EdLawConnect Blog

Recently, a number of the Firm’s local public entity clients have contacted us with questions regarding the issue of “unbalanced bids.” These clients generally want to know when they should reject an unbalanced bid and the guidelines for evaluating unbalanced bids. There is little California legal authority on the subject. Typically, in the absence of California authority, this state’s courts will look to both federal procurement laws and regulations, and decisions by courts in other states. Section 15.814, 48 Code of Federal Regulations, defines a “mathematically unbalanced” bid as a bid “based on prices which are significantly less than cost for some contract line items and significantly overstated in relation to cost for others.” A bidder will typically submit an unbalanced bid with either or both of two goals: 1) To manipulate the bidding process in its favor to win award of the contract, even though the public entity would ultimately pay a higher total price for the goods or services; and 2) To improve their cash flow by front loading a bid’s payment schedule.