Sunday, July 1, 2012


Yes, it's the new age of lowest price, technically acceptable (LPTA) government contracting.  Specifications may be written to the lowest common denominator so that marginally qualified contractors can join in the bidding war.  This is like the advertised, sealed bidding of old (except then the qualification barriers were higher).  It's also akin to reverse auctions except there is only one shot at being low and contractors are not looking at each other's prices.

So, the complaints of underbidding costs are already coming in.  Is buying in illegal?  That question was answered 40 years ago, but we may need to be reminded of the answer.

FAR 3.501 defines "buying in" as submitting an offer below anticipated costs, expecting to increase the price after award through changes or to receive follow on contracts designed to recover losses incurred on the buy-in contract.  Sound familiar?

Buying in, although it may decrease competition or result in poor contract performance, is not illegal.  But the onus is on the contracting officer to make sure buying-in losses are not recovered through the pricing of change orders or follow on contracts.

The regulation says the contracting officer "must" take appropriate action and "should minimize the opportunity" for buying in.  The only   way this effectively can be done is through proper contract administration practices designed to review carefully all alleged changes.

Note that the buying in regulation is located in the FAR subpart dealing with improper business practices.  In our opinion, buying in raises substantial questions about the integrity of the contractor, and hence its responsibility.  So, although the practice of buying in is not itself illegal, the contracting officer is not without effective ways to discourage the practice.

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