FAR 25.502—Application.
Plain-English Summary
FAR 25.502 explains how to apply the domestic preference and trade agreement evaluation rules when making award decisions. It covers the order of evaluation steps, including first removing unacceptable offers or offerors for reasons unrelated to price, then ranking remaining offers by price, and then applying any stated evaluation factors when award is based on more than price. It also addresses how to evaluate offers under the WTO Government Procurement Agreement (GPA), including treatment of U.S.-made and designated country end products, when to make a nonavailability determination, and when award may be made on the low offer. For acquisitions not covered by the WTO GPA but subject to the Buy American statute, it sets out the award sequence for domestic, FTA, Israeli Trade Act, and noneligible offers, including when to apply the evaluation factor in FAR 25.106 and when not to. Finally, it establishes tie-breaking rules for domestic versus foreign offers and for certain foreign offers involving small business concerns. In practice, this section tells contracting officers exactly how to compare offers in the correct order so they apply the right preference, avoid improper evaluation, and make a legally supportable best-value or low-price award decision.
Key Rules
Remove unacceptable offers first
Before applying price preferences or trade agreement rules, eliminate offers or offerors that are unacceptable for reasons other than price, such as nonresponsiveness, suspension or debarment, or being a prohibited source. This ensures only eligible offers are ranked and evaluated further.
Rank remaining offers by price
After screening out unacceptable offers, rank the remaining offers by price unless agency regulations specify a different approach. This price ranking is the starting point for applying the domestic preference and trade agreement rules.
Apply stated evaluation factors
If the solicitation uses factors in addition to price, apply those factors as directed in the section and use the evaluated cost or price to determine best value. The evaluation must follow the solicitation and the applicable preference rules.
WTO GPA acquisitions
For acquisitions covered by the WTO GPA, consider only U.S.-made or designated country end products unless no such offers were received. If agency procedures give U.S.-made non-domestic end products the same treatment as eligible offers, award on the low offer; otherwise, evaluate under agency procedures. If no eligible offers exist, make a nonavailability determination and award on the low offer.
Buy American acquisitions
For acquisitions not covered by the WTO GPA but subject to the Buy American statute, award on the low offer if it is domestic or otherwise eligible under an FTA or the Israeli Trade Act. If the low offer is noneligible and there are no domestic offers, award on the low offer; if a noneligible offer is still lower than the lowest domestic offer, award on the low offer. Otherwise, apply the appropriate FAR 25.106 evaluation factor to the low offer and compare the evaluated price to the lowest domestic offer.
Do not use certain procedures
In the Buy American scenarios described in paragraph (c), the procedures at FAR 25.106(b)(2) and 25.106(c)(2) do not apply. The section instead directs the contracting officer to follow the specific award logic in 25.502(c).
Resolve ties correctly
If an evaluation factor creates a tie between a domestic and foreign offer, award to the domestic offer. If no evaluation preference was applied, resolve domestic-versus-foreign ties by a witnessed drawing of lots by an impartial individual. Ties involving foreign offers from small business concerns, or between a foreign small business and a large business, are resolved under FAR 14.408-6(a).
Responsibilities
Contracting Officer
Screen out unacceptable offers first, rank the remaining offers by price, apply any solicitation evaluation factors, determine whether the acquisition is covered by the WTO GPA or the Buy American statute, apply the correct award rule for domestic, designated country, FTA, Israeli Trade Act, or noneligible offers, make any required nonavailability determination, and resolve ties using the proper method.
Agency
Issue any agency-specific regulations or procedures that modify the default order of evaluation or the treatment of certain offers, and ensure those procedures are consistent with the applicable trade agreement and domestic preference rules.
Offerors
Submit responsive, eligible offers and understand that price ranking, domestic content status, trade agreement coverage, and any solicitation evaluation factors may affect award outcome. Offerors also need to recognize that in some cases a foreign offer may still win if the rule set directs award on the low offer.
Source Selection/Evaluation Team
Apply the solicitation’s evaluation factors consistently, calculate evaluated cost or price where required, and document the basis for ranking, preference application, nonavailability findings, and tie-breaking decisions.
Practical Implications
This section is a decision tree for award, so getting the acquisition category wrong can lead to an incorrect award decision. The first practical step is always to identify whether the procurement is covered by the WTO GPA or instead falls under the Buy American statute and any other applicable trade agreements.
Contracting officers must separate eligibility screening from price evaluation. A low-priced offer that is nonresponsive, suspended, debarred, or otherwise unacceptable cannot be considered until the threshold eligibility issues are resolved.
The rule can produce different outcomes depending on whether the solicitation uses simple low-price award or best-value factors. If evaluation factors are used, the evaluated price—not just the raw offered price—drives the comparison.
The tie-breaking rules matter because a tie does not automatically mean a recompetition. Domestic offers get the preference when an evaluation factor creates the tie, but if no preference was applied, the tie must be broken by a witnessed drawing of lots or by the small-business tie rules in FAR 14.408-6(a).
A common pitfall is applying the wrong preference procedure or using the wrong FAR 25.106 adjustment in a Buy American case. The section specifically says certain 25.106 procedures do not apply in the scenarios listed here, so the contracting officer should follow 25.502’s sequence exactly and document the rationale carefully.
Official Regulatory Text
(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. (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. (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).