Determining Source Selection with the Buy American Statute

Transcription

1

2 Determining Source Selection with the Buy American Statute Breakout Session #: D12 Roy Nyquist, CPCM,CFCM, Fellow Shene Commodore, CPCM,Fellow Date: Tuesday, July 26 Time: 11:15am-12:30pm

3 Buy American Statute (BA)

4 Course Agenda Course Opening & Administration Buy American Statute References FAR-DFAR General/DOD Exceptions Evaluation Source Selection Criteria Summary, Wrap-up & Take-aways 3

5 Learning Objectives Identify which procurement types falls under BA Identify the procedures for applying the BA statute Demonstrate knowledge of BA requirements 4

6 Policy on BA The Buy American Statute policy for supplies specifies that only domestic end products should be acquired for public use inside the United States. Includes small Business set asides for small business if Supply exceeds micro-purchase threshold: OR Supply portion of contract for services that involve furnishing of supplies exceeds micro-purchase *Special rules apply for construction, transit, & the Berry Amendment Treaties take precedence 5

7 Long-standing U.S. preference to buy domestic products Renewed focus on Buy National restrictions Need a Globalized supply chain Increased enforcement efforts Common questions What is the product? Are services covered? How is origin determined? Statutory requirements and waivers 6

8 Understanding the Terminology Definitions are in FAR BA Domestic End Product BA Exception vs. Exemption from BA (or Waiver of BA) Components *Components must be items directly incorporated into the end product. 7

9 Component Entirely foreign or entirely domestic. A component is domestic only if it is manufactured in the United States. A foreign made component may become domestic if it undergoes substantial remanufacturing in the United States. 8

10 Component Test Calculating component cost Purchased components all costs Manufactured components no profit Component test waived for COTS items 9

11 BA Application Applies to: End product (supply contract); or Construction material Two-part test: Manufactured in the U.S. From U.S. manufactured components the cost of which exceeds 50% of the total component cost 10

12 Definitions- Designated Country (DC) Construction (For Countries which US has agreements) Wholly the growth, product or manufacture from a designated country.. Construction material that consists in whole or in part of materials from another country, has been substantially transformed in a DC into a new and different construction material distinct rom the materials from which it was transformed 11

13 Construction Materials Defined : CONSTRUCTION MATERIALS - For the purposes of this discussion, construction materials are defined as permanent plant equipment, materials, or supplies. APPLICATION: Contracts for the construction, alteration, or repair of any public building or work in the U.S.. RESTRICTIONS: Incorporation of any construction materials NOT considered domestic. 12

14 Buy American Statute United States 50 states District of Columbia Territories and possessions Puerto Rico Northern Mariana Islands Any other place subject to US jurisdiction NAFTA Countries Canada Mexico

15 Definition Qualifying Country (For Countries which US has agreements in military items) Australia Italy Luxembourg Norway Northern Ireland Poland Portugal Spain Sweden Switzerland Greece Finland Israel Belgium Netherlands United Kingdom of Great Britain Turkey Canada Czech Republic Denmark Egypt Federal Republic of Germany France

16 Restricted Countries BA compliant projects cannot purchase or use supplies, material, or services originating in, transported from or through the following countries or entities: Cuba Sudan Serbia (excluding Kosovo) Iran North Korea NO Iraq Libya The territory of Afghanistan controlled by the Taliban, Entities controlled by the government of Iraq. THERE ARE EXCEPTIONS 15

17 BA Exceptions Overview 1) Public Interest as determined by the head of the agency; 2) Non-availability of domestic sources, as determined by class or an individual determination by the Contracting Officer; 3) Unreasonable cost; 4) Commissary resale of the product; 5) Information Technology that is a commercial item. 16

18 Evaluations under BA FAR Subpart evaluating foreign offers for supply contracts. The BA provides a cost evaluation preference for domestic offers only. Written as a prohibition; implemented as a preference 6% / 12% evaluation factor (civilian contracts) 50% evaluation factor (DoD contracts) 17

