FAR

FAR

FAC Number: 2022-08
Effective Date: 10/28/2022

Part 25 - Foreign Acquisition

      25.000 Scope of part.

      25.001 General.

      25.002 Applicability of subparts.

      25.003 Definitions.

      Subpart 25.1 - Buy American-Supplies

           25.100 Scope of subpart.

           25.101 General.

           25.102 Policy.

           25.103 Exceptions.

           25.104 Nonavailable articles.

           25.105 Critical components and critical items.

           25.106 Determining reasonableness of cost.

      Subpart 25.2 - Buy American-Construction Materials

           25.200 Scope of subpart.

           25.201 Policy.

           25.202 Exceptions.

           25.203 Preaward determinations.

           25.204 Evaluating offers of foreign construction material.

           25.205 Postaward determinations.

           25.206 Noncompliance.

      Subpart 25.3 - Contracts Performed Outside the United States

           25.301 Contractor personnel in a designated operational area or supporting a diplomatic or consular mission outside the United States.

                25.301-1 Scope.

                25.301-2 Government support.

                25.301-3 Weapons.

                25.301-4 Contract clause.

           25.302 Contractors performing private security functions outside the United States.

                25.302-1 Scope.

                25.302-2 Definitions.

                25.302-3 Applicability.

                25.302-4 Policy.

                25.302-5 Remedies.

                25.302-6 Contract clause.

      Subpart 25.4 - Trade Agreements

           25.400 Scope of subpart.

           25.401 Exceptions.

           25.402 General.

           25.403 World Trade Organization Government Procurement Agreement and Free Trade Agreements.

           25.404 Least developed countries.

           25.405 Caribbean Basin Trade Initiative.

           25.406 Israeli Trade Act.

           25.407 Agreement on Trade in Civil Aircraft.

           25.408 Procedures.

      Subpart 25.5 - Evaluating Foreign Offers-Supply Contracts

           25.501 General.

           25.502 Application.

           25.503 Group offers.

           25.504 Evaluation examples.

                25.504-1 Buy American statute.

                25.504-2 WTO GPA/Caribbean Basin Trade Initiative/FTAs.

                25.504-3 FTA/Israeli Trade Act.

                25.504-4 Group award basis.

      Subpart 25.6 - American Recovery and Reinvestment Act-Buy American statute-Construction Materials

           25.600 Scope of subpart.

           25.601 Definitions.

           25.602 Policy.

                25.602-1 Section 1605 of the Recovery Act.

                25.602-2 Buy American statute

           25.603 Exceptions.

           25.604 Preaward determination concerning the inapplicability of section 1605 of the Recovery Act or the Buy American statute.

           25.605 Evaluating offers of foreign construction material.

           25.606 Postaward determinations.

           25.607 Noncompliance.

      Subpart 25.7 - Prohibited Sources

           25.700 Scope of subpart.

           25.701 Restrictions administered by the Department of the Treasury on acquisitions of supplies or services from prohibited sources.

           25.702 Prohibition on contracting with entities that conduct restricted business operations in Sudan.

                25.702-1 Definitions.

                25.702-2 Certification.

                25.702-3 Remedies.

                25.702-4 Waiver.

           25.703 Prohibition on contracting with entities that engage in certain activities or transactions relating to Iran.

                25.703-1 Definitions.

                25.703-2 Iran Sanctions Act.

                25.703-3 Prohibition on contracting with entities that export sensitive technology to Iran.

                25.703-4 Waiver.

      Subpart 25.8 - Other International Agreements and Coordination

           25.801 General.

           25.802 Procedures.

      Subpart 25.9 - Customs and Duties

           25.900 Scope of subpart.

           25.901 Policy.

           25.902 Procedures.

           25.903 Exempted supplies.

      Subpart 25.10 - Additional Foreign Acquisition Regulations

           25.1001 Waiver of right to examination of records.

           25.1002 Use of foreign currency.

           25.1003 Tax on certain foreign procurements.

      Subpart 25.11 - Solicitation Provisions and Contract Clauses

           25.1101 Acquisition of supplies.

           25.1102 Acquisition of construction.

           25.1103 Other provisions and clauses.

25.000 Scope of part.

      (a) This part provides policies and procedures for-

           (1) Acquisition of foreign supplies, services, and construction materials; and

           (2) Contracts performed outside the United States.

      (b) It implements 41 U.S.C. chapter 83, Buy American; trade agreements; and other laws and regulations.

25.001 General.

      (a) 41 U.S.C. chapter 83, Buy American-

           (1) Restricts the purchase of supplies, that are not domestic end products, for use within the United States. A foreign end product may be purchased if the contracting officer determines that the price of the lowest domestic offer is unreasonable or if another exception applies (see subpart  25.1); and

           (2) Requires, with some exceptions, the use of only domestic construction materials in contracts for construction in the United States (see subpart  25.2).

      (b) The restrictions in the Buy American statute are not applicable in acquisitions subject to certain trade agreements (see subpart  25.4). In these acquisitions, end products and construction materials from certain countries receive nondiscriminatory treatment in evaluation with domestic offers. Generally, the dollar value of the acquisition determines which of the trade agreements applies. Exceptions to the applicability of the trade agreements are described in subpart  25.4.

      (c) The test to determine the country of origin for an end product under the Buy American statute (see the various country "end product" definitions in 25.003) is different from the test to determine the country of origin for an end product under the trade agreements, or the criteria for the representation on end products manufactured outside the United States (see 52.225-18).

           (1) The Buy American statute uses a two-part test to define a "domestic end product" or "domestic construction material" (manufactured in the United States and a domestic content test). The domestic content test has been waived for acquisition of commercially available off-the-shelf (COTS) items, except a product that consists wholly or predominantly of iron or steel or a combination of both (excluding COTS fasteners) (see 25.101(a) and 25.201(b)).

           (2) Under the trade agreements, the test to determine country of origin is "substantial transformation" (i.e., transforming an article into a new and different article of commerce, with a name, character, or use distinct from the original article).

           (3) For the representation at 52.225-18, the only criterion is whether the place of manufacture of an end product is in the United States or outside the United States, without regard to the origin of the components.

           (4) When using funds appropriated under the American Recovery and Reinvestment Act of 2009 (Pub. L. 111-5), the definition of "domestic manufactured construction material" requires manufacture in the United States but does not include a requirement with regard to the origin of the components. If the construction material consists wholly or predominantly of iron or steel, the iron or steel must be produced in the United States.

25.002 Applicability of subparts.

The following table shows the applicability of the subparts. subpart  25.5 provides comprehensive procedures for offer evaluation and examples.

Subpart

Supplies For Use

Construction

Services Performed

Inside U.S.

Outside U.S.

Inside U.S.

Outside U.S.

Inside U.S.

Outside U.S.

25.1 Buy American- Supplies

X

-

-

-

-

-

25.2 Buy American- Construction Materials

-

-

X

-

-

-

25.3 Contracts Performed Outside the United States

-

X

-

X

-

X

25.4 Trade Agreements

X

X

X

X

X

X

25.5 Evaluating Foreign Offers- Supply Contracts

X

X

-

-

-

-

25.6 American Recovery and Reinvestment Act-Buy American statute-Construction Materials

X

25.7 Prohibited Sources

X

X

X

X

X

X

25.8 Other International Agreements and Coordination

X

X

-

X

-

X

25.9 Customs and Duties

X

-

-

-

-

-

25.10 Additional Foreign Acquisition Regulations

X

X

X

X

X

X

25.11 Solicitation Provisions and Contract Clauses

X

X

X

X

X

X

25.003 Definitions.

As used in this part—

Caribbean Basin country means any of the following countries: Antigua and Barbuda, Aruba, Bahamas, Barbados, Belize, Bonaire, British Virgin Islands, Curacao, Dominica, Grenada, Guyana, Haiti, Jamaica, Montserrat, Saba, St. Kitts and Nevis, St. Lucia, St. Vincent and the Grenadines, Sint Eustatius, Sint Maarten, or Trinidad and Tobago.

Caribbean Basin country end product

           (1) Means an article that–

                (i)

(A) Is wholly the growth, product, or manufacture of a Caribbean Basin country; or

                     (B) In the case of an article that consists in whole or in part of materials from another country, has been substantially transformed in a Caribbean Basin country into a new and different article of commerce with a name, character, or use distinct from that of the article or articles from which it was transformed; and

                (ii) Is not excluded from duty-free treatment for Caribbean countries under 19 U.S.C. 2703(b).

                     (A) For this reason, the following articles are not Caribbean Basin country end products:

                          (1) Tuna, prepared or preserved in any manner in airtight containers.

                          (2) Petroleum, or any product derived from petroleum.

                          (3) Watches and watch parts (including cases, bracelets, and straps) of whatever type including, but not limited to, mechanical, quartz digital, or quartz analog, if such watches or watch parts contain any material that is the product of any country to which the Harmonized Tariff Schedule of the United States (HTSUS) column 2 rates of duty apply (i.e., Afghanistan, Cuba, Laos, North Korea, and Vietnam).

                          (4) Certain of the following: textiles and apparel articles; footwear, handbags, luggage, flat goods, work gloves, and leather wearing apparel; or handloomed, handmade, and folklore articles.

                     (B) Access to the HTSUS to determine duty-free status of articles of the types listed in paragraph (1)(ii)(A)(4) of this definition is available via the Internet at https://usitc.gov/tata/hts/index.htm. In particular, see the following:

                          (1) General Note 3(c), Products Eligible for Special Tariff treatment.

                          (2) General Note 17, Products of Countries Designated as Beneficiary Countries under the United States- Caribbean Basin Trade Partnership Act of 2000.

                          (3) Section XXII, Chapter 98, Subchapter II, Articles Exported and Returned, Advanced or Improved Abroad, U.S. Note 7(b).

