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-Part 25 - Foreign Acquisition .....................................................................................................66+Part 25 - Foreign Acquisition
+FC 25.002 Applicability of subparts.
+The following table shows the applicability of the subparts.
+Services
+Supplies for use Construction
+performed
+Inside Outside Inside Outside Inside Outside
+U.S. U.S. U.S. U.S. U.S. U.S.
+Subpart
+25.1 Buy American—Supplies
+X
+25.2 Buy American—
+Construction Materials X
+25.3 Reserved
+25.4 Trade Agreements
+X X X X X X
+25.5 Evaluating Foreign
+Offers—Supply X X
+Contracts
+25.6 Solicitation Provisions
+and Contract Clauses X X X X X X
+25.7 Contracts Performed
+Outside the United X X X
+States
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+Federal Acquisition Regulation (FAR) Companion
+Services
+Supplies for use Construction
+performed
+Inside Outside Inside Outside Inside Outside
+U.S. U.S. U.S. U.S. U.S. U.S.
+Subpart
+25.8 Other International
+Agreements and
+X X X X
+Coordination
+25.9 Customs and Duties
+X
+25.10 Additional Foreign
+Acquisition Regulations X X X X X X
+FC 25.5 Evaluation Examples.
+The following examples illustrate the application of the evaluation procedures in FAR 25.502
+and 25.503. The examples assume that the contracting officer has eliminated all offers that are
+unacceptable for reasons other than price (see FAR 25.502(a)(1)). The evaluation factor may
+change as provided in agency regulations.
+Buy American statute.
+Example 1.
+Offeror Price End Product Type
+Offer A $16,000 Domestic end product, small business.
+Offer B $15,700 Domestic end product, small business.
+Offer C $10,100 U.S.-made end product (not domestic), small business.
+Analysis: This acquisition is for end products for use in the United States and is set aside for
+small business concerns. The Buy American statute applies. Since the acquisition value is less
+than $50,000 and the acquisition is set aside, none of the trade agreements apply. Perform the
+steps in FAR 25.502(a). Offer C is of 50 percent domestic content, therefore Offer C is
+evaluated as a foreign end product, because it is the product of a small business but is not a
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+domestic end product (see FAR 25.502(c)(4)). Since Offer B is a domestic offer, apply the 30
+percent factor to Offer C (see FAR 25.106(b)(2)). The resulting evaluated price of $13,130
+remains lower than Offer B. The cost of Offer B is therefore unreasonable (see FAR
+25.106(b)(1)(ii)). The FAR 25.106(b)(2) procedures do not apply. Award on Offer C at $10,100
+(see FAR 25.502(c)(4)(i)).
+Example 2.
+Offeror Price End Product Type
+Offer A $11,000 Domestic end product, small business.
+Offer B $10,700 Domestic end product, small business.
+Offer C $10,200 U.S.-made end product (not domestic), small business.
+Analysis: This acquisition is for end products for use in the United States and is set aside for
+small business concerns. The Buy American statute applies. Perform the steps in FAR
+25.502(a). Offer C is evaluated as a foreign end product because it is the product of a small
+business but is not a domestic end product (see FAR 25.502(c)(4)). After applying the 30
+percent factor, the evaluated price of Offer C is $13,260. Award on Offer B at $10,700 (see FAR
+25.502(c)(4)(ii)).
+Example 3.
+Offeror Price End Product Type
+Domestic end product (complies with the required domestic content),
+Offer A $14,000
+small business.
+U.S.-made end product (not domestic, exceeds 55% domestic
+Offer B 12,500
+content), small business.
+U.S.-made end product (not domestic, with less than 55% domestic
+Offer C 10,100
+content), small business.
+Analysis: This acquisition is for end products for use in the United States and is set aside for
+small business concerns. The Buy American statute applies. Since the acquisition value is less
+than $50,000 and the acquisition is set aside, none of the trade agreements apply. Perform the
+steps in FAR 25.502(a). Offers B and C are initially evaluated as foreign end products, because
+they are the products of small businesses but are not domestic end products (see FAR
+25.502(c)(4)). Offer C is the low offer. After applying the 30 percent factor, the evaluated price of
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+Offer C is $13,130. The resulting evaluated price of $13,130 remains lower than Offer A. The
+cost of Offer A is therefore unreasonable. Offer B is then treated as a domestic offer, because it
+is for a U.S.-made end product that exceeds 55 percent domestic content (see FAR
+25.106(b)(2)). Offer B is determined reasonable because it is lower than the $13,130 evaluated
+price of Offer C. Award on Offer B at $12,500.
