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  • Question

    Does a contractor comply with DFARS 252.225-7045 when purchasing a construction material from China if the cost of an individual item is below SAT (when multiple similar items are required on the project) as long as it conforms to the specification criteria?


    Answer

    FAR 25.003 defines Construction material as "an article, material, or supply brought to the construction site by a contractor or subcontractor for incorporation into the building or work. The term also includes an item brought to the site preassembled from articles, materials, or supplies. However, emergency life safety systems, such as emergency lighting, fire alarm, and audio evacuation systems, that are discrete systems incorporated into a public building or work and that are produced as complete systems, are evaluated as a single and distinct construction material regardless of when or how the individual parts or components of those systems are delivered to the construction site. Materials purchased directly by the Government are supplies, not construction material.  The same definition can be found in DFARS clause 252.225-7045

    According to DFARS 225.7501, the policy is to "acquire only domestic end products for use outside the United States, and use only domestic construction material for construction to be performed outside the United States, including end products and construction material for foreign military sales, unless--

          (a)(1)  Before issuing the solicitation -- the estimated cost of the acquisition or the value of a particular construction material is at or below the simplified acquisition threshold.  According to (7)(iv), the contracting officer can also make a determination that a requirement can best be filled by a foreign end product or construction material based on the following criteria: the cost of domestic construction material would exceed the cost of foreign construction material by more than 50 percent, calculated on the basis of --

                                (A)  A particular construction material; or 

                                (B)  The comparative cost of application of the Balance of Payments Program to the total acquisition

    Bottom line: Apply the definition of a "construction material" in FAR 25.003 to determine applicability of the simplified acquisition threshold exception in DFARS 225.7501(a)(1).  Based on the FAR definition, I interpret the value of basic construction material such as gravel, plywood, concrete etc. to mean the aggregate value of the material.  If the construction material is delivered as a single item which was preassembled from separate pieces of material, the value would be based on the total cost of the pressembled item.  Similarly, the value of an "emergency life safety system" such as emergency lighting (originally produced as a complete system), is based on the cost of the whole system regardless of how the individual parts are delivered to the construction site.  Therefore, the aggregate cost in lieu of the per unit cost of the construction material would appear to be appropriate method for applying the SAT exception in DFARS 225.7501(a)(1). 

     

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