19 Evaluations under BA Source Selection 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 ); (b) May rely on the offeror s certification of end product origin when evaluating a foreign offer; 18

20 Evaluations under BA Source Selection (c) Must identify and reject offers of end products that are prohibited in accordance with Subpart 25.7; and (d) 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. 19

21 Key Criteria for BA Product Evaluation Gather information regarding the product s: Manufacturing process End product being procured by the Government What constitutes the components and parts of the end product Locations of manufacturing List of its components 2 0

22 Key Criteria for BA Product Evaluation(Continued) Gather information regarding the product s: Country of origin (COO) for its components (and sometimes parts) Costs of the components and end product, Any applicable exceptions to application of the BAA Other requested information. Relevant FAR clauses included in the prime contract/solicitation (e.g. FAR , FAR ). 2 1

23 Evaluation Procedures not covered by Other Agreements but Subject to BA 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 (b)(3)), award on the low offer. 2 2

24 Evaluation Procedures not covered by Other Agreements but Subject to BA(Continued) (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 Buy American statute provides an evaluation preference only for domestic offers. (4) Otherwise, apply the appropriate evaluation factor provided in to the low offer. (i) If the evaluated price of the low offer remains less than the lowest domestic offer, award on the low offer. (ii) If the price of the lowest domestic offer is less than the evaluated price of the low offer, award on the lowest domestic offer. 2 3

25 DoD Evaluation Procedures (ii) If price is the determining factor, use the following procedures: (A) If the low offer is a domestic offer, award on that offer. (B) If there are no domestic offers, award on the low offer (see example in (1)). 2 4

26 DoD Evaluation Procedures (C) If the low offer is a foreign offer that is exempt from application of the Buy American or Balance of Payments Program evaluation factor, award on that offer. (If the low offer is a qualifying country offer from a country listed at (b), execute a determination in accordance with ). (D) If the low offer is a foreign offer that is not exempt from application of the Buy American or Balance of Payments Program evaluation factor, and there is another foreign offer that is exempt and is lower than the lowest domestic offer, award on the low foreign offer (see example in (2)). 2 5

27 DoD Evaluation Procedures (E) Otherwise, apply the 50 percent evaluation factor to the low foreign offer. (1) If the price of the low domestic offer is less than the evaluated price of the low foreign offer, award on the low domestic offer (see example in PGI (3)). (2) If the evaluated price of the low foreign offer remains less than the low domestic offer, award on the low foreign offer (see example in PGI (4)). 2 6

28 DoD Evaluation Procedures(continued) (iii) If price is not the determining factor, use the following procedures: (A) If there are domestic offers, apply the 50 percent Buy American or Balance of Payments Program evaluation factor to all foreign offers unless an exemption applies. (B) Evaluate in accordance with the criteria of the solicitation. 2 7

29 DoD Evaluation Procedures(continued) (C) If these procedures will not result in award on a domestic offer, re-evaluate offers without the 50 percent factor. If this will result in award on an offer to which the Buy American statute or Balance of Payments Program applies, but evaluation in accordance with paragraph (c)(ii) of this section would result in award on a domestic offer, proceed with award only after execution of a determination in accordance with (a)(ii)(B), that domestic preference would be inconsistent with the public interest. 2 8

30 DoD Evaluation Procedures(continued) (iv) If the solicitation includes the provision at , Preference for Products or Services from Afghanistan, use the evaluation procedures at

31 Evaluation Procedures - 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 0

32 Evaluation Procedures - Ties (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 (a). 3 1

33 Steps in Applying the BA Rules Step 1 : Reject offers of end products from prohibited sources in accordance with FAR 25.7/ DFARS Step 2 : If the low offer is a domestic offer, award on that offer. Step 3: If there are no domestic offers, do not apply the evaluation factor and award on the lowest offer. Step 4: If the low offer is a foreign offer that is exempt from the application of the BA, award on that offer. 3 2

34 Steps in Applying the BA Rules If the low offer is from a qualifying country listed at DFARS l(a) proceed with the award. Step 4a: If the acquisition is subject to only the BA or Balance of Payment then only qualifying country end products are exempt from the application of the BA evaluation factor. 3 3

