FAR 14.201-8—Price related factors.
Plain-English Summary
FAR 14.201-8 explains the price-related factors that may be used when evaluating sealed bids for award and that must be stated in the invitation for bids when they apply. It covers foreseeable Government costs or delays caused by inspection differences, supply location, and transportation; transportation costs when bids are on an f.o.b. origin basis; changes made or requested by the bidder that are not grounds for rejection; the advantages or disadvantages of making multiple awards; the assumed $500 administrative cost per contract for multiple-award evaluation; federal, state, and local taxes; and the origin of supplies, including the effect of the Buy American statute and other foreign-purchase restrictions. The purpose of the rule is to ensure award goes to the lowest cost to the Government, not merely the lowest bid price, by accounting for real-world costs and legal restrictions that affect total acquisition cost. In practice, this section requires the contracting officer to identify and disclose applicable evaluation factors up front, so bidders know how their bids will be compared and so the Government can make a fair, defensible award decision. It is especially important in sealed bidding because evaluation must be based on the solicitation terms and the factors announced before bid opening. The section also links to other FAR parts on transportation, bid rejection, multiple awards, taxes, and domestic preference rules, so it often requires coordination across several policy areas.
Key Rules
Use only applicable factors
The listed price-related factors may be used in bid evaluation only when they apply to the acquisition, and they must be included in the solicitation when applicable. This means the contracting officer must decide in advance which factors affect the Government’s actual cost and tell bidders how those factors will be considered.
Account for foreseeable Government costs
Evaluation may include foreseeable costs or delays to the Government caused by inspection differences, supply locations, and transportation. If bids are on an f.o.b. origin basis, transportation costs to the designated destination must be added when determining the lowest cost to the Government.
Consider bidder-requested changes
If a bidder changes or requests changes to IFB provisions and the change is not a basis for rejection under FAR 14.404, the effect of that change may be considered in evaluation. This allows the Government to account for cost impacts of acceptable deviations or requested modifications.
Evaluate multiple-award tradeoffs
The contracting officer may consider the advantages or disadvantages of making more than one award, and must assume a $500 administrative cost to the Government for issuing and administering each contract under the solicitation. Awards should be made to the item or combination of items that produces the lowest aggregate cost, including the assumed administrative costs.
Include taxes in price analysis
Federal, state, and local taxes may be considered in the evaluation, consistent with FAR part 29. The solicitation should make clear how taxes will be treated so bids can be compared on a common basis.
Consider origin and domestic preference rules
The origin of supplies may affect evaluation, and if supplies are foreign, the Buy American statute or other foreign-purchase prohibitions may apply. The contracting officer must evaluate bids in light of FAR part 25 and any applicable restrictions on foreign sources.
Responsibilities
Contracting Officer
Identify which price-related factors apply to the acquisition, include them in the IFB, and evaluate bids using those factors exactly as disclosed. The contracting officer must also account for transportation, taxes, multiple-award administrative costs, and origin-related restrictions when relevant, and ensure the evaluation supports award to the lowest cost to the Government.
Contractor/Bidder
Review the solicitation carefully and submit bids that reflect the stated evaluation method, including any transportation assumptions, tax treatment, and domestic preference requirements. If proposing changes to IFB provisions, the bidder must understand that acceptable changes may still affect evaluation and that unacceptable changes may lead to rejection.
Agency/Requirement Owner
Provide accurate acquisition requirements and cost information needed to determine whether factors such as inspection location, delivery point, multiple awards, or foreign-source restrictions will affect the Government’s total cost. The agency must support the contracting officer in identifying practical evaluation factors before solicitation issuance.
Legal/Policy Support Staff
Advise on the applicability of Buy American and other foreign-purchase restrictions, tax treatment, and any solicitation deviations or bidder-requested changes that may affect evaluation or bid responsiveness. Support is often needed to ensure the solicitation language is consistent with FAR parts 25 and 29 and with sealed-bidding rules.
Practical Implications
This section is about total evaluated cost, not just the face price of the bid. A low bid can lose if transportation, taxes, multiple-award costs, or foreign-source restrictions make it more expensive to the Government overall.
The solicitation must clearly state any applicable evaluation factors before bid opening. If the Government fails to disclose a factor it later uses, the award decision can be vulnerable to protest or internal challenge.
The $500 administrative cost assumption for multiple awards is mandatory when evaluating that tradeoff under this section. Contracting officers should not substitute a different estimate unless another FAR provision specifically allows it.
FOB terms matter a lot in sealed bidding. When bids are FOB origin, the Government must add transportation to the destination point, so bidders and evaluators need the same shipping assumptions.
Bidder-requested changes are not automatically fatal, but they can change the evaluated cost or responsiveness analysis. Contracting officers should distinguish carefully between acceptable changes that affect price and changes that require rejection under FAR 14.404.
Official Regulatory Text
The factors set forth in paragraphs (a) through (e) of this subsection may be applicable in evaluation of bids for award and shall be included in the solicitation when applicable. (See 14.201-5 (c).) (a) Foreseeable costs or delays to the Government resulting from such factors as differences in inspection, locations of supplies, and transportation. If bids are on an f.o.b. origin basis (see 47.303 and 47.305 ), transportation costs to the designated points shall be considered in determining the lowest cost to the Government. (b) Changes made, or requested by the bidder, in any of the provisions of the invitation for bids, if the change does not constitute a ground for rejection under 14.404 . (c) Advantages or disadvantages to the Government that might result from making more than one award (see 14.201-6 (q)). The contracting officer shall assume, for the purpose of making multiple awards, that $500 would be the administrative cost to the Government for issuing and administering each contract awarded under a solicitation. Individual awards shall be for the items or combinations of items that result in the lowest aggregate cost to the Government, including the assumed administrative costs. (d) Federal, state, and local taxes (see part 29 ). (e) Origin of supplies, and, if foreign, the application of the Buy American statute or any other prohibition on foreign purchases (see part 25 ).