                          (4) Section XXII, Chapter 98, Subchapter XX, Goods Eligible for Special Tariff Benefits under the United States-Caribbean Basin Trade Partnership Act; and

           (2) Refers to a product offered for purchase under a supply contract, but for purposes of calculating the value of the acquisition, includes services (except transportation services) incidental to the article, provided that the value of those incidental services does not exceed that of the article itself.

Civil aircraft and related articles means-

           (1) All aircraft other than aircraft to be purchased for use by the Department of Defense or the U.S. Coast Guard;

           (2) The engines (and parts and components for incorporation into the engines) of these aircraft;

           (3) Any other parts, components, and subassemblies for incorporation into the aircraft; and

           (4) Any ground flight simulators, and parts and components of these simulators, for use with respect to the aircraft, whether to be used as original or replacement equipment in the manufacture, repair, maintenance, rebuilding, modification, or conversion of the aircraft and without regard to whether the aircraft or articles receive duty-free treatment under section 601(a)(2) of the Trade Agreements Act.

Component means an article, material, or supply incorporated directly into an end product or construction material.

Construction material means an article, material, or supply brought to the construction site by a contractor or subcontractor for incorporation into the building or work. The term also includes an item brought to the site preassembled from articles, materials, or supplies. However, emergency life safety systems, such as emergency lighting, fire alarm, and audio evacuation systems, that are discrete systems incorporated into a public building or work and that are produced as complete systems, are evaluated as a single and distinct construction material regardless of when or how the individual parts or components of those systems are delivered to the construction site. Materials purchased directly by the Government are supplies, not construction material.

Cost of components means-

           (1) For components purchased by the contractor, the acquisition cost, including transportation costs to the place of incorporation into the end product or construction material (whether or not such costs are paid to a domestic firm), and any applicable duty (whether or not a duty-free entry certificate is issued); or

           (2) For components manufactured by the contractor, all costs associated with the manufacture of the component, including transportation costs as described in paragraph (1) of this definition, plus allocable overhead costs, but excluding profit. Cost of components does not include any costs associated with the manufacture of the end product.

          

Critical component means a component that is mined, produced, or manufactured in the United States and deemed critical to the U.S. supply chain. The list of critical components is at 25.105.

Critical item means a domestic construction material or domestic end product that is deemed critical to the U.S. supply chain. The list of critical items is at 25.105.

Designated country means any of the following countries:

           (1) A World Trade Organization Government Procurement Agreement (WTO GPA) country (Armenia, Aruba, Australia, Austria,, Belgium, Bulgaria, Canada, Croatia, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hong Kong, Hungary, Iceland, Ireland, Israel, Italy, Japan, Korea (Republic of), Latvia, Liechtenstein, Lithuania, Luxembourg, Malta, Moldova, Montenegro, Netherlands, New Zealand, Norway, Poland, Portugal, Romania, Singapore, Slovak Republic, Slovenia, Spain, Sweden, Switzerland, Taiwan (known in the World Trade Organization as "the Separate Customs Territory of Taiwan, Penghu, Kinmen and Matsu (Chinese Taipei)"), Ukraine, or United Kingdom);

           (2) A Free Trade Agreement (FTA) country (Australia, Bahrain, Canada, Chile, Colombia, Costa Rica, Dominican Republic, El Salvador, Guatemala, Honduras, Korea (Republic of), Mexico, Morocco, Nicaragua, Oman, Panama, Peru, or Singapore);

           (3) A least developed country (Afghanistan, Angola, Bangladesh, Benin, Bhutan, Burkina Faso, Burundi, Cambodia, Central African Republic, Chad, Comoros, Democratic Republic of Congo, Djibouti, Equatorial Guinea, Eritrea, Ethiopia, Gambia, Guinea, Guinea-Bissau, Haiti, Kiribati, Laos, Lesotho, Liberia, Madagascar, Malawi, Mali, Mauritania, Mozambique, Nepal, Niger, Rwanda, Samoa, Sao Tome and Principe, Senegal, Sierra Leone, Solomon Islands, Somalia, South Sudan, Tanzania, Timor-Leste, Togo, Tuvalu, Uganda, Vanuatu, Yemen, or Zambia); or

           (4) A Caribbean Basin country (Antigua and Barbuda, Aruba, Bahamas, Barbados, Belize, Bonaire, British Virgin Islands, Curacao, Dominica, Grenada, Guyana, Haiti, Jamaica, Montserrat, Saba, St. Kitts and Nevis, St. Lucia, St. Vincent and the Grenadines, Sint Eustatius, Sint Maarten, or Trinidad and Tobago).

Designated country end product means a WTO GPA country end product, an FTA country end product, a least developed country end product, or a Caribbean Basin country end product.

Domestic construction material means-

           (1) For use in subparts other than 25.6—

                (i)For construction material that does not consist wholly or predominantly of iron or steel or a combination of both

                     (A)An unmanufactured construction material mined or produced in the United States; or

                     (B) A construction material manufactured in the United States, if–

                          (1)The cost of the components mined, produced, or manufactured in the United States exceeds 60 percent of the cost of all its components, except that the percentage will be 65 percent for items delivered in calendar years 2024 through 2028 and 75 percent for items delivered starting in calendar year 2029 (unless an alternate percentage is established for a contract in accordance with FAR 25.201(c)).Components of unknown origin are treated as foreign; or

                          (2)The construction material is a commercially available off-the-shelf (COTS) item; or

                (ii)For construction material that consists wholly or predominantly of iron or steel or a combination of both, a construction material manufactured in the United States if the cost of foreign iron and steel constitutes less than 5 percent of the cost of all the components used in such construction material. The cost of foreign iron and steel includes but is not limited to the cost of foreign iron or steel mill products (such as bar, billet, slab, wire, plate, or sheet), castings, or forgings utilized in the manufacture of the construction material and a good faith estimate of the cost of all foreign iron or steel components excluding COTS fasteners. Iron or steel components of unknown origin are treated as foreign. If the construction material contains multiple components, the cost of all the materials used in such construction material is calculated in accordance with the definition of “cost of components” in this section; or

           (3)For use in subpart  25.6, see the definition in 25.601.

Domestic end product means-

           (1) For an end product that does not consist wholly or predominantly of iron or steel or a combination of both

                (i)An unmanufactured end product mined or produced in the United States;

                (ii)An end product manufactured in the United States, if–

                     (A)The cost of its components mined, produced, or manufactured in the United States exceeds 60 percent of the cost of all its components, except that the percentage will be 65 percent for items delivered in calendar years 2024 through 2028 and 75 percent for items delivered starting in calendar year 2029 (unless an alternate percentage is established for a contract in accordance with FAR 25.101(d)). Components of unknown origin are treated as foreign. Scrap generated, collected, and prepared for processing in the United States is considered domestic; or

                     (B)The end product is a COTS item; or

           (2)For an end product that consists wholly or predominantly of iron or steel or a combination of both, an end product manufactured in the United States, if the cost of foreign iron and steel constitutes less than 5 percent of the cost of all the components used in the end product. The cost of foreign iron and steel includes but is not limited to the cost of foreign iron or steel mill products (such as bar, billet, slab, wire, plate, or sheet), castings, or forgings utilized in the manufacture of the end product and a good faith estimate of the cost of all foreign iron or steel components excluding COTS fasteners. Iron or steel components of unknown origin are treated as foreign. If the end product contains multiple components, the cost of all the materials used in such end product is calculated in accordance with the definition of "cost of components" in this section.

Domestic offer means an offer of a domestic end product. When the solicitation specifies that award will be made on a group of line items, a domestic offer means an offer where the proposed price of the domestic end products exceeds 50 percent of the total proposed price of the group.

Eligible offer means an offer of an eligible product. When the solicitation specifies that award will be made on a group of line items, an eligible offer means a foreign offer where the combined proposed price of the eligible products and the domestic end products exceeds 50 percent of the total proposed price of the group.

Eligible product means a foreign end product, construction material, or service that, due to applicability of a trade agreement to a particular acquisition, is not subject to discriminatory treatment.

End product means those articles, materials, and supplies to be acquired for public use.

Fastener means a hardware device that mechanically joins or affixes two or more objects together. Examples of fasteners are nuts, bolts, pins, rivets, nails, clips, and screws.

Foreign construction material means a construction material other than a domestic construction material.

Foreign contractor means a contractor or subcontractor organized or existing under the laws of a country other than the United States.

Foreign end product means an end product other than a domestic end product.

Foreign iron and steel means iron or steel products not produced in the United States. Produced in the United States means that all manufacturing processes of the iron or steel must take place in the United States, from the initial melting stage through the application of coatings, except metallurgical processes involving refinement of steel additives. The origin of the elements of the iron or steel is not relevant to the determination of whether it is domestic or foreign.

Foreign offer means any offer other than a domestic offer.

Free Trade Agreement country means Australia, Bahrain, Canada, Chile, Colombia, Costa Rica, Dominican Republic, El Salvador, Guatemala, Honduras, Korea (Republic of), Mexico, Morocco, Nicaragua, Oman, Panama, Peru, or Singapore.

Free Trade Agreement country end product means an article that-

           (1) Is wholly the growth, product, or manufacture of a Free Trade Agreement (FTA) country; or

           (2) In the case of an article that consists in whole or in part of materials from another country, has been substantially transformed in an FTA country into a new and different article of commerce with a name, character, or use distinct from that of the article or articles from which it was transformed. The term refers to a product offered for purchase under a supply contract, but for purposes of calculating the value of the end product, includes services (except transportation services) incidental to the article, provided that the value of those incidental services does not exceed that of the article itself.

Israeli end product means an article that-

           (1) Is wholly the growth, product, or manufacture of Israel; or

           (2) In the case of an article that consists in whole or in part of materials from another country, has been substantially transformed in Israel into a new and different article of commerce with a name, character, or use distinct from that of the article or articles from which it was transformed.

