Ranco Construction, Inc., B-281242, January 12, 1999

B-281242 Jan 12, 1999 Jump To VIEW DECISION RELATED PAGES GAO CONTACTS Highlights DIGEST Protest that bid is so front-loaded that it is unbalanced is denied where record shows that the differences between the awardee's prices for the challenged line items and the other bidders' prices. Were not so great as to require a finding that the awardee's pricing was unbalanced. Ranco contends that Ascend's bid was unbalanced and cannot properly form the basis for the awarded contract. The requirements were divided among 10 contract line items (CLIN) for each of which bidders were required to submit lump-sum prices. Ascend was the apparent second-low bidder and Ranco was third-low. Because Ascend's prices for CLIN Nos. 0003 and 0007 are so inflated that they essentially will result in an advance payment. View Decision Matter of: Ranco Construction, Inc. File: B-281242 Date: January 12, 1999 DIGEST Attorneys DECISION Ranco Construction Company, Inc. protests the award of a contract to Ascend Construction Management, Inc./D&K Construction Company, Inc, a Joint Venture, under invitation for bids (IFB) No. DACA51-98-B-0046, issued by the U.S. Army Corps of Engineers for various construction requirements at McGuire Air Force Base. Ranco contends that Ascend's bid was unbalanced and cannot properly form the basis for the awarded contract. We deny the protest. The IFB sought fixed-price bids for the demolition of certain preexisting structures, site preparation work, and construction of new structures for a large fire station and a radar and approach control (RAPCON) building. The requirements were divided among 10 contract line items (CLIN) for each of which bidders were required to submit lump-sum prices. Ranco's protest relates only to CLIN Nos. 0003 and 0007; CLIN No. 0003 covers all work associated with construction of the RAPCON facility and CLIN 0007 covers demolition of a pumphouse and removal of several underground storage tanks. The agency received five bids. After bid opening, the apparent low bidder asserted that it had made a mistake in calculating its bid; the agency denied that firm's request for upward adjustment of its price but permitted the firm to withdraw its bid. Ascend was the apparent second-low bidder and Ranco was third-low. The agency made award to Ascend on September 30, 1998. Ranco asserts that Ascend's bid should be rejected as unbalanced, specifically, because Ascend's prices for CLIN Nos. 0003 and 0007 are so inflated that they essentially will result in an advance payment. In support of its position, Ranco notes that Ascend's price for CLIN No. 0003 is approximately 25 percent higher than the next-low bid and almost twice the government estimate. As for CLIN 0007, Ranco notes that Ascend's bid is almost twice the next-low bid and more than twice the government estimate. Ranco concludes that this alleged unbalancing will result in a prohibited advance payment to Ascend because the work for these two CLINS must be performed early in the contract. /1/ The current regulatory language governing unbalanced pricing in offers provides that unbalanced pricing exists when, despite an acceptable total evaluated price, the price of one or more contract line items is significantly over- or understated. /2/ FAR Sec. 15.404-1(g) (FAC 97-02). The current regulation requires that offers with separately priced line items be analyzed to determine if the prices are unbalanced, and indicates that cost or price analysis techniques are to be used in this analysis. Id. Such techniques include, for example, comparison of proposed prices with other prices received in response to the solicitation, as well as comparison to an independent government estimate. FAR Sec. 15.404-1(b). Here, we see nothing improper in the agency's decision to accept the bid, since the agency had a reasonable basis for concluding that Ascend's pricing, including the pricing for CLIN Nos. 0003 and 0007, was not unbalanced. First, while Ascend's price for CLIN No. 0003 was the highest received, it was nonetheless broadly in line with the other bidders' prices. Aside from Ascend's bid and the bid withdrawn due to a mistake, the bids ranged from Ranco's $1,500,000 to $1,733,300. Ascend's bid of $2,000,000 was only a third higher than Ranco's. Ascend's CLIN No. 0003 price also was less than twice the government's estimate of $1,060,800. Again, while Ascend's price for CLIN No. 0007 ($240,000) was the highest submitted, it was only slightly more than twice the government's estimate ($107,000) and less than twice Ranco's bid of $126,000. Moreover, while the protester alleges that the work covered by the two challenged line items will be performed earlier than other work, the agency and awardee dispute this, maintaining instead that much of the work is to be performed concurrently; we see nothing in the record to support the protester's position that the CLINs at issue will necessarily be performed first.