GENERAL SERVICES ADMINISTRATION ACQUISITION MANUAL (GSAM)

### Appendix 519E—Examples: Applying the SDB Price Evaluation Adjustment and HUBZone Price Evaluation Preference

The evaluation of HUBZone small business and small disadvantaged business concerns depends on the type of acquisition. The examples in this Appendix illustrate some different scenarios.

For most acquisitions, the following guidelines apply:

(a) First evaluate all offers without considering the Price Evaluation Preference (PEP), but considering the Price Evaluation Adjustment (PEA) factors to determine the otherwise successful offer.

(b) Continue the evaluation using the PEP.

(c) You must always consider price reasonableness.

The examples involve the following firms:

HD | a HUBZone small disadvantaged business concern
HS | a HUBZone small business concern
SD | a small disadvantaged business concern
SB | a small business concern
LB | a large business concern

Eval Price (1) means the evaluated price before consideration of the PEP (these examples assume that the only other consideration is the PEA)

Eval Price (2) means the evaluated price after consideration of the PEP.

The otherwise or apparent successful offeror at each step is highlighted in BOLD.

Assume that both the PEP and the PEA apply to the acquisition in each example.

Example 11
Business | Price offered | Eval Price (1) | Eval Price (2)
--- | --- | --- | ---
HD | 110,000 | 110,000 | 110,000
SD | 105,000 | 105,000 | 115,500
SB | 100,000 | 110,000 | 120,000
LB | 93,000 | 102,300 | 111,600

1 Explanation: In this example, a small business concern is not the otherwise successful offeror after application of factors other than the PEP. Therefore, you apply the PEP. As a result, the HUBZone SDB is the apparent successful offeror.

Example 21
Business | Price offered | Eval Price (1) | Eval Price (2)
--- | --- | --- | ---
HD | 110,000 | 110,000 | 110,000
HS | 101,000 | 111,100 | 115,500
SD | 105,000 | 105,000 | 120,000
SB | 100,000 | 110,000 | 111,600
LB | 102,000 | 112,200 |

1 Explanation: In this example, the non-HUBZone small disadvantaged business concern is the otherwise successful offeror, so you do not apply the PEP to its offer. It is pointless to apply the PEP to any of the offers at this point, since it will not change the outcome of the competition.

Example 31
Business | Price offered | Eval Price (1) | Eval Price (2)
--- | --- | --- | ---
HD | 111,000 | 111,000 | 111,000
HS | 100,000 | 110,000 | 110,000
SD | 105,000 | 105,000 | 115,000
SB | 104,000 | 114,400 | 124,800
LB | 95,000 | 104,500 | 114,000

1 Explanation: Both the PEA and the PEP are applied, resulting in the HUBZone being the apparently successful offeror.

Example 41
Business | Price offered | Eval Price (1) | Eval Price (2) | Eval Price (PEP only)
--- | --- | --- | --- | ---
HD | 119,900 | 119,900 | 119,900 | 119,900
LB1 | 100,000 | 110,000 | 120,000 | 110,000
LB2 | 101,000 | 111,100 | 121,200 | 111,100
LB3 | 100,500 | 110,550 | 120,600 | 110,550
LB4 | 100,600 | 110,660 | 120,720 | 110,660
LB5 | 100,300 | 110,330 | 120,360 | 110,330

1 Explanation: In this case (based on knowledge of the item being acquired, market research, and Government records) you determined that $119,900 is not a reasonable price. Therefore, you re-evaluated the offers using only the PEP (which is statutory). FAR 19.1103(c) provides that the contracting officer may not evaluate offers using the PEA if it would cause award to be made at a price that exceeds fair market value by more than 10%.

NOTE: In each of the above cases where offers were received from HUBZone small business, small disadvantaged business, and small business concerns, the contracting officer may not have done adequate market research. These acquisitions should have been set aside for small business because two or more small business concerns could have responded.