Least developed country means any of the following countries: Afghanistan, Angola, Bangladesh, Benin, Bhutan, Burkina Faso, Burundi, Cambodia, Central African Republic, Chad, Comoros, Democratic Republic of Congo, Djibouti, Equatorial Guinea, Eritrea, Ethiopia, Gambia, Guinea, Guinea-Bissau, Haiti, Kiribati, Laos, Lesotho, Liberia, Madagascar, Malawi, Mali, Mauritania, Mozambique, Nepal, Niger, Rwanda, Samoa, Sao Tome and Principe, Senegal, Sierra Leone, Solomon Islands, Somalia, South Sudan, Tanzania, Timor-Leste, Togo, Tuvalu, Uganda, Vanuatu, Yemen, or Zambia.

Least developed country end product means an article that-

           (1) Is wholly the growth, product, or manufacture of a least developed country; or

           (2) In the case of an article that consists in whole or in part of materials from another country, has been substantially transformed in a least developed country into a new and different article of commerce with a name, character, or use distinct from that of the article or articles from which it was transformed. The term refers to a product offered for purchase under a supply contract, but for purposes of calculating the value of the end product, includes services (except transportation services) incidental to the article, provided that the value of those incidental services does not exceed that of the article itself.

Noneligible offer means an offer of a noneligible product.

Noneligible product means a foreign end product that is not an eligible product.

Predominantly of iron or steel or a combination of both means that the cost of the iron and steel content exceeds 50 percent of the total cost of all its components. The cost of iron and steel is the cost of the iron or steel mill products (such as bar, billet, slab, wire, plate, or sheet), castings, or forgings utilized in the manufacture of the product and a good faith estimate of the cost of iron or steel components excluding COTS fasteners.

Steel means an alloy that includes at least 50 percent iron, between 0.02 and 2 percent carbon, and may include other elements.

United States means the 50 States, the District of Columbia, and outlying areas.

U.S.-made end product means an article that is mined, produced, or manufactured in the United States or that is substantially transformed in the United States into a new and different article of commerce with a name, character, or use distinct from that of the article or articles from which it was transformed.

World Trade Organization Government Procurement Agreement (WTO GPA) country means any of the following countries: Armenia, Aruba, Australia, Austria, Belgium, Bulgaria, Canada, Croatia, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hong Kong, Hungary, Iceland, Ireland, Israel, Italy, Japan, Korea (Republic of), Latvia, Liechtenstein, Lithuania, Luxembourg, Malta, Moldova, Montenegro, Netherlands, New Zealand, Norway, Poland, Portugal, Romania, Singapore, Slovak Republic, Slovenia, Spain, Sweden, Switzerland, Taiwan, Ukraine, or United Kingdom.

WTO GPA country end product means an article that-

           (1) Is wholly the growth, product, or manufacture of a WTO GPA country; or

           (2) In the case of an article that consists in whole or in part of materials from another country, has been substantially transformed in a WTO GPA country into a new and different article of commerce with a name, character, or use distinct from that of the article or articles from which it was transformed. The term refers to a product offered for purchase under a supply contract, but for purposes of calculating the value of the end product includes services (except transportation services) incidental to the article, provided that the value of those incidental services does not exceed that of the article itself.

Subpart 25.1 - Buy American-Supplies

25.100 Scope of subpart.

      (a) This subpart implements-

           (1) 41 U.S.C. chapter 83, Buy American;

           (2) Executive Order 10582, December 17, 1954;

           (3) Executive Order 13881, July 15, 2019;

           (4) Executive Order 14005, January 25, 2021; and

           (5) Waiver of the domestic content test of the Buy American statute for acquisition of commercially available off-the-shelf (COTS) items in accordance with 41 U.S.C. 1907, but see 25.101(a)(2)(ii).

      (b) It applies to supplies acquired for use in the United States, including supplies acquired under contracts set aside for small business concerns, if-

           (1) The supply contract exceeds the micro-purchase threshold; or

           (2) The supply portion of a contract for services that involves the furnishing of supplies (e.g., lease) exceeds the micro-purchase threshold.

25.101 General.

      (a) The Buy American statute restricts the purchase of supplies that are not domestic end products. For manufactured

     end products, the Buy American statute, E.O. 13881, and E.O. 14005 use a two-part test to define a domestic end product.

           (1) The article must be manufactured in the United States; and

           (2)

(i) Except for an end product that consists wholly or predominantly of iron or steel or a combination of both, the cost of domestic components shall exceed 60 percent of the cost of all the components, except that the percentage will be 65 percent for items delivered in calendar years 2024 through 2028 and 75 percent for items delivered starting in calendar year 2029. But see paragraph (d) of this section. In accordance with 41 U.S.C. 1907, this domestic content test of the Buy American statute has been waived for acquisitions of COTS items (see 12.505(a)) (but see paragraph (a)(2)(ii) of this section).

                (ii) For an end product that consists wholly or predominantly of iron or steel or a combination of both, the cost of foreign iron and steel must constitute less than 5 percent of the cost of all the components used in the end product (see the definition of "foreign iron and steel" at 25.003). The cost of foreign iron and steel includes but is not limited to the cost of foreign iron or steel mill products (such as bar, billet, slab, wire, plate, or sheet), castings, or forgings utilized in the manufacture of the end product and a good faith estimate of the cost of all foreign iron or steel components excluding COTS fasteners. This domestic content test of the Buy American statute has not been waived for acquisitions of COTS items in this category, except for COTS fasteners.

      (b) The Buy American statute applies to small business set-asides. A manufactured product of a small business concern is a U.S.-made end product, but is not a domestic end product unless it meets the domestic content test in paragraph (a)(2) of this section.

      (c) Exceptions that allow the purchase of a foreign end product are listed at 25.103. The unreasonable cost exception is implemented through the use of an evaluation factor applied to low foreign offers that are not eligible offers. The evaluation factor is not used to provide a preference for one foreign offer over another. Evaluation procedures and examples are provided in subpart  25.5 .

      (d)

(1) A contract with a period of performance that spans the schedule of domestic content threshold increases specified in paragraph (a)(2)(i) of this section shall be required to comply with each increased threshold for the items in the year of delivery, unless the senior procurement executive of the contracting agency allows for application of an alternate domestic content test for that contract under which the domestic content threshold in effect at time of contract award will apply to the entire period of performance for the contract. This authority is not delegable. The senior procurement executive shall consult the Office of Management and Budget's Made in America Office before allowing the use of the alternate domestic content test.

           (2)When a senior procurement executive allows for application of an alternate domestic content test for a contract—

                (i)See 25.1101(a)(1)(ii) or 25.1101(b)(1)(v) for use of the appropriate Alternate clause to reflect the domestic content threshold that will apply to the entire period of performance for that contract; and

                (ii)Use the fill-in at 52.213-4(b)(1)(xvii)(B) instead of including 52.225-1 Alternate I when using 52.213-4, Terms and Conditions—Simplified Acquisitions (Other Than Commercial Products and Commercial Services).

25.102 Policy.

Except as provided in 25.103, acquire only domestic end products for public use inside the United States.

25.103 Exceptions.

When one of the following exceptions applies, the contracting officer may acquire a foreign end product without regard to the restrictions of the Buy American statute:

      (a) Public interest. The head of the agency may make a determination that domestic preference would be inconsistent with the public interest. This exception applies when an agency has an agreement with a foreign government that provides a blanket exception to the Buy American statute.

      (b) Nonavailability. The Buy American statute does not apply with respect to articles, materials, or supplies if articles, materials, or supplies of the class or kind to be acquired, either as end items or components, are not mined, produced, or manufactured in the United States in sufficient and reasonably available commercial quantities and of a satisfactory quality.

           (1) Class determinations.

(i) A nonavailability determination has been made for the articles listed in 25.104. This determination does not necessarily mean that there is no domestic source for the listed items, but that domestic sources can only meet 50 percent or less of total U.S. Government and nongovernment demand.

                (ii) Before acquisition of an article on the list, the procuring agency is responsible to conduct market research appropriate to the circumstances, including seeking of domestic sources. This applies to acquisition of an article as-

                     (A) An end product; or

                     (B) A significant component (valued at more than 50 percent of the value of all the components).

                (iii) The determination in paragraph (b)(1)(i) of this section does not apply if the contracting officer learns at any time before the time designated for receipt of bids in sealed bidding or final offers in negotiation that an article on the list is available domestically in sufficient and reasonably available commercial quantities of a satisfactory quality to meet the requirements of the solicitation. The contracting officer must-

                     (A) Ensure that the appropriate Buy American statute provision and clause are included in the solicitation (see 25.1101(a), 25.1101(b), or 25.1102);

                     (B) Specify in the solicitation that the article is available domestically and that offerors and contractors may not treat foreign components of the same class or kind as domestic components; and

                     (C) Submit a copy of supporting documentation to the appropriate council identified in 1.201-1, in accordance with agency procedures, for possible removal of the article from the list.

           (2) Individual determinations.

(i) The head of the contracting activity may make a determination that an article, material, or supply is not mined, produced, or manufactured in the United States in sufficient and reasonably available commercial quantities of a satisfactory quality. A determination is not required before January 1, 2030, if there is an offer for a foreign end product that exceeds 55 percent domestic content (see 25.106(b)(2) and 25.106(c)(2)).

                (ii) If the contracting officer considers that the nonavailability of an article is likely to affect future acquisitions, the contracting officer may submit a copy of the determination and supporting documentation to the appropriate council identified in 1.201-1, in accordance with agency procedures, for possible addition to the list in 25.104.

           (3) A written determination is not required if all of the following conditions are present:

                (i) The acquisition was conducted through use of full and open competition.

