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[Request for Opinion in Court Case Involving Propriety of Contract Award]

B-217016 Dec 11, 1984
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Highlights

A U.S. district court requested a GAO opinion on the propriety of an Army service contract award because, in a pending case, a plaintiff has argued that its low bid was improperly rejected as unbalanced on the basis that its base year price was approximately 15 percent higher than its prices for option years, and the Army considered the next low bid to be more advantageous for the anticipated duration of the contract. GAO has recognized that a difference of 25 to 50 percent between a base bid and a bid on option years does not necessarily render a bid mathematically unbalanced. However, if there is reasonable doubt that award to a bidder submitting a mathematically unbalanced bid would result in the lowest ultimate cost to the government, the doubt renders the bid materially unbalanced and it may not be accepted. The Army determined that the plaintiff's bid was mathematically unbalanced and further noted that it had increased certain unit prices 2 days before bid opening without explanation. GAO found that the Army's finding that the bid was mathematically unbalanced was incorrect since the plaintiff explained why it would not receive excessive profits if all the options were exercised. Further, GAO has held that, if the government's estimate for the items involved is a reasonably accurate representation of actual anticipated needs, a mathematically unbalanced low bid may be accepted. Therefore, GAO did not consider the Army's argument that the plaintiff's bid was materially unbalanced. Accordingly, GAO found that the plaintiff's bid was improperly rejected.

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