Equal Low Bids
Small businesses must identify qualifying Labor Surplus Areas in their bid to receive priority in the event of equal low bids.
Overview
FAR 52.219-2, Equal Low Bids, establishes procedures for resolving tie bids among small business concerns, specifically addressing the role of Labor Surplus Area (LSA) status. When two or more small businesses submit identical low bids, priority for award may be given to those that qualify as LSA concerns. To be considered for this priority, bidders must identify the relevant LSA(s) where more than 50% of the contract price will be incurred through manufacturing or production, either by the bidder or their first-tier subcontractors. Failure to provide this information at the time of bidding disqualifies the bidder from receiving LSA priority. If a bidder receives an award due to LSA priority, they are obligated to perform the contract in accordance with LSA requirements.
Key Rules
- Applicability to Small Businesses
- Only small business concerns are eligible for LSA priority in the event of equal low bids.
- LSA Identification Requirement
- Bidders seeking LSA priority must specify the LSA(s) where over 50% of contract costs will be incurred.
- Consequence of Non-Identification
- Bidders who do not identify LSAs as required are not eligible for LSA priority consideration.
- Obligation Upon Award
- Awardees who receive contracts due to LSA priority must fulfill the contract as an LSA concern.
Responsibilities
- Contracting Officers: Must apply LSA priority rules when evaluating tie bids among small businesses and verify LSA eligibility.
- Contractors: Must accurately identify LSAs to be considered for priority and comply with LSA performance obligations if awarded.
- Agencies: Ensure compliance with LSA requirements and maintain documentation for tie bid resolutions.
Practical Implications
- This provision ensures that, in the event of tie bids among small businesses, those supporting labor surplus areas may receive preference, promoting economic activity in those regions. Contractors must be proactive in identifying LSAs to benefit from this rule. Common pitfalls include failing to provide LSA information or misunderstanding the 50% cost threshold, which can result in lost award opportunities.