Under the FAR, unbalanced pricing may increase performance risk and can result in the government paying unreasonably high prices. But the concept of unbalanced pricing is often misunderstood in practice.
As the GAO wrote in a recent bid protest decision, unbalanced pricing doesn’t exist merely because some of an offeror’s line item prices are low. Rather, unbalanced pricing requires both understated and overstated line items–that is, some line items appear too high while others appear too low.
When I went out for pizza with my family the other night, the only number that mattered to me when I got the check was the bottom-line price. It didn’t matter to me what the price for each pizza or each lemonade was, as long as the total price was within my budget.
For an agency evaluating a proposal for reasonableness in a fixed-price setting, the same holds true: it is the bottom-line price that matters, not the individual items that add up to the bottom-line price. The GAO recently had the opportunity to review this concept in a bid protest decision.
When an agency competes a task order under a multiple-award contract, the agency must assign the task solicitation a NAICS code set forth in the underlying MAC.
As demonstrated in a recent SBA Office of Hearings and Appeals decision, when the MAC is assigned a single NAICS code, all task orders competed under that MAC will also be assigned that NAICS code–even if a prospective offeror believes that a different NAICS code will best describe the principal purpose of the task order acquisition.