by guiding how offers are compared and how evaluation factors are applied, which can significantly affect award outcomes.
- Common pitfalls include misapplying evaluation factors, incorrectly calculating domestic content, or misunderstanding group award versus line item award rules.
(a) Example 1.
| OFFERS | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| Item | A | B | C | ||||||
|
1 |
DO | = | $55,000 | EL | = | $56,000 | NEL | = | $50,000 |
|
2 |
NEL | = | $13,000 | EL | = | $10,000 | EL | = | $13,000 |
|
3 |
NEL | = | $11,500 | DO | = | $12,000 | DO | = | $10,000 |
|
4 |
NEL | = | $24,000 | EL | = | $28,000 | NEL | = | $22,000 |
|
5 |
DO | = | $18,000 | NEL | = | $10,000 | DO | = | $14,000 |
| $121,500 | $116,000 | $109,000 | |||||||
|
Key: |
||
| DO |
= |
Domestic end product |
| EL |
= |
Eligible product |
| NEL |
= |
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:
| OFFERS | |||||||
|---|---|---|---|---|---|---|---|
| Item | Low Offer | Tentative Award Pattern from A and B | C | ||||
|
1 |
A |
DO | = | $ 55,000 | *NEL | = | $60,000 |
|
2 |
B |
EL | = | $10,000 | EL | = | $13,000 |
|
3 |
B |
DO | = | $12,000 | DO | = | $10,000 |
|
4 |
A |
NEL | = | $24,000 | NEL | = | $22,000 |
|
5 |
B |
*NEL | = | $12,000 | DO | = | $14,000 |
| TOTAL | $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.
| OFFERS | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| Item | A | B | C | ||||||
|
1 |
DO | = | $50,000 | EL | = | $50,500 | NEL | = | $50,000 |
|
2 |
NEL | = | $10,300 | NEL | = | $10,000 | EL | = | $10,200 |
|
3 |
EL | = | $20,400 | EL | = | $21,000 | NEL | = | $20,200 |
|
4 |
DO | = | $10,500 | DO | = | $10,300 | DO | = | $10,400 |
|
TOTAL |
$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] | Determination | |
|
A |
$50,000 (Offer A1) + $10,500 (Offer A4) = $60,500 $60,500/$91,200 (Offer A Total) = 66.3% |
Domestic |
|
B |
$10,300 (Offer B4) /$91,800 (Offer B Total) $ = 11.2% |
Foreign |
|
C |
$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] | Determination | |
|
A |
N/A (Both Domestic) |
Domestic |
|
B |
$50,500 (Offer B1) + $21,000 (Offer B3) + $10,300 (Offer B4)= $81,800. $81,800 /$91,800 (Offer B Total) = 89.1% |
Eligible |
|
C |
$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.
| OFFERS | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| Item | A | B | C | ||||||
|
1 |
DO | = | $17,800 | FO (>55%) | = | $16,000 | FO (>55%) | = | $11,200 |
|
2 |
FO (>55%) | = | $9,000 | FO (>55%) | = | $8,500 | DO | = | $10,200 |
|
3 |
FO (>55%) | = | $11,200 | FO (>55%) | = | $12,000 | FO (>55%) | = | $11,000 |
|
4 |
DO | = | $10,000 | DO | = | $9,000 | FO (>55%) | = | $6,400 |
|
Total |
$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] | Determination | |
|
A |
$17,800 (Offer A1) + $10,000 (Offer A4) = $27,800 $27,800/$48,000 (Offer A Total) = 58% |
Domestic |
|
B |
$9,000 (Offer B4)/$45,500 (Offer B Total) = 19.8% |
Foreign |
|
C |
$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) | Determination | |
|
A |
N/A |
N/A |
|
B |
$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.