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52 to provide for rejection of bids or offers containing separately stated first article prices that are materially unbalanced in relation to prices for production quantities. 2. A proposal to revise FAR sections 25.102(a)(4) and 25.202(a)(3) and the clause at FAR section 52.225-1 to make clear that each procuring agency is responsible for determining. That a given end item is not reasonably available in the United States. FAR case No. 88-68 is a proposed rule that would amend FAR Parts 9. Revised section 14.404-2(g) would state that any bid may be rejected if the prices for any line items or subline items are materially unbalanced. We have said that a bid or offer containing grossly unbalanced first article prices should be rejected when acceptance of the bid or offer would be tantamount to allowing an advance payment.

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B-234591, B-234593, Jun 20, 1989

DIGEST: 1. General Accounting Office has no objection to Federal Acquisition Regulation (FAR) case No. 88-68, a proposal to amend FAR Parts 9, 14, 15, and 52 to provide for rejection of bids or offers containing separately stated first article prices that are materially unbalanced in relation to prices for production quantities. 2. General Accounting Office has no objection to Federal Acquisition Regulation (FAR) case No. 88-72, a proposal to revise FAR sections 25.102(a)(4) and 25.202(a)(3) and the clause at FAR section 52.225-1 to make clear that each procuring agency is responsible for determining, for purposes of establishing an exception to the domestic and product requirements of the Buy American Act, that a given end item is not reasonably available in the United States.

Ms. Margaret A. Willis

FAR Secretariat

General Services Administration:

This responds to your letter of February 10, 1989, requesting our comments on Federal Acquisition Regulation (FAR) case Nos. 88-68 and 88 72.

FAR case No. 88-68 is a proposed rule that would amend FAR Parts 9, 14, 15, and 52 with respect to unbalanced bids and offers. The amendments would require that solicitations inform bidders or offerors that separately stated first article prices may not be materially unbalanced in relation to prices for production quantities. Revised section 14.404-2(g) would state that any bid may be rejected if the prices for any line items or subline items are materially unbalanced. Similarly, FAR section 15.814(c) would provide for rejection of materially unbalanced offers in negotiated procurements. Guidance on material unbalancing for both bids and offers would be provided in a new FAR section 15.814.

The proposed rule would address an issue identified in a number of recent decisions of this Office. Beginning with Riverport Industries, Inc., 64 Comp.Gen. 441 (1985), 85-1 CPD Para. 364, we have said that a bid or offer containing grossly unbalanced first article prices should be rejected when acceptance of the bid or offer would be tantamount to allowing an advance payment. The proposed changes would provide for rejection of materially unbalanced bids or offers and would require explicit notice of that possibility to prospective bidders or offerors. We support the proposed changes.

FAR case No. 88-72 is a proposal to revise FAR sections 25.102(a)(4) and 25.202(a)(3) and the clause at FAR section 52.225-1 to make clear that for purposes of establishing an exception to the domestic end product requirements of the Buy American Act, each procuring agency is responsible for determining that a given end item is not reasonably available in the United States. In particular, the revision would state that the list of items in FAR section 25.108(d) that have been found by one or more agencies to be unavailable domestically is for information purposes only. We also have no objection to these proposed revisions.

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