Requirement to Submit a Bona Fide Bid Fact Sheet

The Durable Medical Equipment, Prosthetics, Orthotics, and Supplies (DMEPOS) Competitive Bidding Program regulations require that each bidder submit a bona fide bid that complies with all the terms and conditions specified in the Request for Bids (RFB) Instructions (see 42 CFR §414.414(b)(4)). Per 42 CFR §414.402, a bid means an offer to furnish an item or items for a particular price and time period that includes, where appropriate, any services that are directly related to the furnishing of the item or items. Bidders will only submit a bid amount for the lead item in each product category. However, bidders should consider all anticipated costs (including overhead) and desired profit associated with furnishing both the lead item and non-lead items in the product category throughout the competitive bidding area (CBA) when submitting their bid amount. In accordance with 42 CFR §414.416(b), the single payment amount (SPA) is set based off the maximum winning bid for the lead item and calculated for all non-lead items in the CBA and product category combination (competition). Please refer to the Lead Item Pricing Calculator to determine the impact of your bid amount for the lead item on the potential SPAs for the non-lead items in the product category, and the Lead Item Pricing fact sheet for more information on the lead item pricing methodolgy. 

All bids are screened and evaluated by the Competitive Bidding Implementation Contractor (CBIC) to ensure they are bona fide (i.e., the bid amount for a particular lead item passes scrutiny as a rational and feasible bid for furnishing the lead item and all non-lead items in the product category). To determine whether a bid is bona fide, the bid amount for each lead item will be evaluated and compared to all other bidders’ bid amounts submitted for the same lead item throughout all CBAs. The CBIC may ask bidders to upload in Connexion, the program’s secure portal, (1) a narrative rationale that describes the bidder’s ability to furnish the lead and non-lead items in the product category, and (2) supporting documentation that substantiates the bidder’s ability to obtain the lead item for less than its bid amount. The narrative rationale should explain how the bidder considered the impact its bid amount for the lead item would have on the potential SPAs for the non-lead items. 

The types of documentation that can substantiate a bid amount include, but may not be limited to:

• manufacturer invoices;
• receipts (including retail sales receipts);
• letters of intent from manufacturers or wholesalers;
• manufacturer price lists; and
• signed written quotes.

This documentation should clearly identify the specific lead item Healthcare Common Procedure Coding System (HCPCS) code for which the bid amount is being verified. The lead item documentation may be obtained from manufacturers, distributors, retail sales facilities, internet sales facilities, or any other sources that can legally sell suppliers the lead item. All documentation should readily display the contact information of the source (e.g., manufacturer, distributor, etc.) for verification.

If a bidder is asked to upload a narrative rationale and documentation in Connexion to substantiate its bid amount and the bidder does not provide the necessary information, or the information provided does not substantiate its bid amount, that bidder’s bid for the applicable competition will be disqualified.

Possible factors that may result in a determination that a bidder submitted a non-bona fide bid include:

• Submitting a rental bid amount when the RFB Instructions require a purchase bid amount, or vice versa, for the lead item within a product category.
• Submitting a bid amount for a remanufactured, used, or refurbished lead item instead of new.
• Inadvertently entering an incorrect bid amount (e.g. transposing numbers, leaving out a zero).
• Submitting a bid amount that does not reflect consideration of the anticipated costs (including overhead) of furnishing the lead item and all non-lead items, and desired profit.

Please check your bid amount(s) carefully before you certify your bid(s) in the DMEPOS Bidding System, DBidS. Bid amounts may be amended while the bid window is open, but bid amounts cannot be amended after the close of the bid window.