35 Steps in Applying the BA Rules If the low offer is from a qualifying country at DFARS l(b), execute a determination in accordance with DFARS for additional details. Step 5: If there is no possibility that a domestic offer can win because foreign offer that is exempt from the application of the Buy American Statute (a qualifying country offer)is lower than the domestic offer, then award on the lowest foreign offer. No evaluation factor is applied to any foreign offer when a domestic offer cannot win. 3 4

36 Steps in Applying the BA Rules (Cont) Step 5a: If the acquisition is also subject to FTA, then the FTA country end products are also exempt from the application of the Buy American Statute. Step 6: Otherwise, apply a 50 percent factor to the price of the low foreign offer that is not exempt from the Buy American Statute using the following conditions: 3 5

37 Steps in Applying the BA Rules (Cont) If the price of the low domestic offer is less than the adjusted price of the low foreign offer, award on the low domestic offer. If the adjusted price of the low foreign offer remains less than the low domestic offer, award on the low foreign offer In the case of a tie, award on the domestic offer Step 7: Evaluate group offers in accordance with FAR but apply the described evaluation procedures DFARS

38 BA Price Reasonableness If the U.S. made product is significantly more expensive than the foreign product, the agency may purchase the foreign product. In order to determine price reasonableness, the BA provides a price preference for U.S. made products. If a procurement is subject to the BA and the lowest price offeror is offering a foreign made product, for evaluation purposes the contracting officer is required to add 6% or 12% to the price of the foreign product. If the company bidding the U.S. made product is a small business, the contracting officer applies a 12% price evaluation penalty to the foreign product offer, and 6% if the offeror of the U.S. made product is not a small business. 3 7

39 Summary The Contracting Officer (CO) may rely on the vendor s certification of BA & TAA compliance Unless an exception applies, U.S. government agencies are required to purchase U.S. made products if the BAA applies to the procurement. Apply BA rules and other agreements to your daily functions even with limited suppliers. 38

40 Summary (Continued) COs, Suppliers\Subcontractor s, Representatives need to know and document the origin of materials and products that they are supplying. BA Compliance determination is fact specific to each product BA does not prohibit the purchase of foreign-made products; but provides a price preference (6-50 percent) for domestic end products. The TAA, on the other hand, does prohibit the purchase of products and services that are not substantially transformed in the U.S. or a designated country. 39

41 Summary (Continued) STEP IF THEN The offers of end products are from prohibited sources Reject in accordance with FAR Subpart 25.7/DFARS The low offer is a domestic offer Award on that offer. 3 There are no domestic offers Award on the low offer. The low offer is a foreign offer that is exempt from the application of the BAs Award on that offer because it is from a designated country or a qualifying country Note: see for end products subject to trade agreements (i.e. designated countries). Note: if the low offer is a qualifying country offer from a country listed at DFARS (a), execute a determination in accordance with (Using Public Interest) Note: Individual Acquisitions from following Countries may be exempt on purchase by purchase basis(dfars (1)(b) Austria 4 To award to designated country offer, the acquisition must be equal or above the FTA or WTO/GPA threshold. 5 There is no possibility that a domestic offer can win because a foreign offer that is exempt from the application of the BAs (i.e. designated or qualifying country) is lower than the domestic offer Award on the lowest foreign offer. No evaluation factor is applied to any foreign offer when a domestic offer cannot win. No foreign offer is from a country with a designated or qualifying country exemption from BAs Apply a 50 percent factor [ (b) and (c)(ii)(E)] to the price of the low foreign offer that is not exempt from the BAs using the following conditions: If the price of the low domestic offer is less than the adjusted (evaluated) price of the low foreign offer, award on the low domestic offer. If the adjusted price of the low foreign offer remains less than the low domestic offer, award on the low foreign offer. 6 In the case of a tie, award on the domestic offer. 7 It is a group offer Evaluate in accordance with FAR but apply the described evaluation procedures (DFARS ). 40

42 Contact Information Roy Nyquist, / Shene Commodore, g.com /