By Bruce Jervis
A bid is unbalanced when it fails to rationally allocate cost, overhead and profit among the various work items. As a general rule, a public project owner may accept a “mathematically unbalanced” bid unless it creates unreasonable risk for the owner. In that case, the bid is considered “materially unbalanced.” It is nonresponsive and ineligible for contract award.
Another way of stating this rule is that an unbalanced bid is acceptable if it creates risk only for the bidder. On a recent federal project, the low bidder carried 42% of its bid price in an option item estimated to comprise 2% of the total contract value. The bid was eligible for acceptance because the bidder had the financial resources to perform the contract even if the option was not exercised.
Does this make any sense? It is puzzling for a bidder to grossly over-price an option that may or may not be exercised. But if only the bidder is at risk, the bid is eligible for acceptance. Apparently well capitalized companies are allowed to engage in risky bidding practices. Your comments are welcomed.
