(Editor’s Note.  Though we have reported on cases where low ball bids should not be rejected the following demonstrates conditions when it may be rejected.)  

MCT challenged an award to Metro for ship maintenance asserting contrary to terms of the solicitation, the Navy unreasonably accepted Metro’s unrealistically low capped indirect rates where since its capped rates were below forward pricing rates it would be operating at a loss.  MCT asserted the Navy failed to consider the risks such capped overhead and G&A rates presented. The GAO sustained the protest noting the Navy RFP warned offerors of proposing unrealistically low estimated costs/prices because of possible performance problems and stated the government may reject a proposal if it was too low.  The GAO stated the Navy could not “simply ignore the risks presented by the capped rates” and added the rates exacerbated DCAA’s concerns about Metro’s financial condition which would further hamper its performance. The GAO stated a consideration of risk of performance stemming from proposed unrealistically low capped rates must be a matter of consideration when evaluating a proposal and the failure of the Navy to consider this risk was wrong (MCT JV, GAO B-311245).