Buying-In
Subject: Improper Practices
Source: FARProperty "Source" has a restricted application area and cannot be used as annotation property by a user.
FAR Part: FAR 3
DFAR Part:
“Buying-in,” as used in this section, means submitting an offer below anticipated costs, expecting to—
- (1) Increase the contract amount after award (e.g., through unnecessary or excessively priced change orders); or
- (2) Receive follow-on contracts at artificially high prices to recover losses incurred on the buy-in contract.[1]
General[2]
(a) Buying-in may decrease competition or result in poor contract performance. The contracting officer must take appropriate action to ensure buying-in losses are not recovered by the contractor through the pricing of—
- (1) Change orders; or
- (2) Follow-on contracts subject to cost analysis.
(b) The Government should minimize the opportunity for buying-in by seeking a price commitment covering as much of the entire program concerned as is practical by using—
- (1) Multiyear contracting, with a requirement in the solicitation that a price be submitted only for the total multiyear quantity; or
- (2) Priced options for additional quantities that, together with the firm contract quantity, equal the program requirements (see Subpart 17.2).
(c) Other safeguards are available to the contracting officer to preclude recovery of buying-in losses (e.g., amortization of nonrecurring costs (see 15.408, Table 15-2, paragraph A, column (2) under “Formats for Submission of Line Item Summaries”) and treatment of unreasonable price quotations (see 15.405).