+WTO GPA/Caribbean Basin Trade Initiative/FTAs.
+Example 1.
+Offeror Price End Product Type
+Offer A $304,000 U.S.-made end product (not domestic).
+Offer B $303,000 U.S.-made end product (domestic), small business.
+Offer C $300,000 Eligible product.
+Offer D $295,000 Noneligible product (not U.S.-made).
+Analysis: Eliminate Offer D because the acquisition is covered by the WTO GPA and there is an
+offer of a U.S.-made or an eligible product (see FAR 25.502(b)(1)). If the agency gives the same
+consideration given eligible offers to offers of U.S.-made end products that are not domestic
+offers, it is unnecessary to determine if U.S.-made end products are domestic (large or small
+business). No further analysis is necessary. Award on the low remaining offer, Offer C (see FAR
+25.502(b)(2)).
+FTA/Israeli Trade Act.
+Example 1.
+Offeror Price End Product Type
+Offer A $105,000 Domestic end product, small business.
+Offer B $100,000 Eligible product.
+Analysis: Since the low offer is an eligible offer, award on the low offer (see FAR 25.502(c)(1)).
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+Example 2.
+Offeror Price End Product Type
+Offer A $105,000 Eligible product.
+Offer B $103,000 Noneligible product.
+Analysis: Since the acquisition is not covered by the WTO GPA, the contracting officer can
+consider the noneligible offer. Since no domestic offer was received, make a nonavailability
+determination and award on Offer B (see FAR 25.502(c)(2)).
+Example 3.
+Offeror Price End Product Type
+Offer A $105,000 Domestic end product, large business.
+Offer B $103,000 Eligible product.
+Offer C $100,000 Noneligible product.
+Analysis: Since the acquisition is not covered by the WTO GPA, the contracting officer can
+consider the noneligible offer. Because the eligible offer (Offer B) is lower than the domestic
+offer (Offer A), no evaluation factor applies to the low offer (Offer C). Award on the low offer
+(see FAR 25.502(c)(3)).
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+Group award basis.
+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
+Total $121,500 $116,000 $109,000
+Key: DO = Domestic end product; EL = Eligible product; NEL = Non-eligible 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 FAR 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.
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+STEP 2: Evaluate Offer C against the tentative award pattern for Offers A and B:
+Offers
+Tentative award
+Low offer C
+Item pattern from A and B
+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.
+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
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+Offers
+Item A B C
+Total $91,200 $91,800 $90,800
+Problem: The solicitation specifies an 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 FAR 25.503(c))
+STEP 1: Determine which of the offers are domestic (see FAR 25.503(c)(1)):
+Offer Domestic (percent) Determination
+A $50,000 (Offer A1) + $10,500 (Offer A4) = $60,500 Domestic
+$60,500/$91,200 (Offer A Total) = 66.3%
+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 FAR
+25.503(c)(2)):
+Offer Domestic + eligible (percent) Determination
+A N/A (Both Domestic) Domestic
+B $50,500 (Offer B1) + $21,000 (Offer B3) + $10,300 (Offer B4) Eligible
+= $81,800
+$81,800/$91,800 (Offer B Total) = 89.1%
+C $10,200 (Offer C2) + $10,400 (Offer C4) = $20,600 Noneligible
+$20,600/$90,800 (Offer C Total) = 22.7%
+STEP 3: Determine whether to apply an evaluation factor (see FAR 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
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+on Offer A (see FAR 25.502(c)(4)(ii)). Note that, if Offer A were greater than Offer B, an
+evaluation factor would not be applied, and the award would be on Offer C (see FAR
+25.502(c)(3)).
+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 an 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 FAR 25.503(d))
+STEP 1: Determine which of the offers are domestic (see FAR 25.503(d)(1)):
+Offer Domestic (percent) Determination
+A $17,800 (Offer A1) + $10,000 (Offer A4) = $27,800 Domestic
+$27,800/$48,000 (Offer A Total) = 58%
+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 FAR 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
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+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 FAR 25.503(d)(2)).
+Offer 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 Can be treated
+as 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
+C $10,200 (Offer C2)/$38,800 (Offer C Total) = 26.3% is domestic Foreign
+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 FAR
+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.
+FC 25.9 Tax on foreign procurements.
+Before buying goods or services from a foreign source, the contracting officer should consult the
+agency-designated legal counsel to:
+● Get information about foreign tax treaties and agreements in effect and any foreign-tax-
+relief programs; and
+● Resolve any other tax questions affecting the planned contract.