BNUMBER:  B-261135.2
DATE:  September 1, 1995
TITLE:  Bollinger Machine Shop & Shipyard, Inc.

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Matter of:     Bollinger Machine Shop & Shipyard, Inc.

File:          B-261135.2

Date:          September 1, 1995
                                                           
Marcus B. Slater, Jr., Esq., and Jennifer J. Zeien, Esq., Fort & 
Schlefer, for the protester.
Kenneth S. Kramer, Esq., Fried, Frank, Harris, Shriver & Jacobson, and 
Paul C. Hill, Esq., for Textron Marine & Land Systems, Inc., and J. 
Stephen Lawrence, Jr., Esq., Arnold & Porter, for Peterson Builders, 
Inc., interested parties.
Nilza F. Velazquez, Esq., United States Coast Guard, for the agency.
John L. Formica, Esq., and James A. Spangenberg, Esq., Office of the 
General Counsel, GAO, participated in the preparation of the decision.
                                                           
DIGEST

1.  The low bid under an invitation for bids for lifeboats and 
associated services and equipment calling for a base quantity and 4 
option periods for additional quantities is not materially unbalanced 
where there is no credible evidence that the bid contains overstated 
prices for the lifeboats such that it could be considered 
mathematically unbalanced, and, in any case, the bid becomes low 
during the first option period.

2.  An agency's acceptance and consideration of a bid modification, 
received by a representative of the bidder from a facsimile machine 
located in the agency's mail room and then hand-delivered by the 
bidder's representative to the cognizant agency contract specialist, 
was not precluded by the solicitation's prohibition against facsimile 
submissions.
                                                           
DECISION

Bollinger Machine Shop & Shipyard, Inc. protests the award of a 
contract to Textron Marine and Land Systems, Inc., under invitation 
for bids (IFB) No. DTCG23-95-B-AMB001, issued by the United States 
Coast Guard, Department of Transportation, for motor lifeboats and 
associated equipment and services.

We deny the protest.

The IFB, issued on January 27, 1995, provided for the award of a firm, 
fixed-price contract for a base quantity of 20 motor lifeboats and 
associated equipment and services, with four 365-day option periods to 
be exercised consecutively with each allowing for the purchase of up 
to 30 lifeboats for a total of up to 120 additional lifeboats.[1]  
Bidders were informed that the government would evaluate bids by 
adding the total price for all options to the total price for the base 
requirement.  The IFB contained the standard sealed bidding award 
clause, set forth at Federal Acquisition Regulation (FAR)  52.214-10, 
that, in pertinent part, cautions that a bid which is materially 
unbalanced may be rejected as nonresponsive.

The Coast Guard received five bids by the bid opening date of April 
20, ranging from Textron's low bid of $164,275,192, to the high bid of 
$230,653,493.  The three lowest priced bids are as follows:

               Textron        Peterson       Bollinger

Base Period    $26,613,222    $26,870,422    $26,304,170
Option One     $33,484,200    $36,389,412    $37,247,149
Option Two     $31,888,630    $38,398,600    $38,135,910
Option Three   $30,676,470    $39,328,482    $39,031,442
Option Four    $41,612,670    $53,757,384    $58,744,381
Total          $164,275,192   $194,744,300   $199,463,052

Bollinger protests that the agency should have rejected Textron's low 
bid and Peterson's second low bid as nonresponsive.[2]  The protester 
first contends that Textron's bid should be rejected as unbalanced 
because Textron's unit prices for the lifeboats decline significantly 
from the base period through each of the option periods, whereas 
Bollinger's and Peterson's unit prices for lifeboats are relatively 
constant from the base period through each of the option periods.

To be rejected as unbalanced, a bid must be both mathematically and 
materially unbalanced.  DGS Contract Servs., Inc.; Inventory 
Accounting Servs., Inc., B-258429; B-258429.2, Jan. 19, 1995, 95-1 CPD  
27.  A bid is mathematically unbalanced if it contains understated 
prices for some items and overstated prices for other items.  Hampton 
Roads Leasing, Inc., B-250645.2, Feb. 1, 1993, 93-1 CPD  486.  On the 
other hand, the submission of a below-cost bid is not illegal, and the 
mere fact that a bid includes understated prices does not justify 
rejection of the bid.  Id.; Wizard-Movers Elite, Inc.; Elkay Transp., 
Inc., B-255753; B-255753.2, Mar. 29, 1994, 94-1 CPD  221.  
Accordingly, even a well-founded allegation of understated prices 
without evidence of overstated prices does not constitute a legally 
adequate basis for finding that a bid is mathematically unbalanced.  
Id.