                (ii) The acquisition was synopsized in accordance with 5.201.

                (iii) No offer for a domestic end product was received.

      (c) Unreasonable cost. The contracting officer may determine that the cost of a domestic end product would be unreasonable, in accordance with 25.106 and subpart  25.5.

      (d) Resale. The contracting officer may purchase foreign end products specifically for commissary resale.

      (e) Information technology that is a commercial product. The restriction on purchasing foreign end products does not apply to the acquisition of information technology that is a commercial product, when using fiscal year 2004 or subsequent fiscal year funds (section 535(a) of Division F, Title V, Consolidated Appropriations Act, 2004, and similar sections in subsequent appropriations acts).

25.104 Nonavailable articles.

      (a) The following articles have been determined to be nonavailable in accordance with 25.103(b)(1)(i):

     Acetylene, black.

     Agar, bulk.

     Anise.

     Antimony, as metal or oxide.

     Asbestos, amosite, chrysotile, and crocidolite.

     Bamboo shoots.

     Bananas.

     Bauxite.

     Beef, corned, canned.

     Beef extract.

     Bephenium hydroxynapthoate.

     Bismuth.

     Books, trade, text, technical, or scientific; newspapers; pamphlets; magazines; periodicals; printed briefs and films; not printed in the United States and for which domestic editions are not available.

     Brazil nuts, unroasted

     Cadmium, ores and flue dust.

     Calcium cyanamide.

     Capers.

     Cashew nuts.

     Castor beans and castor oil.

     Chalk, English.

     Chestnuts.

     Chicle.

     Chrome ore or chromite.

     Cinchona bark.

     Cobalt, in cathodes, rondelles, or other primary ore and metal forms.

     Cocoa beans.

     Coconut and coconut meat, unsweetened, in shredded, desiccated, or similarly prepared form.

     Coffee, raw or green bean.

     Colchicine alkaloid, raw.

     Copra.

     Cork, wood or bark and waste.

     Cover glass, microscope slide.

     Crane rail (85-pound per foot).

     Cryolite, natural.

     Dammar gum.

     Diamonds, industrial, stones and abrasives.

     Emetine, bulk.

     Ergot, crude.

     Erythrityl tetranitrate.

     Fair linen, altar.

     Fibers of the following types: abaca, abace, agave, coir, flax, jute, jute burlaps, palmyra, and sisal.

     Goat and kidskins.

     Goat hair canvas.

     Grapefruit sections, canned.

     Graphite, natural, crystalline, crucible grade.

     Hand file sets (Swiss pattern).

     Handsewing needles.

     Hemp yarn.

     Hog bristles for brushes.

     Hyoscine, bulk.

     Ipecac, root.

     Iodine, crude.

     Kaurigum.

     Lac.

     Leather, sheepskin, hair type.

     Lavender oil.

     Manganese.

     Menthol, natural bulk.

     Mica.

     Microprocessor chips (brought onto a Government construction site as separate units for incorporation into building systems during construction or repair and alteration of real property).

     Modacrylic fiber.

     Nickel, primary, in ingots, pigs, shots, cathodes, or similar forms; nickel oxide and nickel salts.

     Nitroguanidine (also known as picrite).

     Nux vomica, crude.

     Oiticica oil.

     Olive oil.

     Olives (green), pitted or unpitted, or stuffed, in bulk.

     Opium, crude.

     Oranges, mandarin, canned.

     Petroleum, crude oil, unfinished oils, and finished products.

     Pine needle oil.

     Pineapple, canned.

     Platinum and related group metals, refined, as sponge, powder, ingots, or cast bars.

     Pyrethrum flowers.

     Quartz crystals.

     Quebracho.

     Quinidine.

     Quinine.

     Rabbit fur felt.

     Radium salts, source and special nuclear materials.

     Rosettes.

     Rubber, crude and latex.

     Rutile.

     Santonin, crude.

     Secretin.

     Shellac.

     Silk, raw and unmanufactured.

     Spare and replacement parts for equipment of foreign manufacture, and for which domestic parts are not available.

     Spices and herbs, in bulk.

     Sugars, raw.

     Swords and scabbards.

     Talc, block, steatite.

     Tantalum.

     Tapioca flour and cassava.

     Tartar, crude; tartaric acid and cream of tartar in bulk.

     Tea in bulk.

     Thread, metallic (gold).

     Thyme oil.

     Tin in bars, blocks, and pigs.

     Triprolidine hydrochloride.

     Tungsten.

     Vanilla beans.

     Venom, cobra.

     Water chestnuts.

     Wax, carnauba.

     Wire glass.

     Woods; logs, veneer, and lumber of the following species: Alaskan yellow cedar, angelique, balsa, ekki, greenheart, lignum vitae, mahogany, and teak.

     Yarn, 50 Denier rayon.

     Yeast, active dry and instant active dry.

      (b) This list will be published in the Federal Register for public comment no less frequently than once every five years. Unsolicited recommendations for deletions from this list may be submitted at any time and should provide sufficient data and rationale to permit evaluation (see 1.502).

25.105 Critical components and critical items.

      (a) The following is a list of articles that have been determined to be a critical component or critical item and their respective preference factor(s).

     (1)-(2) [Reserved]

      (b) The list of articles and preference factors in paragraph (a) of this section will be published in the Federal Register for public comment no less frequently than once every 4 years. Unsolicited recommendations for deletions from this list may be submitted at any time and should provide sufficient data and rationale to permit evaluation ( see 1.502).

      (c) For determining reasonableness of cost for domestic end products that contain critical components or are critical items ( see 25.106(c)).

25.106 Determining reasonableness of cost.

      (a) The contracting officer-

           (1) Must use the evaluation factors in paragraphs (b) and (c) of this section unless the head of the agency makes a written determination that the use of higher factors is more appropriate. If the determination applies to all agency acquisitions, the agency evaluation factors must be published in agency regulations; and

           (2) Must not apply evaluation factors to offers of eligible products if the acquisition is subject to a trade agreement under subpart  25.4.

      (b) For end products that are not critical items and do not contain critical components.

           (1)

(i) If there is a domestic offer that is not the low offer, and the restrictions of the Buy American statute apply to the low offer, the contracting officer must determine the reasonableness of the cost of the domestic offer by adding to the price of the low offer, inclusive of duty—

                     (A) 20 percent, if the lowest domestic offer is from a large business concern; or

                     (B) 30 percent, if the lowest domestic offer is from a small business concern. The contracting officer must use this factor, or another factor established in agency regulations, in small business set-asides if the low offer is from a small business concern offering the product of a small business concern that is not a domestic end product (see subpart  19.5).

                (ii) The price of the domestic offer is reasonable if it does not exceed the evaluated price of the low offer after addition of the appropriate evaluation factor in accordance with paragraph (a) or (b)(1)(i) of this section. See evaluation procedures at subpart  25.5.

           (2)

(i) For end products that are not COTS items and do not consist wholly or predominantly of iron or steel or a combination of both, if the procedures in paragraph (b)(1)(i) of this section result in an unreasonable cost determination for the domestic offer or there is no domestic offer received, and the low offer is for a foreign end product that does not exceed 55 percent domestic content, the contracting officer shall

                     (A) Treat the lowest offer of a foreign end product that is manufactured in the United States and exceeds 55 percent domestic content as a domestic offer; and

                     (B) Determine the reasonableness of the cost of this offer by applying the evaluation factors listed in paragraph (b)(1)(i) of this section to the low offer.

                (ii) The price of the lowest offer of a foreign end product that exceeds 55 percent domestic content is reasonable if it does not exceed the evaluated price of the low offer after addition of the appropriate evaluation factor in accordance with paragraph (a) or (b)(1)(i) of this section. See evaluation procedures at subpart  25.5.

                (iii) The procedures in this paragraph (b)(2) will no longer apply as of January 1, 2030.

      (c) For end products that are critical items or contain critical components.

           (1)

(i) If there is a domestic offer that is not the low offer, and the restrictions of the Buy American statute apply to the low offer, the contracting officer shall determine the reasonableness of the cost of the domestic offer by adding to the price of the low offer, inclusive of duty—

                     (A) 20 percent, plus the additional preference factor identified for the critical item or end product containing critical components listed at section 25.105, if the lowest domestic offer is from a large business concern; or

                     (B) 30 percent, plus the additional preference factor identified for the critical item or end product containing critical components listed at section 25.105, if the lowest domestic offer is from a small business concern. The contracting officer shall use this factor, or another factor established in agency regulations, in small business set-asides if the low offer is from a small business concern offering the product of a small business concern that is not a domestic end product (see subpart  19.5).

                (ii) The price of the domestic offer is reasonable if it does not exceed the evaluated price of the low offer after addition of the appropriate evaluation factor in accordance with paragraph (a) or (b) of this section. See evaluation procedures at subpart  25.5.

           (2)

(i) For end products that are not COTS items and do not consist wholly or predominantly of iron or steel or a combination of both, if the procedures in paragraph (c)(1)(ii) of this section result in an unreasonable cost determination for the domestic offer or there is no domestic offer received, and the low offer is for a foreign end product that does not exceed 55 percent domestic content, the contracting officer shall

                     (A) Treat the lowest offer of a foreign end product that is manufactured in the United States and exceeds 55 percent domestic content as a domestic offer; and

                     (B) Determine the reasonableness of the cost of this offer by applying the evaluation factors listed in paragraph (c)(1) of this section to the low offer.

                (ii) The price of the lowest offer of a foreign end product that exceeds 55 percent domestic content is reasonable if it does not exceed the evaluated price of the low offer after addition of the appropriate evaluation factor in accordance with paragraph (a) or (b) of this section. See evaluation procedures at subpart  25.5.

                (iii) The procedures in this paragraph (c)(2) will no longer apply as of January 1, 2030.

