Buying-in
Contractors must avoid submitting unrealistically low bids with the intent to recover losses through future contract modifications or follow-on work, as this practice is prohibited and closely monitored by contracting officers.
Overview
FAR 3.501 addresses the practice of "buying-in," which occurs when a contractor submits an offer below anticipated costs, expecting to increase the contract price later through change orders, modifications, or follow-on contracts. The regulation warns against buying-in as it can undermine fair competition and lead to increased costs for the government. Contracting officers are advised to be vigilant for signs of buying-in and to take steps to protect the government's interests, such as negotiating reasonable prices for change orders and avoiding automatic follow-on awards to the original contractor. The section emphasizes the importance of maintaining integrity in the procurement process and ensuring that contract awards are based on realistic and fair pricing.