Government Contracts Monitor

The Importance of Clearly Establishing Your Price

May 19, 2014

The Government Accountability Office (GAO) recently reminded bidders that even if they think their overall prices are clearly ascertainable from their bids, an agency can and will reject a bid if the agency disagrees. In Croman Corp., B-409496 (Comp. Gen. April 29, 2014), the GAO upheld the agency’s decision to reject Corman’s lowest-priced bid as nonresponsive for failing to price all option year CLINs and failing to establish a consistent pattern of pricing that could be used to determine the intended price for the omitted items. The company claimed, unsuccessfully, that the agency should have allowed Croman to fix its mistake.

The Department of the Army issued an invitation for bids (IFB) as a small business set-aside for aerial fire suppression. Bidders were required to price four CLINs in each of the 4 contract years. The IFB informed bidders that “the price for the base year will be added to the total price for all options to determine the lowest priced bid.” It added that “the Government will evaluate its option to extend services… by adding one half the bidder’s final option period price to the bidder’s total price.”

Croman submitted the apparent lowest bid. However, Croman’s bid was missing three pages, meaning there was no price listed for the fourth option year and the bid had no total rolled-up prices for each contract year. When informed that the bid appeared incomplete, the company admitted that it mistakenly omitted three pages from its bid, but contended the agency should allow the company to correct the mistake because its bid showed a clear pattern of pricing. Specifically, Croman claimed that since the prices for two of the CLINs were the same for all periods, and a third CLIN increased by the same fixed price in each contract period, the agency could easily ascertain Croman’s intended bid for option year four. Croman alleged that if it could correct its mistake, its bid would be $750,000 lower than the next lowest bid. The agency refused to allow Croman to fix its bid, and instead rejected the bid as nonresponsive. Croman protested to GAO.

GAO first explained that “to be responsive, the bid as submitted must represent an unequivocal offer to comply with the IFB’s material terms, which include the requirement for a fixed price. As a general rule, a bid must be rejected as nonresposnsive if, as submitted, it does not include a price for every item required by the IFB.” (internal citations omitted). GAO then stated that, in limited circumstances, “[a] bid that fails to price every required item may nevertheless be responsive where the bid itself establishes a pattern of pricing. This limited exception allows correction where the bid, as submitted, indicates the possibility of error, the exact nature of the error, and the intended bid price.”

Here, however, GAO found that the exception to the general rule did not apply. First, GAO reasoned that the company’s failure to return the pricing schedule for the fourth option year called into question whether the company had obligated itself to perform for the fourth option year. Second, GAO found that Croman’s bid did not establish a uniform pricing pattern such that the agency could have ascertained its fourth year pricing. Specifically, for one CLIN, Croman escalated the price using varied rates each year, so the agency could not reasonably ascertain what the fourth year price would be. Ultimately, GAO held that without the required pages the agency could not have possibly derived the company’s intended price, and it could not infer an offeror’s intent to comply with the obligations to perform the fourth option year. Therefore, the agency properly rejected the bid as nonresponsive.

What’s the takeaway? To avoid being in Croman’s position – submitting the lowest price bid, but failing to win the award – offerors should eliminate any guesswork from an agency’s evaluation of their bids by ensuring complete responses and by clearly establishing consistent patterns of pricing that can be used in the event of a mistake.

Heather Joyce is the attorney responsible for the content of this article.