In the old days of advertised (sealed bid, FAR Part 14) contracting, contracting officers often rejected a contractor's "unrealistically low bid." In fact, many of us were involved in GAO protests in which one side or the other was arguing for or against the determination of an unrealistically low bid. How often do you hear this today? The debate was all based on FAR 14.404-2(f) which states:
Any bid may be rejected if the contracting officer determines in writing that it is unreasonable as to price. Unreasonableness of price includes not only the total price of the bid, but the prices for individual line items as well.In the old days, low ball bids might well be rejected if the contracting officer suspected the contracting was buying in.
"Buying-in may decrease competition or result in poor contract performance." FAR 3.501-2(a). Contracting officers are required by that regulation to make sure any buying in losses are not recovered through changes and follow on contracts.
FAR Part 14, and its progeny, advertised procurements, bear a striking resemblance to LPTA in FAR 15.101-2. Under LPTA, "tradeoffs are not permitted," and the award goes to the lowest priced technically acceptable contractor. Sounds like advertised (sealed) bidding to us. So let's take the pretense one more step and reject buy ins as unreasonably priced proposals.
Since LPTA and sealed bidding are siblings and FAR 3.501 applies to both anyway, shouldn't contracting officers be wary of low ball pricing, shouldn't they exercise some due diligence to investigate the reasonableness of the lowest price and shouldn't they have the fortitude to reject unreasonable prices?
The solution starts with evaluation criteria alerting contractors to the prospect that unrealistically low or unreasonably priced proposals will be rejected.