BNUMBER:  B-270744
DATE:  April 17, 1996
TITLE:  Allstate Van and Storage, Inc.

**********************************************************************

Matter of:Allstate Van and Storage, Inc.

File:     B-270744

Date:     April 17, 1996

Michael J. Radford, Esq., for the protester.
Steven P. McDonald, Esq., Luce, Forward, Hamilton & Scripps, for Pack 
and Crate Services, Inc., the intervenor.
Jeffrey A. Mansfield, Esq., Department of the Navy, for the agency.
Behn Miller, Esq., and Christine S. Melody, Esq., Office of the 
General Counsel, GAO, participated in the preparation of the decision.

DIGEST

Allegation that awardee's offer is materially unbalanced and violates 
solicitation's Integrity of Unit Prices clause is denied where there 
is no basis in record to conclude that awardee's price is 
mathematically unbalanced.

DECISION

Allstate Van and Storage, Inc. protests the award of a contract to 
Pack & Crate Services, Inc. (P&C) under request for proposals (RFP) 
No. N00244-96-D-5009, issued by the Department of the Navy for 
residential packing and moving services for military families located 
in the San Diego, California area.  Allstate contends that P&C's offer 
is both mathematically and materially unbalanced.

We deny the protest.

The RFP was issued to 11 offerors on September 5, 1995, and 
contemplated the award of a firm fixed price, indefinite delivery 
requirements contract to the lowest priced offeror for the 1996 
calendar year.  For their proposals, offerors were required to 
complete and submit the solicitation's pricing schedule which 
solicited unit prices on a per net hundred weight basis (NCWT) for 13 
types of outbound moving and storage services--identified in the 
pricing schedule with 13 contract line item numbers (CLIN).

By the October 31, 1995 closing date, proposals were received from 
Allstate, P&C, and a third offeror.  In early December, 1995, the Navy 
awarded the contract to P&C as the lowest-priced offeror.  On December 
14, Allstate, the second low offeror, filed this protest at our 
Office.

Allstate contends that P&C's offer is materially unbalanced and 
violates the RFP's Integrity of Unit Prices clause, see Federal 
Acquisition Regulation  sec.  52.215-26, because P&C understated its 
proposed prices for CLIN No. 0001, Complete Outbound Services, and 
offered inflated prices for CLIN No. 0003, Overflow Outbound Services.  
CLIN No. 0001 requires the contractor to survey and pack a service 
member's household furnishings and belongings into government-provided 
196 cubic foot standard shipping containers and ship the goods to the 
appropriate outbound destination.  Under CLIN No. 0003, any oversize 
articles that will not fit into the standard containers (e.g., 
motorcycles, oversize sofas), as well as items requiring a smaller 
container (overflow articles or fragile items), are to be transported 
by the contractor to the contractor's local facility for special 
packing in a contractor-provided container and then reunited with the 
remaining CLIN 0001 containers for shipment to the appropriate 
outbound destination.

