Unbalanced Bidding When Filing a Bid Protest & Cost Price Analysis Techniques FAR 15.404 1

Filing a GAO protest alleging unbalanced pricing and bidding based on the lowest technically acceptable price is tricky and must be approached with caution. Oftentimes a protestor may allege that the successful awardee’s bid is so low that it is Unbalanced Pricing and Bidding GAO Protestsunbalanced. If this is all you state in the protest without articulating more, the GAO might more than likely dismiss the protest because it fails to meet the legal requirements for a bid protest.

What is Unbalanced Pricing? 

Bid unbalancing occurs when, despite an acceptable total evaluated price in your proposal, the price of one or more contract line items is significantly overstated or understated as indicated by the application of cost or FAR. price analysis techniques. See FAR 15.404-1(g)(1). The FAR provides examples of cost price analysis techniques to include a comparison of proposed prices received in response to the solicitation and comparison with Independent Government Estimates (IGEs).  See also FAR. 15.404-1(b)(2).

(typically achieved through underpricing one or more of the other line items). GAO ruled on this issue in the matter of ABSG Consulting, Inc., B-404863.7, June 26, 2013,2013 CPD ¶ 185 at 6.

When arguing unbalanced bidding in a bid protest, government contractors should be aware that low prices, by themselves, are not improper and do not themselves prove or create the risk typical in unbalanced pricing Cost Analysis Techniques under FAR15.404-1. The real question is whether the solicitation highlighted the importance of prices being unbalanced. In other words, many agencies may tend to put a lot of emphasis in the expressed solicitation terms. 

Yet, when a contractor submits a bid where there is an indicator of unbalanced pricing, there is no record of the agency if analyzing the information to form a conclusion, one way or other, whether the proposal pricing was understated of overstated.

If there is only one line item that has a questionable price offer, the GAO will likely rule that a questionable price on only one line item does not rise to the level of unbalanced bidding and therefore creates no risk to the government.

Standard to find Unbalanced Bidding

The critical point when addressing the unreasonableness of the government’s cost price analysis techniques is that the agency does not have to reject the bid outright. Instead, the agency must only make a showing that it actually considered the risk of unreasonably high prices for contract performance. See Serco, Inc.,B-406683, B-406683.2, Aug. 3, 2012, 2012 CPD ¶ 216 at 10.

Contractors must understand that the GAO is not going to second guess a bad business decision by the agency. Instead, it will only look to see if the agency acted unreasonably. This means that the GAO must find that the agency either violated procurement regulations or did not follow the solicitation requirements and FAR 15.404.

If you craft a COFC or GAO protest based upon an unbalanced pricing proposal analysis that makes your unreasonableness argument simply equal to a bad business decision by the agency, your protest may be dismissed. See also, Price Realism Analysis vs Price Reasonableness Evaluations in Bid Protests.

When assessing bid unbalancing, you should:

  • Find several line items that are significantly overstated
  • Show how the agency’s consideration of any risk was unreasonable

Arguing Unbalanced Pricing Based on Unrealistically Low Price: This argument will not carry the day because below-cost prices on fixed-price contracts are not prohibited. Instead, the issue actually goes to the bidder’s responsibility which is not subject to GAO’s jurisdiction. See Price Realism Analysis vs Price Reasonableness Evaluations in Bid Protests.

Courts will often always give the agency-wide discretion to make their business decisions. Agency’s often get around the unbalanced pricing argument by also comparing the proposed prices of other offerors when considering labor rates. An example would be where the government compares your proposed pricing for certain positions. When looking at the agency’s comparison of your pricing with others, its finds that one set of your proposed positions are higher and some of your other positions are lower.

Note that the FAR expressly provides for comparing other companies’ prices as an acceptable price analysis technique. See FAR 15.404-1(b)(2). See Strategic Resources, Inc., B-406841.2, Nov. 27, 2012, 2012 CPD ¶ 346 at 11 (agency’s price realism analysis was reasonable, despite flawed IGE, because the agency also used other FAR. price analysis techniques);

See How We Can Help You With a GAO or COFC Bid Protest

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If you are contemplating filing a bid protest due to unbalanced pricing cost analysis techniques farFAR15.404 1, call our government contract bid protest lawyers at 1-866-601-5518 for a free consultation.

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