FAR 15.304—Evaluation factors and significant subfactors.
Plain-English Summary
FAR 15.304 explains how agencies must choose and disclose the evaluation factors and significant subfactors used in negotiated source selections. It covers the core principle that award decisions must be based on tailored factors that reflect the acquisition’s key areas of importance and allow meaningful comparison among proposals, as well as the requirement to state those factors and their relative importance in the solicitation. The section also addresses mandatory consideration of price or cost, the special DoD/NASA/Coast Guard exception for certain multiple-award contracts, the requirement to evaluate quality through non-cost factors, the general rule that past performance must be evaluated in most competitive negotiated acquisitions above the simplified acquisition threshold, and special past-performance and subcontracting participation factors for consolidation or bundling situations with significant subcontracting opportunities. It further requires agencies to avoid unfavorably evaluating telecommuting unless a written FAR 7.108(b) determination is made, and it explains how solicitations must describe the overall importance of non-price factors relative to price or cost. In practice, this section is about transparency, defensible source selection, and ensuring the evaluation scheme matches the acquisition strategy so offerors know what matters and evaluators can make a sound, well-documented award decision.
Key Rules
Tailor factors to the acquisition
Evaluation factors and significant subfactors must be customized to the specific procurement. They must reflect the key areas of importance and support meaningful discrimination among competing proposals.
Price or cost is normally required
Price or cost must be evaluated in every source selection, except for the limited DoD, NASA, and Coast Guard multiple-award exception described in paragraph (c)(1)(ii)(A). Even when excluded from the initial award evaluation under that exception, price or cost must still be considered for each order.
Quality must be evaluated through non-cost factors
The quality of the product or service must be addressed in every source selection using one or more non-cost factors such as past performance, technical excellence, management capability, personnel qualifications, prior experience, or compliance with requirements.
Past performance is usually mandatory
For negotiated competitive acquisitions expected to exceed the simplified acquisition threshold, past performance must be evaluated unless the contracting officer documents why it is not appropriate for the acquisition. For certain consolidation or bundling acquisitions, the solicitation must also evaluate small business participation history.
Small business participation may be a factor
For solicitations not set aside for small business concerns that involve consolidation or bundling and offer significant subcontracting opportunities, the contracting officer must include proposed small business subcontracting participation in the subcontracting plan as an evaluation factor.
Telecommuting cannot be penalized without justification
If telecommuting is not prohibited, agencies may not unfavorably evaluate an offer simply because it includes telecommuting unless the contracting officer makes a written determination under FAR 7.108(b).
Solicitation must disclose factors and importance
All evaluation factors and significant subfactors that will affect award, and their relative importance, must be clearly stated in the solicitation. The solicitation must also describe the general approach for evaluating past performance, though it does not have to disclose the exact rating method.
Relative weight of price must be stated
Unless the DoD/NASA/Coast Guard multiple-award exception applies, the solicitation must say whether the non-price factors combined are significantly more important than price, approximately equal to price, or significantly less important than price.
Responsibilities
Contracting Officer
Design the evaluation scheme to fit the acquisition, identify all factors and significant subfactors, determine and document when past performance is not appropriate, include required small business participation factors when applicable, avoid improper negative treatment of telecommuting, and ensure the solicitation clearly states the factors and their relative importance.
Agency Acquisition Officials
Exercise broad discretion in selecting evaluation factors and their relative importance, but do so consistently with statutory and FAR requirements and in a way that supports a defensible source selection decision.
Source Selection Team / Evaluators
Apply only the disclosed factors and subfactors, evaluate proposals in a way that allows meaningful comparison, and assess price/cost, quality, past performance, and any required subcontracting or telecommuting-related considerations as stated in the solicitation.
Offerors / Contractors
Prepare proposals to address the stated evaluation factors and significant subfactors, including price or cost, technical quality, past performance, subcontracting participation where relevant, and any other disclosed areas of importance.
Agency
Ensure solicitations and source selection practices comply with the statutory requirements for disclosure, price/cost evaluation, past performance, and special rules for consolidation, bundling, and telecommuting.
Practical Implications
This section is one of the most important source selection rules because it controls what evaluators may consider and what offerors must address. If a factor is not stated, it generally should not drive the award decision.
A common pitfall is overloading the solicitation with too many factors or vague subfactors that do not actually help distinguish proposals. FAR 15.304 requires factors that matter and that support real discrimination between offers.
