3.501-1
Definition
Buying-in is the practice of bidding below cost with the intent to recover losses through contract modifications or future contracts, which is prohibited in government contracting.
Overview
- FAR 3.501-1 defines the term "buying-in" for use in the context of government contracting. This definition is critical for understanding improper pricing strategies that may undermine fair competition and contract integrity.
Key Rules
- Definition of Buying-In
- Buying-in refers to submitting an offer below anticipated costs with the expectation of either increasing the contract amount after award (such as through overpriced change orders) or securing future contracts at inflated prices to recover initial losses.
Responsibilities
- Contracting Officers: Must be vigilant for signs of buying-in during proposal evaluation and contract administration.
- Contractors: Should avoid submitting offers below cost with the intent to recover losses through future contract modifications or follow-on work.
- Agencies: Should establish procedures to detect and prevent buying-in practices.
Practical Implications
- This definition clarifies what constitutes buying-in, helping contracting professionals identify and avoid unethical pricing tactics. Recognizing buying-in is essential for maintaining fair competition and preventing cost overruns or abuse of contract modifications. Contractors engaging in buying-in risk disqualification, reputational harm, or further scrutiny.