CONSIDERATIONS FOR PROTESTING (OR SUBMITTING) UNBALANCED BIDS

By Scott K. Semple, Esq.

In July of 2012, the Massachusetts Attorney

General Fair Labor & Business Practices Division,
Bid Protest Unit, approved of a bid that at first
glance appeared to require rejection as being
unbalanced.
For a contract involving the
movement of compost from one site to another,
and then grading the compost, the bid sheet called
for seven unit price line items. The low bidder
listed one cent (penny bid) for six line items for
equipment and operator costs, and included all
costs in one line item for the cost per-truckload of
compost. Though this bid was mathematically
unbalanced, the Attorney General held that
rejection was not required, finding that the low
bidder did not derive an unfair advantage or
disturb the principles of equal footing, and that the
unbalanced nature of the bid would not result in
the awarding authority ultimately having to pay
more than it would to the second-low bidder. In
re: Dept. of Conservation & Recreation, Attorney
General Bid Protest Decision (July 16, 2012).
It is well established in Massachusetts that penny
bidding does not necessarily violate the public bid
laws, so long as the penny bid does not result in an
unbalanced or front-end loaded bid. See Dept. of
Labor and Industries v. Boston Water & Sewer
Commission, 18 Mass. App. Ct. 621, 626 (1984).
A front-end loaded bid contains abnormally high
prices for items that the owner pays for first, so
the bidder gets paid more in the beginning than
the actual value of the work that has been done.
An unbalanced bid contains an abnormally low
price for one item and an abnormally high price
for another item in order to recoup losses from the
abnormally low price.
In the event a disappointed bidder protests an
unbalanced bid, the Massachusetts Attorney
Generals office has followed the United States
Comptroller Generals analysis of whether the
unbalanced bid should be rejected. Under this

analysis, the bid will be approved if it is not

materially unbalanced. A bid is materially
unbalanced where there is reasonable doubt that
award to the low bidder would result in the lowest
ultimate cost to the government. See USA Pro
Co., Inc., B-220976, Feb. 13, 1986, at p. 3, 86-1
CPD 159.
The U.S. Comptroller Generals and the
Massachusetts Attorney Generals analysis is
liberal in favor of permitting mathematically
unbalanced bids. Be mindful, however, that the
Attorney Generals method of analysis has not
been adopted or utilized by Massachusetts Courts,
and may very well be rejected by Massachusetts
Courts if presented. In fact, the Supreme Judicial
Court in the Boston Water & Sewer case implied
that the a bidder directly violates the public
bidding statutes when it inflates one unit price to
recoup monies lost from an underbid unit price.
Id. at 622, 624 (defining an unbalanced bid as one
in which the bidder inflate[s] [a] unit price to
recoup monies lost from [a] penny unit price, and
stating that because the bid in question was not
unbalanced [t]here was, thus, no direct
violation of any of the public bidding statutes).
A contractor that finds itself protesting a
competitors unbalanced bid should keep in mind
that the Attorney General or Comptroller General
will only require rejection of the bid if there is
reasonable doubt that award to the unbalanced low
bidder would result in the lowest overall cost to
the government. As an alternative to bringing a
bid protest with the Attorney General, a
disappointed bidder can seek an injunction in
court. In light of the language of the Boston
Water & Sewer case, a protester may find that the
Superior Court lends a more sympathetic ear than
the Attorney General when attempting to force the
rejection of a bid as unbalanced.

Scott K. Semple, Esq. is an Associate at the law firm of Heafitz & Sullivan in Boston Massachusetts.
Contact him at scott@hsconstructionlaw.com or (617) 562-1000 or visit the firm website at
www.bostonconstructionlaw.com