Subpart 25.2 - Buy American-Construction Materials

25.200 Scope of subpart.

      (a) This subpart implements-

           (1) 41 U.S.C. chapter 83, Buy American;

           (2) Executive Order 10582, December 17, 1954;

           (3) Executive Order 13881, July 15, 2019;

           (4) Executive Order 14005, January 25, 2021; and

           (5) Waiver of the domestic content test of the Buy American statute for acquisitions of commercially available off-the-shelf (COTS) items in accordance with 41 U.S.C. 1907, but see 25.201(b)(2)(ii).

      (b) It applies to contracts for the construction, alteration, or repair of any public building or public work in the United States.

      (c) When using funds appropriated or otherwise provided by the American Recovery and Reinvestment Act of 2009 (Pub. L. 111-5) (Recovery Act) for construction, see subpart  25.6.

25.201 Policy.

      (a) Except as provided in 25.202, use only domestic construction materials in construction contracts performed in the United States.

      (b) The Buy American statute restricts the purchase of construction materials that are not domestic construction materials. For manufactured construction materials, the Buy American statute, E.O. 13881, and E.O. 14005 use a two-part test to define domestic construction materials.

           (1) The article must be manufactured in the United States; and

           (2)

(i) Except for construction material that consists wholly or predominantly of iron or steel or a combination of both, the cost of domestic components must exceed 60 percent of the cost of all the components, except that the percentage will be 65 percent for items delivered in calendar years 2024 through 2028 and 75 percent for items delivered starting in calendar year 2029, but see paragraph (c) of this section. In accordance with 41 U.S.C. 1907, this domestic content test of the Buy American statute has been waived for acquisitions of COTS items (see 12.505(a)).

                (ii) For construction material that consists wholly or predominantly of iron or steel or a combination of both, the cost of foreign iron and steel must constitute less than 5 percent of the cost of all the components used in such construction material (see the definition of "foreign iron and steel" at 25.003). The cost of foreign iron and steel includes but is not limited to the cost of foreign iron or steel mill products (such as bar, billet, slab, wire, plate, or sheet), castings, or forgings utilized in the manufacture of the construction material and a good faith estimate of the cost of all foreign iron or steel components excluding COTS fasteners. This domestic content test of the Buy American statute has not been waived for acquisitions of COTS items in this category, except for COTS fasteners.

      (c)

(1) A contract with a period of performance that spans the schedule of domestic content threshold increases specified in paragraph (b)(2)(i) of this section shall be required to comply with each increased threshold for the items in the year of delivery, unless the senior procurement executive of the contracting agency allows for application of an alternate domestic content test for that contract under which the domestic content threshold in effect at time of contract award will apply to the entire period of performance for the contract. This authority is not delegable. The senior procurement executive shall consult the Office of Management and Budget's Made in America Office before allowing the use of the alternate domestic content test.

           (2) When a senior procurement executive allows for application of an alternate domestic content test for a contract, see 25.1102(a)(3) or (c)(4) for use of the appropriate Alternate clause to reflect the domestic content threshold that will apply to the entire period of performance for that contract.

25.202 Exceptions.

      (a) When one of the following exceptions applies, the contracting officer may allow the contractor to acquire foreign construction materials without regard to the restrictions of the Buy American statute:

           (1) Impracticable or inconsistent with public interest. The head of the agency may determine that application of the restrictions of the Buy American statute to a particular construction material would be impracticable or would be inconsistent with the public interest. The public interest exception applies when an agency has an agreement with a foreign government that provides a blanket exception to the Buy American statute.

           (2) Nonavailability. The head of the contracting activity may determine that a particular construction material is not mined, produced, or manufactured in the United States in sufficient and reasonably available commercial quantities of a satisfactory quality. The determinations of nonavailability of the articles listed at 25.104(a) and the procedures at 25.103(b)(1) also apply if any of those articles are acquired as construction materials. A determination is not required before January 1, 2030, if there is an offer for a foreign construction material that exceeds 55 percent domestic content (see 25.204(b)(1)(ii) and 25.204(b)(2)(ii)).

           (3) Unreasonable cost. The contracting officer concludes that the cost of domestic construction material is unreasonable in accordance with 25.204.

           (4) Information technology that is a commercial product. The restriction on purchasing foreign construction material does not apply to the acquisition of information technology that is a commercial product, when using Fiscal Year 2004 or subsequent fiscal year funds (section 535(a) of Division F, Title V, Consolidated Appropriations Act, 2004, and similar sections in subsequent appropriations acts).

      (b) Determination and findings. When a determination is made for any of the reasons stated in this section that certain foreign construction materials may be used, the contracting officer must list the excepted materials in the contract. The agency must make the findings justifying the exception available for public inspection.

      (c) Acquisitions under trade agreements. For construction contracts with an estimated acquisition value of $7,032,000 or more, see subpart  25.4.

25.203 Preaward determinations.

      (a) For any acquisition, an offeror may request from the contracting officer a determination concerning the inapplicability of the Buy American statute for specifically identified construction materials. The time for submitting the request is specified in the solicitation in paragraph (b) of either 52.225-10 or 52.225-12, whichever applies. The information and supporting data that must be included in the request are also specified in the solicitation in paragraphs (c) and (d) of either 52.225-9 or 52.225-11, whichever applies.

      (b) Before award, the contracting officer must evaluate all requests based on the information provided and may supplement this information with other readily available information.

25.204 Evaluating offers of foreign construction material.

      (a) Offerors proposing to use foreign construction material other than that listed by the Government in the applicable clause at 52.225-9, paragraph (b)(2), or 52.225-11, paragraph (b)(3), or covered by the WTO GPA or a Free Trade Agreement (paragraph (b)(2) of 52.225-11), must provide the information required by paragraphs (c) and (d) of the respective clauses.

      (b)

           (1) For construction material that is not a critical item and does not contain critical components.

                (i) Unless the head of the agency specifies a higher percentage, the contracting officer shall add to the offered price 20 percent of the cost of any foreign construction material proposed for exception from the requirements of the Buy American statute based on the unreasonable cost of domestic construction materials. In the case of a tie, the contracting officer shall give preference to an offer that does not include foreign construction material excepted at the request of the offeror on the basis of unreasonable cost.

                (ii) For construction material that is not a COTS item and does not consist wholly or predominantly of iron or steel or a combination of both, if the procedures in paragraph (b)(1)(i) of this section result in an unreasonable cost determination for the domestic construction material offer or there is no domestic construction material offer received, and the low offer is for foreign construction material that does not exceed 55 percent domestic content, the contracting officer shall

                     (A) Treat the lowest offer of foreign construction material that is manufactured in the United States and exceeds 55 percent domestic content as a domestic offer; and

                     (B) Determine the reasonableness of the cost of this offer by applying the evaluation factor listed in paragraph (b)(1)(i) to the low offer.

                (iii) The procedures in paragraph (b)(1)(ii) of this section will no longer apply as of January 1, 2030.

           (2) For construction material that is a critical item or contains critical components.

                (i) The contracting officer shall add to the offered price 20 percent, plus the additional preference factor identified for the critical item or construction material containing critical components listed at section 25.105, of the cost of any foreign construction material proposed for exception from the requirements of the Buy American statute based on the unreasonable cost of domestic construction materials. In the case of a tie, the contracting officer shall give preference to an offer that does not include foreign construction material excepted at the request of the offeror on the basis of unreasonable cost. See 25.105 for the list of critical components and critical items.

                (ii) For construction material that is not a COTS item and does not consist wholly or predominantly of iron or steel or a combination of both, if the procedures in paragraph (b)(2)(i) of this section result in an unreasonable cost determination for the domestic construction material offer or there is no domestic construction material offer received, and the low offer is for foreign construction material that does not exceed 55 percent domestic content, the contracting officer shall

                     (A) Treat the lowest offer of foreign construction material that is manufactured in the United States and exceeds 55 percent domestic content as a domestic offer; and

                     (B) Determine the reasonableness of the cost of this offer by applying the evaluation factors listed in this paragraph (b)(2) to the low offer.

                (iii) The procedures in paragraph (b)(2)(ii) of this section will no longer apply as of January 1, 2030.

      (c) Offerors also may submit alternate offers based on use of equivalent domestic construction material to avoid possible rejection of the entire offer if the Government determines that an exception permitting use of a particular foreign construction material does not apply.

      (d) If the contracting officer awards a contract to an offeror that proposed foreign construction material not listed in the applicable clause in the solicitation (paragraph (b)(2) of 52.225-9, or paragraph (b)(3) of 52.225-11), the contracting officer must add the excepted materials to the list in the contract clause.

25.205 Postaward determinations.

      (a) If a contractor requests a determination regarding the inapplicability of the Buy American statute after contract award, the contractor must explain why it could not request the determination before contract award or why the need for such determination otherwise was not reasonably foreseeable. If the contracting officer concludes that the contractor should have made the request before contract award, the contracting officer may deny the request.

      (b) The contracting officer must base evaluation of any request for a determination regarding the inapplicability of the Buy American statute made after contract award on information required by paragraphs (c) and (d) of the applicable clause at 52.225-9 or 52.225-11 and/or other readily available information.

      (c) If a determination, under 25.202(a), is made after contract award that an exception to the Buy American statute applies, the contracting officer must negotiate adequate consideration and modify the contract to allow use of the foreign construction material. When the basis for the exception is the unreasonable price of a domestic construction material, adequate consideration is at least the differential established in 25.202(a) or in accordance with agency procedures.

25.206 Noncompliance.

The contracting officer must-

      (a) Review allegations of Buy American statute violations;

      (b) Unless fraud is suspected, notify the contractor of the apparent unauthorized use of foreign construction material and request a reply, to include proposed corrective action; and

      (c) If the review reveals that a contractor or subcontractor has used foreign construction material without authorization, take appropriate action, including one or more of the following:

           (1) Process a determination concerning the inapplicability of the Buy American statute in accordance with 25.205.

