FAR 25.504-4—Group award basis.
Plain-English Summary
FAR 25.504-4 explains how to evaluate offers when the solicitation uses a group award basis and the Buy American statute or related domestic-preference rules apply. The section is built around worked examples that show how to compare domestic, eligible, and noneligible end products; how to apply the price evaluation factor; how to handle all-or-none offers; and how to determine the award pattern when multiple line items are grouped together. It also shows the difference between evaluating individual line items and evaluating a group of items as a package, including how the tentative award pattern is formed before considering a competing all-or-none offer. The examples cover situations where the WTO GPA does not apply, where the Buy American statute applies, and where domestic content percentages affect whether an offer is treated as domestic or foreign. In practice, this section matters because the lowest raw price is not always the award winner; contracting officers must follow the domestic-preference evaluation method exactly, or they may make an incorrect award decision. Contractors also need to understand that a low-priced foreign offer can lose once the evaluation factor is applied, and that an all-or-none condition can change the award outcome across grouped items.
Key Rules
Evaluate by the solicitation method
When the solicitation calls for group award, the agency evaluates offers as a package rather than simply line by line in isolation. The examples show that the contracting officer first establishes the tentative award pattern under the applicable preference rules, then compares that pattern against any all-or-none offer.
Apply domestic preference rules first
The evaluation must reflect whether the acquisition is covered by the WTO GPA or only by the Buy American statute, because that determines whether a price evaluation factor applies and to which products. The examples show that domestic, eligible, and noneligible products are treated differently depending on the governing trade and domestic-content rules.
Use the 20 percent factor when required
If the low offer is a foreign or noneligible offer and the other offer for that line item is domestic, the contracting officer applies the evaluation factor to the foreign/noneligible offer. The examples use a 20 percent factor, or 30 percent if the domestic offer is from a small business, to determine the evaluated price.
Compare tentative award patterns to all-or-none offers
When an offeror conditions its proposal on receiving all items or none, the contracting officer must compare that all-or-none evaluated total against the tentative award pattern formed from the other offers. Award goes to the lower evaluated result, even if the raw prices suggest a different outcome.
Determine domestic status by content percentages
For group awards under the Buy American analysis, the examples show that an offer can be domestic if the domestic portion of the total offer meets the required threshold. If the offer is not domestic, the contracting officer then determines whether it is eligible or noneligible before applying any factor.
Do not apply the factor unnecessarily
The examples show that the evaluation factor is not applied to every foreign item automatically. It is applied only when the rule calls for it, such as when the low offer is foreign and the other offer for that line item is domestic, or when the specific evaluation step requires it under the applicable subsection.
Responsibilities
Contracting Officer
Identify whether the acquisition is subject to the WTO GPA, the Buy American statute, or another domestic-preference rule; determine whether the solicitation uses line-item or group award; classify offers as domestic, eligible, or noneligible; apply the correct evaluation factor where required; compare tentative award patterns against all-or-none offers; and make award to the evaluated combination that is lowest in accordance with the applicable rule.
Offeror/Contractor
Structure the proposal consistently with the solicitation’s award basis, including any all-or-none condition; identify domestic and foreign end products accurately; provide pricing that can be evaluated under the domestic-preference rules; and understand that the evaluated price, not the raw price, controls award outcome.
Agency
Draft the solicitation to state the award basis clearly, including whether award will be made on a group basis and whether all-or-none offers are permitted; ensure the applicable domestic-preference regime is identified; and support the contracting officer in applying the correct evaluation methodology.
Evaluation Team
Calculate domestic-content percentages and evaluated prices accurately; document the tentative award pattern; and ensure the evaluation record shows how the group award decision was reached under the applicable preference rules.
Practical Implications
A low bid is not necessarily the winning bid once domestic-preference adjustments are applied; contractors should always evaluate their competitive position using the evaluated price, not just the offered price.
Group award evaluations can change the result dramatically because the government may combine line items from different offers into a tentative award pattern before comparing it to an all-or-none proposal.
A common mistake is applying the 20 percent factor to the wrong offer or at the wrong stage; the factor only applies when the rule requires it, and the comparison must be made item by item under the stated method.
Contractors offering foreign products should pay close attention to whether their products are classified as eligible or noneligible, because that classification can determine whether they lose on evaluation even when their raw price is lower.
When an offeror conditions its proposal on all-or-none award, the contracting officer must test that condition against the tentative award pattern; failing to do so can lead to an incorrect award decision and a flawed price evaluation record.
Official Regulatory Text
(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 Key: DO = Domestic end product EL = Eligible product NEL = Noneligible product 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)): Domestic [percent] Determination A $50,000 (Offer A1) + $10,500 (Offer A4) = $60,500 $60,500/$91,200 (Offer A Total) = 66.3% Domestic B $10,300 (Offer B4) /$91,800 (Offer B Total) $ = 11.2% Foreign C $10,400 (Offer C4) /$90,800 (Offer C Total) = 11.5% Foreign STEP 2 : Determine whether foreign offers are eligible or noneligible offers (see 25.503 (c)(2)): Domestic
- Eligible [percent] Determination A N/A (Both Domestic) Domestic B $50,500 (Offer B1) + $21,000 (Offer B3) + $10,300 (Offer B4)= $81,800. $81,800 /$91,800 (Offer B Total) = 89.1% Eligible C $10,200 (Offer C2) + $10,400 (Offer C4) = $20,600. $20,600/$90,800 (Offer C Total) = 22.7% Noneligible 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)). Domestic [percent] Determination A $17,800 (Offer A1) + $10,000 (Offer A4) = $27,800 $27,800/$48,000 (Offer A Total) = 58% Domestic B $9,000 (Offer B4)/$45,500 (Offer B Total) = 19.8% Foreign C $10,200 (Offer C2)/$38,800 (Offer C Total) = 26.3% Foreign 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)). Amount of domestic content (percent) Determination A N/A N/A B $9,000 (Offer B4)/$45,500 (Offer B Total) $ = 19.8% is domestic AND $16,000 (Offer B1) + $8,500 (Offer B2) + $12,000 (Offer B3) = $36,500 $36,500/$45,500 (Offer B Total) = 80.2% can be treated as domestic 19.8% + 80.2% = 100% is domestic or can be treated as domestic Can be treated as domestic. C $10,200 (Offer C2)/$38,800 (Offer C Total) = 26.3% is domestic Noneligible 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 on Offer B.