Legal Information & Resources for Federal Construction Contractors
By: Michael H. Payne
Government contractors frequently use incorrect terminology to describe a solicitation. For example, clients often call me and ask why they were not awarded a contract even though they had submitted the lowest bid. The first thing that I ask is whether the solicitation was a Request for Proposals ("RFP"), or an…
By: Michael H. Payne
There is an old saying that “you win some, and you lose some.” Well, if you are a construction contractor who competes in the world of Multiple Award Task Order Contracting (“MATOC”), you usually lose. Under sealed bidding, which dominated the procurement of federal construction for many years, a contractor who…
Federal construction contractors need to be aware that an unbalanced bid can be rejected as nonresponsive. FAR 52.214-10(e) provides that:
“The Government may reject a bid as nonresponsive if the prices bid are materially unbalanced between line items or subline items. A bid is materially unbalanced when it is based on prices significantly less than cost for some work and prices which are significantly overstated in relation to cost for other work, and if there is a reasonable doubt that the bid will result in the lowest overall cost to the Government even though it may be the low evaluated bid, or if it is so unbalanced as to be tantamount to allowing an advance payment.”
Unbalanced bidding becomes a problem if the government believes that the bidder who submitted the apparent low bid according to the method by which the low bid was to be determined for evaluation purposes, in all probability will ultimately perform the project at a higher cost than the second bidder. In other words, the idea is that the low bidder has managed to “trick” the system by managing to be evaluated as low at bid opening, but through an unbalancing strategy has made it likely that he will be paid more than it appears. For example, if a solicitation requests bids on both an underrun and an overrun quantity for the same item (i.e. a unit price price for over 10,000 cubic yards and a unit price for under 10,000 cubic yards), with both bid item prices to be counted for bid evaluation purposes, an unbalanced bid would insert a very high price for the item likely to overrrun, and a very low price for the item likely to underrun. The bidder thereby would be planning to be paid a lot more than reflected by its bid because of its “educated guess” that there will be a windfall occasioned by an overrun.Continue Reading The Hazards of Unbalanced Bidding
Many contractors prepare bids on a computer, using either commercially prepared bid packages or “home grown” spreadsheets using Excel or similar programs, to automatically calculate their bids. A recent decision by the Comptroller General, however, reveals some of the dangers that these “automatic” packages hold for a contractor. A bidder on a sewer lagoon project for the Corps of Engineers recently utilized a computer program and contended that an erroneous entry resulted in its bid of $6,881,800 being 25 percent lower than the next competitor’s bid. The low bidder alleged that it had made a “mistake” in preparing its bid and requested upward correction. The Federal Acquisition Regulations (FAR) allow upward correction of a bid when the bidder provides clear and convincing evidence of both the existence of a mistake and the bid actually intended, but only where the correction would not result in displacing one or more lower bids. See FAR 14.407-3(a). The low bidder alleged that a “mistake” occurred because it “overrode” the automatic calculations in the spreadsheet by manually entering a dollar amount in the “total” column for a bid item rather than allowing that total amount to be automatically calculated by the formula in that cell.
Continue Reading Upward Correction of Low Bid Disallowed
