Filing a GAO protest alleging unbalanced pricing based on a 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. 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?
Unbalanced bidding occurs when prices of one or more items are significantly overstated or understated, despite an acceptable total evaluated price (typically achieved through under pricing 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.
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 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.
When assessing unbalanced bids, 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.