ConstructionPro Week, Volume: 5 - Issue: 29 - 07/22/2016

Should Grossly Unbalanced Bids Be Acceptable?

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.

 

COMMENTS

Such a proposal should send up a red flag to any Owner or Owner's rep and though it might be "eligible" is just screams trouble. Risk is one thing, but no bidder is going to make such a proposal unless it is to his benefit and begs for scrutiny.
Posted by: Duane Downer - Friday, July 22, 2016 11:54 AM


The contractor's nature is always to see were he/she can make extra money. Further, if there is an unbalanced bid that is allowed to be submitted, more dollar signs in change orders will be submitted due to lack of time, lack of information, lack of clarity, etc.
Posted by: Maher Abu-Mallouh - Monday, July 25, 2016 11:12 AM


 









WPL
PUBLISHING CO, INC.
WPL Publishing - 5750 Bou Avenue #1712 - Rockville, MD 20852

Phone: (301)765-9525  -  Fax: (301)983-4367

All Content and Design Copyright © 2021 WPL Publishing
About Us

Contact Us

Privacy Policy

My Account