Textron's bid cannot be considered to be mathematically unbalanced 
because there is no credible evidence to suggest that any of its 
prices for the lifeboats are overstated.  In his regard, Textron's 
price per lifeboat exceeds Bollinger's only during the base period of 
the contract, and differs during this period by only 1 percent.[3]  
Further, Textron's total price for the CLINs comprising the base 
period of the contract is only 1 percent higher than Bollinger's low 
price for the base period CLINs, and from 1 to 12 percent lower than 
the bids for the base period CLINs submitted by the other firms 
responding to the solicitation.  Such a differential simply does not 
evidence that Textron's bid contains overstated prices.  Hampton Roads 
Leasing, Inc., supra.

Even assuming for the sake of argument that Textron's bid was 
mathematically unbalanced, the acceptance of its bid would not be 
objectionable unless the bid is also materially unbalanced, that is, 
unless there is reasonable doubt that the acceptance of Textron's bid 
will result in the lowest overall cost to the government.  DGS 
Contract Servs., Inc., B-245400, Dec. 30, 1991, 92-1 CPD  16.  The 
analysis of material unbalancing focuses primarily on whether a 
mathematically unbalanced bid is so front-loaded that it does not 
become low until late in the contract term, including options.  Id.  
Here, as noted by the agency, Textron's bid becomes low relative to 
all of the bids received during the first option period of the 
contract, and as such, there is no reasonable doubt that Textron's bid 
will result in the lowest overall cost to the government.[4]  
Integrated Protection Sys., Inc., B-254457.2; B-254457.3, Jan. 19, 
1994, 94-1 CPD  24 (agency's acceptance of a mathematically 
unbalanced bid was not objectionable where the bid becomes low during 
the first option year of a contract providing for a base and 4-option 
years).

Bollinger next argues that the agency improperly accepted Textron's 
facsimile modification to Textron's bid.  The protester points out 
that the IFB incorporated by reference FAR  52.214-5, which states in 
pertinent part that "[f]acsimile bids, modifications, or withdrawals 
will not be considered unless authorized by the solicitation," and 
that the IFB did not authorize facsimile bids, modifications, or 
withdrawals.

According to the record, a Textron representative hand-delivered 
Textron's bid to the cognizant contract specialist during the morning 
of April 20.  Shortly before bid opening, Textron transmitted a signed 
bid modification to a facsimile machine located in the agency's mail 
room for receipt by the same Textron representative who had submitted 
Textron's bid.  This Textron representative, after his receipt of the 
bid modification, sealed the modification in an envelope and 
hand-delivered the modification to the cognizant agency contract 
specialist.  Textron's bid and bid modification were subsequently 
opened and read aloud at the bid opening.

Textron's submission of its bid modification on facsimile paper does 
not constitute the submission of facsimile bid modification.  
International Shelter Sys., Inc., 71 Comp. Gen. 142 (1992), 92-1 CPD  
38; Tomahawk Constr. Co., B-243582, Aug. 7, 1991, 91-2 CPD  137.  In 
this regard, the IFB clause in question prohibits the submission of 
bid modifications via facsimile machine directly to the government, 
and does not pertain to submission in person of a bid modification 
which is printed on facsimile paper, as was the case here.  Tomahawk 
Constr. Co., supra.

The fact that Textron made arrangements for the use of an agency 
facsimile machine for its representative's receipt of the modification 
does not alter this result.  As stated above, the IFB clause prohibits 
the submission of bid modifications by facsimile directly to the 
agency.  Textron's bid modification was not submitted by facsimile 
directly to the agency, but rather, as explained previously, was 
transmitted to a Textron representative who then submitted the bid 
modification to the agency by hand.  As such, we find that the agency 
properly accepted and considered Textron's hand-delivered modification 
to its bid.

The protest is denied.

/s/  Ronald Berger
for  Robert P. Murphy
     General Counsel

1. There were variances in the nature of the contract line items 
(CLINs) for the base quantity and the four options.

2. Because we find Textron's bid was responsive, we need not consider 
Bollinger's protest that Peterson's bid was nonresponsive.

3. Textron's unit price for the base period is $1,068,300 per lifeboat 
and Bollinger's is $1,056,988 per lifeboat.

4. There is nothing in the record to suggest that the agency is 
unlikely to exercise the options for additional lifeboats and 
associated equipment and services.