Another frequent issue is failing to state the relative importance of price versus non-price factors clearly enough. Offerors need to know whether technical merit can outweigh price, or whether price will be the dominant consideration.
For acquisitions involving consolidation or bundling, contracting officers must remember the extra small business-related evaluation requirements. Missing these can create protest risk and undermine the procurement record.
Telecommuting must be handled carefully: agencies cannot simply treat it as a negative unless they have the required written determination. This matters in modern workforce and performance-based acquisitions where remote work may be part of the proposed approach.
Official Regulatory Text
(a) The award decision is based on evaluation factors and significant subfactors that are tailored to the acquisition. (b) Evaluation factors and significant subfactors must- (1) Represent the key areas of importance and emphasis to be considered in the source selection decision; and (2) Support meaningful comparison and discrimination between and among competing proposals. (c) The evaluation factors and significant subfactors that apply to an acquisition and their relative importance, are within the broad discretion of agency acquisition officials, subject to the following requirements: (1) (i) Price or cost to the Government shall be evaluated in every source selection ( 10 U.S.C. 3206(c)(1)(B) and 41 U.S.C.3306 (c)(1)(B)(also see part 36 for architect-engineer contracts), subject to the exception listed in paragraph (c)(1)(ii)(A) of this section for use by DoD, NASA, and the Coast Guard. (ii) In accordance with 10 U.S.C. 3206(c) , for DoD, NASA, and the Coast Guard— (A) The contracting officer may choose not to include price or cost as an evaluation factor for award when a solicitation— (1) Has an estimated value above the simplified acquisition threshold; (2) Will result in multiple-award contracts (see subpart 16.5 ) that are for the same or similar services; and (3) States that the Government intends to make an award to each and all qualifying offerors (see 2.101). (B) If the contracting officer chooses not to include price or cost as an evaluation factor for the contract award, in accordance with paragraph (c)(1)(ii)(A) of this section, the contracting officer shall consider price or cost as one of the factors in the selection decision for each order placed under the contract. (C) The exception in paragraph (c)(1)(ii)(A) of this section shall not apply to solicitations for multiple-award contracts that provide for sole source orders pursuant to section 8(a) of the Small Business Act ( 15 U.S.C. 637 (a)). (2) The quality of the product or service shall be addressed in every source selection through consideration of one or more non-cost evaluation factors such as past performance, compliance with solicitation requirements, technical excellence, management capability, personnel qualifications, and prior experience ( 10 U.S.C. 3206(c)(1)(A) and 41 U.S.C. 3306(c)(1)(A) ); and (3) (i) Past performance, except as set forth in paragraph (c)(3)(iii) of this section, shall be evaluated in all source selections for negotiated competitive acquisitions expected to exceed the simplified acquisition threshold. (ii) For solicitations that are not set aside for small business concerns, involving consolidation or bundling, that offer a significant opportunity for subcontracting, the contracting officer shall include a factor to evaluate past performance indicating the extent to which the offeror attained applicable goals for small business participation under contracts that required subcontracting plans ( 15 U.S.C. 637(d)(4)(G)(ii) ). (iii) Past performance need not be evaluated if the contracting officer documents the reason past performance is not an appropriate evaluation factor for the acquisition. (4) For solicitations, that are not set aside for small business concerns, involving consolidation or bundling, that offer a significant opportunity for subcontracting, the contracting officer shall include proposed small business subcontracting participation in the subcontracting plan as an evaluation factor ( 15 U.S.C. 637(d)(4)(G)(i) ). (5) If telecommuting is not prohibited, agencies shall not unfavorably evaluate an offer that includes telecommuting unless the contracting officer executes a written determination in accordance with FAR 7.108 (b). (d) All factors and significant subfactors that will affect contract award and their relative importance shall be stated clearly in the solicitation ( 10 U.S.C. 3206(b)(1) and 41 U.S.C. 3306(b)(1) ) (see 15.204-5 (c)). The rating method need not be disclosed in the solicitation. The general approach for evaluating past performance information shall be described. (e) Unless the exception at paragraph (c)(1)(ii)(A) of this section applies, the solicitation shall also state, at a minimum, whether all evaluation factors other than cost or price, when combined, are— (1) Significantly more important than cost or price; (2) Approximately equal to cost or price; or (3) Significantly less important than cost or price ( 10 U.S.C. 3206(c)(1)(C) and 41 U.S.C. 3306(c)(1)(C) ).