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 indicate based on other bids, prior bids on similar work, or the Government
estimate. Such a bid is referred to as an "unrealistically low bid." If
the contract is awarded to the unrealistically low bidder, quality
deficiencies and performance shortfalls are to be expected. An
unrealistically low bid can be attributed to "buying in," to a mistake in
bid preparation, or to ambiguous specifications.
5-420 Buying-in. "Buying-in" means submitting an offer below anticipated
costs expecting to increase the contract amount after award (e.g. by
unnecessary or excessively priced contract modifications). In sealed
bidding, the Contracting Officer has no authority to reject a bid solely
because it appears too low. In most cases if the contractor, after being
given an opportunity, affirms his bid, the contract must be awarded to the
low bidder unless of course it has been determined that the contractor is
responsible as discussed at 6-300.
Buying-in can be more readily avoided when contracting by negotiation
(competitive proposals) than when sealed bidding is used. When contracting
by competitive negotiation, the Contracting Officer can make a provision in
the solicitation requiring the prospective contractor to submit adequate
pricing data. The pricing data submitted by the contractor enable the
Government to perform a price realism and analysis and permits the Government to
reduce the proposer 's technical evaluation score when the price is
unreasonably low and the proposer cannot satisfactorily demonstrate how he
can perform at the price submitted. A price realism analysis consists of a
summary level review of the price portion of the price proposals to
determine if the overall costs proposed are realistic for the work to be
performed. Price realism analysis differs from the detailed cost analysis
as it minimizes the requirements for cost and pricing data and associated
audit requirements .
5-430 Mistake in Bids. After the opening of sealed bids, the Contracting
Officer is required by the FAR (subpart 14.406) to examine all bids for
mistakes. In all cases, where the Contracting Officer has reason to believe
that a mistake may have been made, the Contracting Officer is required to
identify the basis for the suspected error and request a verification of the
bid.
In sealed bidding, the Contracting Officer has the authority to request
verification of an unrealistically low bid. However, if the contractor
confirms the bid, the Contracting Officer is normally required to award the
contract, unless the contractor is found to be nonresponsible. NAVFACENGCOM
P-68 (subpart 14.400) provides additional detailed information about this
subject. This problem is avoided to a large extent in the case of
negotiated contracts by reason of the procedures involved in the
negotiations, but still my occur. The Contracting Manual P-68, subpart
14.406, provides additional detailed information on mistake in bids.
5-440 Ambiguous Specifications. Ambiguous specifications are all too
often the cause of an unrealistically low bid. The specification writer
must, to the maximum extent possible, let the contractor clearly know in the
performance work statement (PWS) what work the contractor is required to
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