FAR 25.605—Evaluating offers of foreign construction material.
Plain-English Summary
FAR 25.605 explains how contracting officers must evaluate offers when a contractor requests an exception to Buy American-style domestic construction material requirements because comparable domestic material is unreasonably costly. It covers the specific evaluation factors that must be added to the offered price for foreign manufactured construction material and foreign unmanufactured construction material, how those factors affect best-value source selection when non-price factors are used, how to break ties when offers are equal in price, and the option for offerors to submit alternate offers using equivalent domestic material to reduce the risk of rejection. It also addresses a post-award administrative step: if the awardee proposed foreign construction material that was not already listed in the solicitation’s applicable clause, the contracting officer must add those excepted materials to the contract clause. In practice, this section ensures that exceptions for unreasonable domestic cost are not treated as a free pass; instead, the Government still evaluates the foreign-content offer with a price penalty to preserve domestic preference policy while allowing flexibility when domestic material is too expensive.
Key Rules
Apply 25% to foreign manufactured material
If the offer includes foreign manufactured construction material under an unreasonable-cost exception requested by the offeror, the contracting officer must add an evaluation factor equal to 25 percent of the total offered price. This penalty is applied to the whole offer price, not just to the foreign material portion.
Apply 20% to foreign unmanufactured material
If the offer includes foreign unmanufactured construction material under an unreasonable-cost exception requested by the offeror, the contracting officer must also add an evaluation factor equal to 20 percent of the cost of that foreign unmanufactured material. This is a separate adjustment from the 25 percent factor for manufactured material.
Use the evaluated price formula
The evaluated price equals the offered price plus any applicable 25 percent factor and plus any applicable 20 percent factor. The contracting officer uses this adjusted price for comparison purposes, not the raw offered price, when the exception applies.
Use evaluated price in best-value tradeoffs
If the solicitation uses award factors other than cost or price, the contracting officer must still apply the evaluation factors in paragraph (a) and then use the evaluated price as part of the best-value determination. The foreign-material adjustment remains part of the source selection analysis.
Break equal-price ties in favor of domestic content
If paragraph (b) does not apply and two or more offers are equal in price, the contracting officer must prefer an offer that does not include foreign construction material excepted because domestic material was unreasonably costly. This tie-break rule reinforces the domestic preference when price alone does not distinguish offers.
Allow alternate domestic offers
Offerors may submit alternate offers using equivalent domestic construction material so the Government can consider a compliant alternative if the foreign-material exception is later found not to apply. This helps avoid rejecting an entire offer when a domestic substitute is available.
Update the contract clause list after award
If award is made to an offeror that proposed foreign construction material not already listed in the solicitation clause, the contracting officer must add those excepted materials to the contract clause. This keeps the contract record aligned with the approved exception and the actual awarded content.
Responsibilities
Contracting Officer
Determine whether the unreasonable-cost exception under FAR 25.604 applies, apply the required evaluation factors to offers containing excepted foreign construction material, use the evaluated price in best-value decisions, resolve equal-price ties by preferring compliant domestic-content offers when applicable, and update the contract clause list to include any newly excepted foreign materials after award.
Offeror/Contractor
Identify foreign construction material for which an unreasonable-cost exception is requested, understand that the offer will be evaluated with price penalties, consider submitting alternate offers based on equivalent domestic material, and ensure the solicitation and contract records accurately reflect any excepted materials proposed and accepted.
Source Selection Authority/Technical Evaluators
Use the evaluated price, not the unadjusted offered price, when conducting best-value comparisons under solicitations that include non-price factors, and ensure the foreign-material evaluation adjustment is incorporated consistently into the source selection record.
Agency/Procurement Team
Structure solicitations and contract clauses so the applicable foreign-construction-material exceptions and listing requirements are clear, and maintain accurate contract documentation when excepted materials are added after award.
Practical Implications
This section matters because an approved exception for unreasonable domestic cost does not eliminate the domestic preference; it changes the math used to compare offers. Contractors should expect a significant evaluation penalty and should price accordingly.
A common pitfall is applying the 25 percent factor only to the foreign material portion instead of to the total offered price when foreign manufactured construction material is involved. That would understate the evaluation impact and distort the competition.
Another frequent issue is forgetting that the 20 percent factor for foreign unmanufactured material is separate and cumulative when both types of foreign material are present. Contracting officers need to calculate both adjustments correctly.
When award is based on best value rather than price alone, teams must use the evaluated price in the tradeoff analysis; relying on the raw offered price can lead to an improper source selection decision.
Offerors should consider alternate domestic offers where allowed, because if the Government later determines the exception does not apply, the alternate can prevent rejection of the entire proposal and preserve competitiveness.
Official Regulatory Text
(a) If the contracting officer has determined that an exception applies because the cost of certain domestic construction material is unreasonable, in accordance with section 25.604 , then the contracting officer shall apply evaluation factors to the offer incorporating the use of such foreign construction material as follows: (1) Use an evaluation factor of 25 percent, applied to the total offered price of the contract, if foreign manufactured construction material is incorporated in the offer based on an exception for unreasonable cost of comparable domestic construction material requested by the offeror. (2) In addition, use an evaluation factor of 20 percent applied to the cost of foreign unmanufactured construction material incorporated in the offer based on an exception for unreasonable cost of comparable domestic unmanufactured construction material requested by the offeror. (3) Total evaluated price = offered price + (.25 x offered price, if (a)(1) applies)
- (.20 x cost of foreign unmanufactured construction material, if (a)(2) applies). (b) If the solicitation specifies award on the basis of factors in addition to cost or price, apply the evaluation factors as specified in paragraph (a) of this section and use the evaluated price in determining the offer that represents the best value to the Government (c) Unless paragraph (b) applies, if two or more offers are equal in price, the contracting officer must give preference to an offer that does not include foreign construction material excepted at the request of the offeror on the basis of unreasonable cost. (d) Offerors also may submit alternate offers based on use of equivalent domestic construction material to avoid possible rejection of the entire offer if the Government determines that an exception permitting use of a particular foreign construction material does not apply. (e) If the contracting officer awards a contract to an offeror that proposed foreign construction material not listed in the applicable clause in the solicitation (paragraph (b)(3) of 52.225-21 , or paragraph (b)(3) of 52.225-23 ), the contracting officer must add the excepted materials to the list in the contract clause.