Matter of: Hampton Roads Leasing, Inc. File: B-250645.2 Date: February 1, 1993

B-250645.2: Feb 1, 1993

Additional Materials:

Contact:

Edda Emmanuelli Perez
(202) 512-2853
EmmanuelliPerezE@gao.gov

 

Office of Public Affairs
(202) 512-4800
youngc1@gao.gov

PROCUREMENT Sealed Bidding Bids Evaluation Prices Unbalanced bids PROCUREMENT Sealed Bidding Unbalanced bids Materiality Responsiveness Bid containing line item prices which may be below cost is not unbalanced where bid does not contain overstated prices for any line item. Hampton Roads alleges that Allenhurst's bid should have been rejected as materially unbalanced. The base lease period is 7 months with 3 option periods totaling 29 additional months. Which 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.

Matter of: Hampton Roads Leasing, Inc. File: B-250645.2 Date: February 1, 1993

PROCUREMENT Sealed Bidding Bids Evaluation Prices Unbalanced bids PROCUREMENT Sealed Bidding Unbalanced bids Materiality Responsiveness Bid containing line item prices which may be below cost is not unbalanced where bid does not contain overstated prices for any line item.

Attorneys

DECISION Hampton Roads Leasing, Inc. protests the award of a contract to Allenhurst Industries, Inc. under invitation for bids (IFB) No. N62470-92- B-8776, issued by the Department of the Navy. Hampton Roads alleges that Allenhurst's bid should have been rejected as materially unbalanced.

We deny the protest.

The IFB sought bids for the delivery, installation, and lease of 160 mobile modular buildings, with an option for 10 additional buildings. The base lease period is 7 months with 3 option periods totaling 29 additional months.

The IFB contained Federal Acquisition Regulation (FAR) Sec. 52.214-10(e), which 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."

Seventeen bids were received by bid opening. Of those bids, the first and second low bids were rejected by the agency as unbalanced. Allenhurst, which submitted the third low bid, was awarded the contract.

Hampton Roads, which submitted the sixth low bid, contends that Allenhurst's bid, as well as that of the fourth and fifth low bidders, should have been rejected as materially unbalanced. In particular, Hampton Roads alleges that Allenhurst's bid was unrealistically low for the lease in the second and third option periods and for demobilization. Hampton Roads also argues that in two of the possible scenarios involving exercise of different options, it is not certain that Allenhurst's bid would result in the lowest overall price to the government.

To be rejected as unbalanced, an offer must be both mathematically and materially unbalanced. Solid Waste Servs., Inc., B-248200.4, Nov. 9, 1992, 92-2 CPD Para. ___. A bid is mathematically unbalanced where it contains understated prices for some items and overstated prices for other items. Id. The submission of a below-cost bid is not illegal, and the mere fact that a bid includes understated prices does not justify rejection of the bid. BFPE Int'l, B-248783, Sept. 25, 1992, 92-2 CPD Para. 206. Accordingly, even a well-founded allegation of understated prices, without an assertion of overstated prices, does not constitute a legally adequate basis for finding that an offer is mathematically unbalanced. Atlantic Research Corp., B-247650, June 26, 1992, 92-1 CPD Para. 543.

Hampton Roads can offer no tenable argument that any item in Allenhurst's bid was overstated. The reason is clear: Allenhurst's bid was not significantly higher than Hampton Roads's for any line item. Thus, for the two line items where Allenhurst's bid exceeded Hampton Roads's by the greatest proportion (the lease rate for the base and first option periods), less than a 10 percent difference separated the two bids. Considering the small difference between Allenhurst's and Hampton Roads's bids for the items for which Allenhurst's bid was higher, it is understandable that Hampton Roads offers no rationale which could support a finding that any part of Allenhurst's bid was inflated or otherwise excessive. Further, nothing in the record suggests a basis for such a finding. However, as explained above, unless Allenhurst's bid was overstated for one or more items, there can be no finding that the bid was mathematically unbalanced. Accordingly, the bid cannot be materially unbalanced.

The protest is denied.