Burney & Burney Construction Company, Inc., B-292458.2, March 19, 2004

B-292458.2 Mar 19, 2004 Jump To VIEW DECISION RELATED PAGES GAO CONTACTS Highlights DIGEST Protest that agency improperly rejected protester's bid as unbalanced is denied where bid included overstated prices for some line items. Bidders were required to supply unit and extended prices for each line item. Was the lowest of the five bids received. The next low bid was $2. The contracting officer determined that Burney's bid was unbalanced because some line item prices were overstated. The price of one or more contract line items is significantly overstated (typically one or more other line items are underpriced). Where an unbalanced bid is received. The contracting officer is required to conduct a risk analysis to determine whether award to the firm will result in the government's paying an unreasonably high price for contract performance. View Decision Burney & Burney Construction Company, Inc., B-292458.2, March 19, 2004 DIGEST Attorneys DECISION Burney & Burney Construction Company, Inc. protests the rejection of its bid as unbalanced under invitation for bids (IFB) No. DAKB13-013-B-0003, issued by the Department of the Army for painting and related services. We deny the protest. The solicitation called for the award of a requirements contract for a base year, with 4 option years. It listed 18 line items (per year), each describing a painting service to be performed, and each setting forth a quantity estimate. Bidders were required to supply unit and extended prices for each line item, with the overall price to be determined by multiplying the unit prices by the corresponding estimated quantities, and then totaling the resulting extended unit prices. Burney's bid, at $2,463,354.50, was the lowest of the five bids received; the next low bid was $2,523,133.00. The contracting officer determined that Burney's bid was unbalanced because some line item prices were overstated, and further that, due to the uncertainty inherent in the estimates for those overpriced items, an award based on Burney's apparent low bid might result in the government's paying an unreasonably high price for contract performance. The contracting officer therefore rejected Burney's bid. Burney protests the rejection. Unbalanced pricing exists when, despite an acceptable total evaluated price, the price of one or more contract line items is significantly overstated (typically one or more other line items are underpriced). Where an unbalanced bid is received, the contracting officer is required to conduct a risk analysis to determine whether award to the firm will result in the government's paying an unreasonably high price for contract performance. Federal Acquisition Regulation (FAR) Sec. 15.404-1(g)(2). A bid properly may be rejected if the contracting officer determines that the lack of balance poses an unacceptable risk to the government. /1/ FAR Sec. 14.404-2(g); L.W. Matteson, Inc., B-290224, May 28, 2002, 2002 CPD Para. 89 at 3. With respect to the risk that the agency would pay an unreasonable price for performance, where, as here, the issue of unbalancing arises in the context of a requirements contract, the accuracy of the solicitation estimates is critical, since the unbalanced bid will become less advantageous than it appears if the government ultimately requires a greater quantity of the overpriced items. Alice Roofing & Sheet Metal Works, Inc., B-275477, Feb. 24, 1997, 97-1 CPD Para. 86 at 4. Accordingly, where an agency has reason to believe that its actual needs may vary significantly during performance from the solicitation estimates, it may reasonably view an unbalanced bid as not representing the lowest cost to the government. Id. The contracting officer here explains that, while the agency prepared the estimates for each line item based on historical data and made a good faith effort to make them accurate, the work under the IFB is subject to many variables, so the work actually ordered under any line item could deviate substantially from the estimates. In this regard, the agency explains, painting is not directly funded but, rather, is funded under the maintenance budget, and is given low priority because many other maintenance projects, such as mechanical repairs, cannot be delayed. Thus, if a large quantity of priority work arises, less painting than estimated may be ordered, while, if less priority work is required, more painting may be ordered. Due to the uncertainty resulting from these variables, the contracting officer was concerned that Burney's bid, with its overstated prices for some line items, could result in other than the lowest total cost to the government if the actual quantities for those items exceeded the estimates. In order to verify her position, the contracting officer calculated the effect if the ordered quantities under the current contract ultimately were the same as the quantities actually ordered under the fiscal year 2003 contract.