GAO: Bid Was Responsive Despite Missing Information Regarding Buy American Act Exception

The Buy American Act generally requires construction contractors to use domestically-made materials, unless an exception applies. One important exception allows contractors to use foreign-produced materials when the cost of domestic material is six percent more expensive. To quality under this exception, however, a contractor must provide certain information outlined by the FAR with its bid.

But what if a contractor doesn’t provide every piece of required information? Is its proposal automatically doomed as non-responsive? Not necessarily. A recent case shows that offerors may have some wiggle-room.

In Addison Constr. Co., B-416525 et al. (Sept. 4, 2018), the Department of Energy issued a solicitation for the construction of certain electrical transmission equipment. The solicitation incorporated FAR 52.225-9 which, among other things, requires the contractor to use “domestic construction material” to perform the contract unless an exception, like the one referenced above, applies. The solicitation also incorporated FAR 52.225-10, which directs the contracting officer to reject, as non-responsive, any bid that uses “foreign construction material” and no exception applies.

To invoke the unreasonable cost exception, an offeror must provide certain information, outlined in FAR 52.225-9, in its bid. For example, an offeror must include the price, quantity, unit of measure, and a description of the foreign and domestic materials at issue, along with a detailed justification for the use of foreign construction materials, a reasonable survey of the market, and a completed price comparison table. Also, the provision requires the offeror to list the time of delivery or availability of the materials, the construction project’s location, specific supplier information (e.g., name, address, telephone number), a copy of each supplier’s response to the market survey, and “other applicable supporting information.”

Addison, the protester, submitted a bid requesting an exception to the Buy American Act, on the basis of unreasonable cost for three items. Addison’s bid included much of the information required to invoke the exception. But it did not provide 1) the name, address, telephone number, and contact information for the suppliers that had been surveyed, 2) a copy of the suppliers’ responses, or 3) any other supporting information.

Given this missing information, the agency rejected Addison’s bid as nonresponsive. It argued that, without the information, it could not determine whether unreasonable cost exception applied. GAO disagreed. Two key points are worth mentioning.

First, in previous cases, GAO has held that offerors, when invoking the unreasonable costs exception, must provide key information required by FAR 52.225-9i.e., the amount of foreign construction material it plans to use and the price of the material–to ensure that it can’t manipulate its overall price, and thus its relative standing, after bid opening.  Other information, however, is much less critical and an offer can be responsive without it. GAO explained:

Here, we find that, based on the information provided in Addison’s bid, the bid was responsive.  In this regard, while the bid did not include all of the information required under FAR clause and provision 52.225-9 and 52.225-10 respectively, it nonetheless included sufficient information for the agency to understand the foreign material being provided, and the quantity and costs of such material.  Thus, while the bid was missing required supporting documentation and details, the omission of this information would not enable Addison to alter the price, or relative standing, of its bid.

Second, GAO noted that the agency could conduct its own investigation to determine the applicability of the unreasonable cost exception because the missing information would not have allowed Addison to alter its acceptance of the solicitation’s terms after bid closing:

[I]n our view, the agency is permitted to conduct its own investigation to determine the applicability of the requested Buy American Act exception provided that the information not included would not be the type that would enable a bidder to alter or amend the price, or relative standing, of its bid. . . . Here, the missing information, which includes such information as the contact information for the foreign supplier contacted by the protester, would not allow Addison to alter its acceptance of the [solicitation’s] terms.  Accordingly, we conclude that the agency erred in determining that the missing information required the rejection of the exception request.

Ultimately, GAO sustained the protest and recommended that the agency reimburse Addison for its protest costs.

Despite this case, if you plan on taking advantage of the unreasonable cost exception, it’s always best to provide all the required information under FAR 52.225-9. Doing so will likely elicit a more favorable response from the agency in the first instance. But if you leave out certain non-critical information and the agency rejects your bid as non-responsive, GAO may afford your offer a second chance.