           (2) Consider requiring the removal and replacement of the unauthorized foreign construction material.

           (3) If removal and replacement of foreign construction material incorporated in a building or work would be impracticable, cause undue delay, or otherwise be detrimental to the interests of the Government, the contracting officer may determine in writing that the foreign construction material need not be removed and replaced. A determination to retain foreign construction material does not constitute a determination that an exception to the Buy American statute applies, and this should be stated in the determination. Further, a determination to retain foreign construction material does not affect the Government’s right to suspend or debar a contractor, subcontractor, or supplier for violation of the Buy American statute, or to exercise other contractual rights and remedies, such as reducing the contract price or terminating the contract for default.

           (4) If the noncompliance is sufficiently serious, consider exercising appropriate contractual remedies, such as terminating the contract for default. Also consider preparing and forwarding a report to the agency suspending or debarring official in accordance with subpart  9.4. If the noncompliance appears to be fraudulent, refer the matter to other appropriate agency officials, such as the officer responsible for criminal investigation.

Subpart 25.3 - Contracts Performed Outside the United States

25.301 Contractor personnel in a designated operational area or supporting a diplomatic or consular mission outside the United States.

25.301-1 Scope.

      (a) This section applies to contracts requiring contractor personnel to perform outside the United States-

           (1) In a designated operational area during-

                (i) Contingency operations;

                (ii) Humanitarian or peacekeeping operations; or

                (iii) Other military operations or military exercises, when designated by the combatant commander; or

           (2) When supporting a diplomatic or consular mission-

                (i) That has been designated by the Department of State as a danger pay post (see https://aoprals.state.gov/); or

                (ii) That the contracting officer determines is a post at which application of the clause at FAR 52.225-19, Contractor Personnel in a Designated Operational Area or Supporting a Diplomatic or Consular Mission outside the United States, is appropriate.

      (b) Any of the types of operations listed in paragraph (a)(1) of this section may include stability operations such as-

           (1) Establishment or maintenance of a safe and secure environment; or

           (2) Provision of emergency infrastructure reconstruction, humanitarian relief, or essential governmental services (until feasible to transition to local government).

      (c) This section does not apply to personal services contracts (see FAR 37.104), unless specified otherwise in agency procedures.

25.301-2 Government support.

      (a) Generally, contractors are responsible for providing their own logistical and security support, including logistical and security support for their employees. The agency shall provide logistical or security support only when the appropriate agency official, in accordance with agency guidance, determines that-

           (1) Such Government support is available and is needed to ensure continuation of essential contractor services; and

           (2) The contractor cannot obtain adequate support from other sources at a reasonable cost.

      (b) The contracting officer shall specify in the contract, and in the solicitation if possible, the exact support to be provided, and whether this support is provided on a reimbursable basis, citing the authority for the reimbursement.

25.301-3 Weapons.

The contracting officer shall follow agency procedures and the weapons policy established by the combatant commander or the chief of mission when authorizing contractor personnel to carry weapons (see paragraph (i) of the clause at 52.225-19, Contractor Personnel in a Designated Operational Area or Supporting a Diplomatic or Consular Mission outside the United States).

25.301-4 Contract clause.

Insert the clause at 52.225-19, Contractor Personnel in a Designated Operational Area or Supporting a Diplomatic or Consular Mission outside the United States, in solicitations and contracts, other than personal service contracts with individuals, that will require contractor personnel to perform outside the United States—

      (a) In a designated operational area during–

           (1) Contingency operations;

           (2) Humanitarian or peacekeeping operations; or

           (3) Other military operations or military exercises, when designated by the combatant commander; or

      (b) When supporting a diplomatic or consular mission–

           (1) That has been designated by the Department of State as a danger pay post (see https://aoprals.state.gov/); or

           (2) That the contracting officer determines is a post at which application of the clause FAR 52.225-19, Contractor Personnel in a Designated Operational Area or Supporting a Diplomatic or Consular Mission outside the United States, is appropriate.

25.302 Contractors performing private security functions outside the United States.

25.302-1 Scope.

This section prescribes policy for implementing section 862 of the National Defense Authorization Act (NDAA) for Fiscal Year (FY) 2008 (Pub. L. 110-181), as amended by section 853 of the NDAA for FY 2009 (Pub. L. 110-417), and sections 831 and 832 of the NDAA for FY 2011 (Pub. L. 111-383) (see 10 U.S.C. 2302 Note).

25.302-2 Definitions.

As used in this section-

Area of combat operations means an area of operations designated as such by the Secretary of Defense when enhanced coordination of contractors performing private security functions working for Government agencies is required.

Other significant military operations means activities, other than combat operations, as part of a contingency operation outside the United States that is carried out by United States Armed Forces in an uncontrolled or unpredictable high-threat environment where personnel performing security functions may be called upon to use deadly force (see 25.302-3(a)(2)).

Private security functions means activities engaged in by a contractor, as follows-

           (1) Guarding of personnel, facilities, designated sites, or property of a Federal agency, the contractor or subcontractor, or a third party; or

           (2) Any other activity for which personnel are required to carry weapons in the performance of their duties in accordance with the terms of the contract.

25.302-3 Applicability.

      (a) This section applies to contracts that require performance outside the United States-

           (1) In an area of combat operations as designated by the Secretary of Defense; or

           (2) In an area of other significant military operations as designated by the Secretary of Defense, and only upon agreement of the Secretary of Defense and the Secretary of State.

      (b) These designations can be found at http://www.acq.osd.mil/dpap/pacc/cc/designated_areas_of_other_significant_military_operations.html and http://www.acq.osd.mil/dpap/pacc/cc/designated_areas_of_combat_operations.html.

      (c) When the applicability requirements of this subsection are met, contractors and subcontractors must comply with 32 CFR part 159, whether the contract is for the performance of private security functions as a primary deliverable or the provision of private security functions is ancillary to the stated deliverables.

      (d) The requirements of section 25.302 shall not apply to-

           (1) Contracts entered into by elements of the intelligence community in support of intelligence activities; or

           (2) Temporary arrangements entered into on a non-DoD contract for the performance of private security functions by individual indigenous personnel not affiliated with a local or expatriate security company. These temporary arrangements must still comply with local law.

25.302-4 Policy.

      (a) General.

(1) The policy, responsibilities, procedures, accountability, training, equipping, and conduct of personnel performing private security functions in designated areas are addressed at 32 CFR part 159, entitled "Private Security Contractors Operating in Contingency Operations". Contractor responsibilities include ensuring that employees are aware of, and comply with, relevant orders, directives, and instructions; keeping appropriate personnel records; accounting for weapons; registering and identifying armored vehicles, helicopters, and other military vehicles; and reporting specified incidents in which personnel performing private security functions under a contract are involved.

           (2) In addition, contractors are required to fully cooperate with any Government-authorized investigation into incidents reported pursuant to paragraph (c)(3) of the clause at 52.225-26, Contractors Performing Private Security Functions Outside the United States, by providing access to employees performing private security functions and relevant information in the possession of the contractor regarding the incident concerned.

      (b) Implementing guidance. In accordance with 32 CFR part 159-

           (1) Geographic combatant commanders will provide DoD contractors performing private security functions with guidance and procedures for the operational environment in their area of responsibility; and

           (2) In a designated area of combat operations, or areas of other significant military operations, as designated by the Secretary of Defense and only upon agreement of the Secretary of Defense and the Secretary of State, the relevant Chief of Mission will provide implementing instructions for non-DoD contractors performing private security functions and their personnel consistent with the standards set forth by the geographic combatant commander. In accordance with 32 CFR 159.4(c), the Chief of Mission has the option of instructing non-DoD contractors performing private security functions and their personnel to follow the guidance and procedures of the geographic combatant commander and/or a sub-unified commander or joint force commander where specifically authorized by the combatant commander to do so and notice of that authorization is provided to non-DoD agencies.

25.302-5 Remedies.

      (a) In addition to other remedies available to the Government-

           (1) The contracting officer may direct the contractor, at its own expense, to remove and replace any contractor or subcontractor personnel performing private security functions who fail to comply with or violate applicable requirements. Such action may be taken at the Government's discretion without prejudice to its rights under any other contract provision, e.g., termination for default;

           (2) The contracting officer shall include the contractor’s failure to comply with the requirements of this section in appropriate databases of past performance and consider any such failure in any responsibility determination or evaluation of past performance; and

           (3) In the case of award-fee contracts, the contracting officer shall consider a contractor’s failure to comply with the requirements of this subsection in the evaluation of the contractor’s performance during the relevant evaluation period, and may treat such failure as a basis for reducing or denying award fees for such period or for recovering all or part of award fees previously paid for such period.

      (b) If the performance failures are severe, prolonged, or repeated, the contracting officer shall refer the matter to the appropriate suspending and debarring official.

25.302-6 Contract clause.

      (a) Use the clause at 52.225-26, Contractors Performing Private Security Functions Outside the United States, in solicitations and contracts for performance outside the United States in an area of-

           (1) Combat operations, as designated by the Secretary of Defense; or

           (2) Other significant military operations, as designated by the Secretary of Defense and only upon agreement of the Secretary of Defense and the Secretary of State.

      (b) The clause is not required to be used for-

           (1) Contracts entered into by elements of the intelligence community in support of intelligence activities; or

           (2) Temporary arrangements entered into by non-DoD contractors for the performance of private security functions by individual indigenous personnel not affiliated with a local or expatriate security company.

