[Protest of U.S. Marshals Service Rejection of Low Bid]

A firm protested the U.S. Marshal's Service rejection of its low bid for the rental of police cars for 1 year and 2 option years. The bids were evaluated on the basis of prices quoted for both the first year and the option periods. Although the protester's total bid was low, it was heavily front-loaded, and the price of its first year of performance exceeded the funding available for that year. Therefore, the protester's bid was rejected and the contract was awarded to a firm whose first year bid was within available funding because its price was balanced over the option years of the contract. The protester contended that its bid was improperly rejected because all bidders, except the awardee, front-loaded their bids and because of the termination risks inherent in the solicitation. The contracting officer found that the protester's bid was mathematically unbalanced because the protester would recover 89 percent of the contract price after the base period of the contract. GAO concluded that the protester's bid was not mathematically unbalanced, since the protester would not obtain a windfall if all options were not exercised, and the protester would not own or use the motor vehicles subsequent to the contract period. Therefore, GAO found that the protester's bid was improperly rejected as nonresponsive and that the contract award was improper. Since sufficient funds were not available to make award to the protester, the agency should have canceled the procurement and resolicited. However, due to the urgency of the procurement, GAO did not recommend the termination of the contract. It did recommend that the options not be exercised and that the requirement be resolicited with the agency disclosing the funds available for reprocurement to all bidders. The protester's claim for bid preparation costs was disallowed since its bid exceeded the available funding. Accordingly, the protest was sustained and the claim disallowed.