The law regarding unbalanced bids grew out of bid protest decisions of the General Accounting Office which became formalized in procurement regulations like the FAR. As the rules evolved, a bid could be rejected if it was both "mathematically" and "materially" unbalanced.

"Mathematically unbalanced" means some prices are significantly less than cost while others are significantly overstated. If a bid was unbalanced it did not need to be rejected unless the unbalancing was "material." "Material" usually hinged on a calculation of the chance a bid would not remain low if actual conditions varied from what was expected from the evaluation model.

The GAO also expressed concerns regarding "front loaded costs" – those where payments are shifted to the early part of a contract and away from later periods. The front loaded prices were to be rejected when they were "tantamount" to illegal advanced payments.

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