Subpart 25.4 - Trade Agreements

25.400 Scope of subpart.

      (a) This subpart provides policies and procedures applicable to acquisitions that are covered by-

           (1) The World Trade Organization Government Procurement Agreement (WTO GPA), as approved by Congress in the Uruguay Round Agreements Act (Public Law 103-465);

           (2) Free Trade Agreements (FTA), consisting of-

                (i) NAFTA (the North American Free Trade Agreement, as approved by Congress in the North American Free Trade Agreement Implementation Act of 1993 (Pub. L. 103-182) ( 19 U.S.C. 3301 note));

                (ii) Chile FTA (the United States-Chile Free Trade Agreement, as approved by Congress in the United States-Chile Free Trade Agreement Implementation Act of 1993 (Pub. L. 108-77) ( 19 U.S.C. 3805 note));

                (iii) Singapore FTA (the United States-Singapore Free Trade Agreement, as approved by Congress in the United States-Singapore Free Trade Agreement Implementation Act (Pub. L. 108-78) ( 19 U.S.C. 3805 note));

                (iv) Australia FTA (the United States-Australia Free Trade Agreement, as approved by Congress in the United States-Australia Free Trade Agreement Implementation Act (Pub. L. 108-286) ( 19 U.S.C. 3805 note));

                (v) Morocco FTA (The United States-Morocco Free Trade Agreement, as approved by Congress in the United States-Morocco Free Trade Agreement Implementation Act (Pub. L. 108-302) ( 19 U.S.C. 3805 note));

                (vi) CAFTA-DR (The Dominican Republic-Central America-United States Free Trade Agreement, as approved by Congress in the Dominican Republic-Central America-United States Free Trade Agreement Implementation Act (Pub. L. 109-53) ( 19 U.S.C. 4001 note));

                (vii) Bahrain FTA (the United States-Bahrain Free Trade Agreement, as approved by Congress in the United States-Bahrain Free Trade Agreement Implementation Act (Pub. L. 109-169) ( 19 U.S.C. 3805 note));

                (viii) Oman FTA (the United States-Oman Free Trade Agreement, as approved by Congress in the United States-Oman Free Trade Agreement Implementation Act (Pub. L. 109-283) ( 19 U.S.C. 3805 note));

                (ix) Peru FTA (the United States-Peru Trade Promotion Agreement, as approved by Congress in the United States-Peru Trade Promotion Agreement Implementation Act (Pub. L. 110-138) ( 19 U.S.C. 3805 note));

                (x) Korea FTA (the United States–Korea Free Trade Agreement Implementation Act (Pub. L. 112-41) ( 19 U.S.C. 3805));

                (xi) Colombia FTA (the United States–Colombia Trade Promotion Agreement Implementation Act (Pub. L. 112-42) ( 19 U.S.C. 3805 note)); and

                (xii) Panama FTA (the United States-Panama Trade Promotion Agreement Implementation Act (Pub. L. 112-43) ( 19 U.S.C. 3805 note));

           (3) The least developed country designation made by the U.S. Trade Representative, pursuant to the Trade Agreements Act ( 19 U.S.C. 2511(b)(4)), in acquisitions covered by the WTO GPA;

           (4) The Caribbean Basin Trade Initiative (CBTI) (determination of the U.S. Trade Representative that end products or construction material granted duty-free entry from countries designated as beneficiaries under the Caribbean Basin Economic Recovery Act ( 19 U.S.C. 2701, et seq.), with the exception of Panama, must be treated as eligible products in acquisitions covered by the WTO GPA);

           (5) The Israeli Trade Act (the U.S.-Israel Free Trade Area Agreement, as approved by Congress in the United States-Israel Free Trade Area Implementation Act of 1985 ( 19 U.S.C. 2112 note)); or

           (6) The Agreement on Trade in Civil Aircraft (U.S. Trade Representative waiver of the Buy American statute for signatories of the Agreement on Trade in Civil Aircraft, as implemented in the Trade Agreements Act of 1979 ( 19 U.S.C. 2513)).

      (b) For application of the trade agreements that are unique to individual agencies, see agency regulations.

25.401 Exceptions.

      (a) This subpart does not apply to-

           (1) Acquisitions set aside for small businesses;

           (2) Acquisitions of arms, ammunition, or war materials, or purchases indispensable for national security or for national defense purposes;

           (3) Acquisitions of end products for resale;

           (4) Acquisitions from Federal Prison Industries, Inc., under subpart  8.6, and acquisitions under subpart  8.7, Acquisition from Nonprofit Agencies Employing People Who Are Blind or Severely Disabled; and

           (5) Other acquisitions not using full and open competition, if authorized by subpart  6.2 or 6.3, when the limitation of competition would preclude use of the procedures of this subpart; or sole source acquisitions justified in accordance with 13.501(a).

      (b) In the World Trade Organization Government Procurement Agreement (WTO GPA) and each FTA, there is a U.S. schedule that lists services that are excluded from that agreement in acquisitions by the United States. Acquisitions of the following services are excluded from coverage by the U.S. schedule of the WTO GPA or an FTA as indicated in this table:

* Note1. Acquisitions of the services listed at (2)(iii) of this table are a subset of the excluded services at (2)(i) and (ii), and are therefore not covered under the WTO GPA.

** Note2. Acquisitions of the services listed at (4)(ii) of this table are a subset of the excluded services at (4)(i), and are therefore not covered under the WTO GPA.

25.402 General.

      (a)

(1) The Trade Agreements Act ( 19 U.S.C.2501, et seq.) provides the authority for the President to waive the Buy American statute and other discriminatory provisions for eligible products from countries that have signed an international trade agreement with the United States, or that meet certain other criteria, such as being a least developed country. The President has delegated this waiver authority to the U.S. Trade Representative. In acquisitions covered by the WTO GPA, Free Trade Agreements, or the Israeli Trade Act, the U.S. Trade Representative has waived the Buy American statute and other discriminatory provisions for eligible products. Offers of eligible products receive equal consideration with domestic offers.

           (2) The contracting officer shall determine the origin of services by the country in which the firm providing the services is established. See subpart  25.5 for evaluation procedures for supply contracts covered by trade agreements.

      (b) The value of the acquisition is a determining factor in the applicability of trade agreements. Most of these dollar thresholds are subject to revision by the U.S. Trade Representative approximately every 2 years. The various thresholds are summarized as follows:

Table 1 to Paragraph (b)
Trade Agreement Supply Contract (equal to or exceeding) Service Contract (equal to or exceeding) Construction Contract (equal to or exceeding)
WTO GPA $183,000 $183,000 $7,032,000
FTAs
Australia FTA 92,319 92,319 7,032,000
Bahrain FTA 183,000 183,000 12,001,460
CAFTA-DR (Costa Rica, Dominican Republic, El Salvador, Guatemala, Honduras, and Nicaragua) 92,319 92,319 7,032,000
Chile FTA 92,319 92,319 7,032,000
Colombia FTA 92,319 92,319 7,032,000
Korea FTA 100,000 100,000 7,032,000
Morocco FTA 183,000 183,000 7,032,000
NAFTA
-Canada 25,000 83,099 10,802,884
-Mexico 92,319 92,319 12,001,460
Oman FTA 183,000 183,000 12,001,460
Panama FTA 183,000 183,000 7,032,000
Peru FTA 183,000 183,000 7,032,000
Singapore FTA 92,319 92,319 7,032,000
Israeli Trade Act 50,000 - -

25.403 World Trade Organization Government Procurement Agreement and Free Trade Agreements.

      (a) Eligible products from WTO GPA and FTA countries are entitled to the nondiscriminatory treatment specified in 25.402(a)(1). The WTO GPA and FTAs specify procurement procedures designed to ensure fairness (see 25.408).

      (b) Thresholds.

(1) To determine whether the acquisition of products by lease, rental, or lease-purchase contract (including lease-to-ownership, or lease-with-option-to purchase) is covered by the WTO GPA or an FTA, calculate the estimated acquisition value as follows:

                (i) If a fixed-term contract of 12 months or less is contemplated, use the total estimated value of the acquisition.

                (ii) If a fixed-term contract of more than 12 months is contemplated, use the total estimated value of the acquisition plus the estimated residual value of the leased equipment at the conclusion of the contemplated term of the contract.

                (iii) If an indefinite-term contract is contemplated, use the estimated monthly payment multiplied by the total number of months that ordering would be possible under the proposed contract, i.e., the initial ordering period plus any optional ordering periods.

                (iv) If there is any doubt as to the contemplated term of the contract, use the estimated monthly payment multiplied by 48.

           (2) The estimated value includes the value of all options.

           (3) If, in any 12-month period, recurring or multiple awards for the same type of product or products are anticipated, use the total estimated value of these projected awards to determine whether the WTO GPA or an FTA applies. Do not divide any acquisition with the intent of reducing the estimated value of the acquisition below the dollar threshold of the WTO GPA or an FTA.

      (c) Purchase restriction.

(1) Under the Trade Agreements Act ( 19 U.S.C. 2512), in acquisitions covered by the WTO GPA, acquire only U.S.-made or designated country end products or U.S. or designated country services, unless offers for such end products or services are either not received or are insufficient to fulfill the requirements. This purchase restriction does not apply below the WTO GPA threshold for supplies and services, even if the acquisition is covered by an FTA.

           (2) This restriction does not apply to purchases of supplies by the Department of Defense from a country with which it has entered into a reciprocal agreement, as provided in departmental regulations.

25.404 Least developed countries.

For acquisitions covered by the WTO GPA, least developed country end products, construction material, and services must be treated as eligible products.

25.405 Caribbean Basin Trade Initiative.

Under the Caribbean Basin Trade Initiative, the United States Trade Representative has determined that, for acquisitions covered by the WTO GPA, Caribbean Basin country end products, construction material, and services must be treated as eligible products. In accordance with Section 201 (a)(3) of the Dominican Republic-Central America-United States Free Trade Implementation Act (Pub. L. 109-53) (19 U.S.C. 4031), when the CAFTA-DR agreement enters into force with respect to a country, that country is no longer designated as a beneficiary country for purposes of the Caribbean Basin Economic Recovery Act, and is therefore no longer included in the definition of "Caribbean Basin country" for purposes of the Caribbean Basin Trade Initiative.

25.406 Israeli Trade Act.

Acquisitions of supplies by most agencies are covered by the Israeli Trade Act, if the estimated value of the acquisition is $50,000 or more but does not exceed the WTO GPA threshold for supplies (see 25.402(b)). Agencies other than the Department of Defense, the Department of Energy, the Department of Transportation, the Bureau of Reclamation of the Department of the Interior, the Federal Housing Finance Board, and the Office of Thrift Supervision must evaluate offers of Israeli end products without regard to the restrictions of the Buy American statute. The Israeli Trade Act does not prohibit the purchase of other foreign end products.

25.407 Agreement on Trade in Civil Aircraft.

Under the authority of Section 303 of the Trade Agreements Act, the U.S. Trade Representative has waived the Buy American statute for civil aircraft and related articles that meet the substantial transformation test of the Trade Agreements Act, from countries that are parties to the Agreement on Trade in Civil Aircraft. Those countries are Albania, Austria, Belgium, Bulgaria, Canada, Croatia, Cyprus, Czech Republic, Denmark, Egypt, Estonia, Finland, France, Georgia, Germany, Greece, Hungary, Ireland, Italy, Japan, Latvia, Lithuania, Luxembourg, Macao China, Malta, Montenegro, the Netherlands, Norway, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, Sweden, Switzerland, Taiwan (Chinese Taipei), and the United Kingdom.

25.408 Procedures.

      (a) If the WTO GPA or an FTA applies (see 25.401), the contracting officer must-

           (1) Comply with the requirements of 5.203, Publicizing and response time;

           (2) Comply with the requirements of 5.207, Preparation and transmittal of synopses;

           (3) Not include technical requirements in solicitations solely to preclude the acquisition of eligible products;

           (4) Specify in solicitations that offerors must submit offers in the English language and in U.S. dollars (see 52.214-34, Submission of Offers in the English Language, and 52.214-35, Submission of Offers in U.S. Currency, or paragraph (c)(5) of 52.215-1, Instruction to Offerors-Competitive Acquisitions); and

           (5) Provide unsuccessful offerors from WTO GPA or FTA countries notice in accordance with 14.409-1 or 15.503.

      (b) See subpart  25.5 for evaluation procedures and examples.

Subpart 25.5 - Evaluating Foreign Offers-Supply Contracts

25.501 General.

The contracting officer-

      (a) Must apply the evaluation procedures of this subpart to each line item of an offer unless either the offer or the solicitation specifies evaluation on a group basis (see 25.503);

      (b) May rely on the offeror’s certification of end product origin when evaluating a foreign offer;

      (c) Must identify and reject offers of end products that are prohibited in accordance with subpart  25.7; and

      (d) When trade agreements are involved, must not use the Buy American statute evaluation factors prescribed in this subpart to provide a preference for one foreign offer over another foreign offer.

25.502 Application.

      (a) Unless otherwise specified in agency regulations, perform the following steps in the order presented:

           (1) Eliminate all offers or offerors that are unacceptable for reasons other than price; e.g., nonresponsive, debarred or suspended, or a prohibited source (see subpart  25.7).

           (2) Rank the remaining offers by price.

           (3) If the solicitation specifies award on the basis of factors in addition to cost or price, apply the evaluation factors as specified in this section and use the evaluated cost or price in determining the offer that represents the best value to the Government.

      (b) For acquisitions covered by the WTO GPA (see subpart  25.4)-

           (1) Consider only offers of U.S.-made or designated country end products, unless no offers of such end products were received;

           (2) If the agency gives the same consideration given eligible offers to offers of U.S.-made end products that are not domestic end products, award on the low offer. Otherwise, evaluate in accordance with agency procedures; and

           (3) If there were no offers of U.S.-made or designated country end products, make a nonavailability determination (see 25.103(b)(2)) and award on the low offer (see 25.403(c)).

      (c) For acquisitions not covered by the WTO GPA, but subject to the Buy American statute (an FTA or the Israeli Trade Act also may apply), the following applies:

           (1) If the low offer is a domestic offer or an eligible offer under an FTA or the Israeli Trade Act, award on that offer.

           (2) If the low offer is a noneligible offer and there were no domestic offers (see 25.103(b)(3)), award on the low offer. The procedures at 25.106(b)(2) and 25.106(c)(2) do not apply.

           (3) If the low offer is a noneligible offer and there is an eligible offer that is lower than the lowest domestic offer, award on the low offer. The procedures at 25.106(b)(2) and 25.106(c)(2) do not apply.

           (4) Otherwise, apply the appropriate evaluation factor provided in 25.106 to the low offer. The procedures at 25.106(b)(2) and 25.106(c)(2) do not apply.

      (d) Ties.

(1) If application of an evaluation factor results in a tie between a domestic offer and a foreign offer, award on the domestic offer.

           (2) If no evaluation preference was applied (i.e., offers afforded nondiscriminatory treatment under the Buy American statute), resolve ties between domestic and foreign offers by a witnessed drawing of lots by an impartial individual.

           (3) Resolve ties between foreign offers from small business concerns (under the Buy American statute, a small business offering a manufactured article that does not meet the definition of "domestic end product" is a foreign offer) or foreign offers from a small business concern and a large business concern in accordance with 14.408-6(a).

25.503 Group offers.

      (a) If the solicitation or an offer specifies that award can be made only on a group of line items or on all line items contained in the solicitation or offer, reject the offer-

           (1) If any part of the award would consist of prohibited end products (see subpart  25.7); or

           (2) If the acquisition is covered by the WTO GPA and any part of the offer consists of items restricted in accordance with 25.403(c).

      (b) If an offer restricts award to a group of line items or to all line items contained in the offer, determine for each line item whether to apply an evaluation factor (see 25.504-4, Example 1).

           (1) First, evaluate offers that do not specify an award restriction on a line item basis in accordance with 25.502, determining a tentative award pattern by selecting for each line item the offer with the lowest evaluated price.

           (2) Evaluate an offer that specifies an award restriction against the offered prices of the tentative award pattern, applying the appropriate evaluation factor on a line item basis.

           (3) Compute the total evaluated price for the tentative award pattern and the offer that specified an award restriction.

           (4) Unless the total evaluated price of the offer that specified an award restriction is less than the total evaluated price of the tentative award pattern, award based on the tentative award pattern.

      (c) If the solicitation specifies that award will be made only on a group of line items or all line items contained in the solicitation, determine the category of end products on the basis of each line item, but determine whether to apply an evaluation factor on the basis of the group of items (see 25.504-4, Example 2).

           (1) If the proposed price of domestic end products exceeds 50 percent of the total proposed price of the group, evaluate the entire group as a domestic offer. Evaluate all other groups as foreign offers.

           (2) For foreign offers, if the proposed price of domestic end products and eligible products exceeds 50 percent of the total proposed price of the group, evaluate the entire group as an eligible offer.

           (3) Apply the evaluation factor to the entire group in accordance with 25.502.

      (d) If no trade agreement applies to a solicitation and the solicitation specifies that award will be made only on a group of line items or all line items contained in the solicitation, determine the category of end products ( i.e., domestic or foreign) on the basis of each line item, but determine whether to apply an evaluation factor on the basis of the group of items ( see 25.504-4(c), Example 3).

           (1) If the proposed price of domestic end products exceeds 50 percent of the total proposed price of the group, evaluate the entire group as a domestic offer. Evaluate all other groups as foreign offers.

           (2) Apply the evaluation factor to the entire group in accordance with 25.502, except where 25.502(c)(4) applies and the evaluated price of the low offer remains less than the lowest domestic offer. Where the evaluated price of the low offer remains less than the lowest domestic offer, treat as a domestic offer any group where the proposed price of end products with a domestic content of at least 55 percent exceeds 50 percent of the total proposed price of the group.

           (3) Apply the evaluation factor to the entire group in accordance with 25.502(c)(4).

25.504 Evaluation examples.

The following examples illustrate the application of the evaluation procedures in 25.502 and 25.503. The examples assume that the contracting officer has eliminated all offers that are unacceptable for reasons other than price or a trade agreement (see 25.502(a)(1)). The evaluation factor may change as provided in agency regulations.

25.504-1 Buy American statute.

      (a)

(1) Example 1.

           (2) 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 $25,000 and the acquisition is set aside, none of the trade agreements apply. Perform the steps in 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 domestic end product ( see 25.502(c)(4)). Since Offer B is a domestic offer, apply the 30 percent factor to Offer C ( see 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 25.106(b)(1)(ii)). The 25.106(b)(2) procedures do not apply. Award on Offer C at $10,100 ( see 25.502(c)(4)(i)).

      (b)

(1) Example 2.

           (2) 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 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 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 25.502(c)(4)(ii)).

      (c)

(1) Example 3.

           (2) 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 $25,000 and the acquisition is set aside, none of the trade agreements apply. Perform the steps in 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 25.502(c)(4)). Offer C is the low offer. After applying the 30 percent factor, the evaluated price of 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 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.

25.504-2 WTO GPA/Caribbean Basin Trade Initiative/FTAs.

Example 1.

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 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 25.502(b)(2)).

25.504-3 FTA/Israeli Trade Act.

      (a) Example 1.

      Analysis: Since the low offer is an eligible offer, award on the low offer (see 25.502(c)(1)).

      (b) Example 2.

      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 25.502(c)(2)).

      (c) Example 3.

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 25.502(c)(3)).

25.504-4 Group award basis.

      (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

      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)):

      STEP 2: Determine whether foreign offers are eligible or noneligible offers (see 25.503(c)(2)):

      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)).

     

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)).

      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 o