P&C proposed a unit price of $7 per NCWT for CLIN No. 0001 and $110 
per NCWT for CLIN No. 0003.  Allstate contends that the pricing 
disparity between these two CLINs demonstrates that P&C's offer is 
mathematically unbalanced, and in violation of the Integrity of Unit 
Prices clause, because, according to the protester, the costs of 
performing these services are essentially identical.[1]  Allstate 
further argues that this mathematical unbalancing renders P&C's offer 
materially unbalanced because of inherent fluctuations in the level of 
required services for these CLINs.  Allstate maintains that 
performance levels from selected prior years show that services 
performed under CLIN No. 0001 routinely have been lower than stated 
solicitation estimates, while services performed under CLIN No. 0003 
routinely have been higher than stated solicitation estimates.  
Allstate does not dispute the accuracy of the current solicitation's 
stated estimates; the protester admits that given the uncertainty of 
military moving needs, there is no better method for calculating the 
RFP's estimates than relying on the prior year's actual delivery order 
quantities--which the agency has done in this case.  However, relying 
on our decision in Outer Limb, Inc., B-244227, Sept. 16, 1991, 91-2 
CPD  para.  248, wherein this Office upheld a contracting officer's 
rejection of a bid on a requirements contract as materially unbalanced 
due to inherent fluctuations in the level of the procured services 
(collection and survey of pine cones), and citing Beldon Roofing & 
Remodeling Co., B-253199, B-253199.2, Aug. 18, 1993, 93-2 CPD  para.  103 
(roofing estimates subject to fluctuation according to storm damage or 
previously undetected roof deterioration) and Custom Envtl. Serv., 
Inc., B-252538, July 7, 1993, 93-2 CPD  para.  7 (lawn maintenance estimates 
subject to fluctuation according to seasonal changes affecting grass 
growth), Allstate argues that the agency was required to factor 
potential quantity fluctuations into its price analysis here.  
According to Allstate, had the Navy done so, it would recognize that 
P&C's mathematically unbalanced pricing would not result in the lowest 
priced offer to the government in the event that actual needs exceed 
the current CLIN No. 0003 estimate. 
 
An offer that is mathematically and materially unbalanced may not be 
accepted for award.  Howell Constr., Inc., 66 Comp. Gen. 413 (1987), 
87-1 CPD  para.  455.  In determining whether an offer is impermissibly 
unbalanced, the proposal must first be shown to be mathematically 
unbalanced, which involves the assessment of whether each element of 
the pricing schedule carries its share of the costs of the work plus 
profit or whether the pricing is based on nominal prices for some work 
and enhanced prices for other work.  Outer Limb, Inc., supra.  Next, 
the offer must be materially unbalanced; that is, there must be a 
reasonable doubt that award to the offeror submitting a mathematically 
unbalanced offer will result in the lowest cost to the government.  
Duramed Homecare, 71 Comp. Gen. 193 (1992), 92-1 CPD  para.  126.  Our 
analysis of alleged violations of the Integrity of Unit Prices 
clause--which requires that offerors distribute costs within contracts 
on a basis that ensures that unit prices are in proportion to actual 
costs and prohibits methods of distributing costs to line items that 
distort unit prices--is similar; to succeed in a protest of alleged 
violations of this provision, the protester must establish both that 
the violations exist, and that the protester was prejudiced by the 
improper pricing methods.  Allstate Van and Storage, Inc., B-238320, 
Apr. 26, 1990, 90-1 CPD  para.  431.

With regard to estimated quantities in requirements contracts, 
consideration of the materiality of unbalancing begins with a 
determination of the accuracy of the solicitation's estimate of the 
agency's anticipated needs, since the unbalanced offer will only 
become less advantageous than it appears if the government ultimately 
requires a greater quantity of the overpriced items and/or a lesser 
quantity of the underpriced items.  Id.  However, where contractors 
are on notice of the inherent unpredictability of a particular type of 
estimate--either by virtue of incumbency or experience in the 
field--any concerns regarding the accuracy of the government estimate, 
including how it will be factored into the final evaluation analysis, 
must be raised prior to the time for receipt of proposals, in 
accordance with our timeliness rules.  See Bid Protest Regulations, 
Section 21.2(a)(1), 60 Fed. Reg. 40,737, 40,740 (Aug. 10, 1995) (to be 
codified at 4 C.F.R.  sec.  21.2(a)(1)).  This requirement is intended to 
provide parties with a fair opportunity to present their cases, and to 
enable the contracting agency to take effective corrective action when 
it is most practicable and where circumstances warrant.  Allstate Van 
& Storage, Inc.,          B-247463, May 22, 1992, 92-1 CPD  para.  465.

While Allstate correctly points out that a contracting agency may 
factor potential fluctuations into its pricing analysis, see Outer 
Limb, Inc., supra, this is not required where, as here, the agency has 
no basis for forming more reliable or accurate estimates.  Allstate 
admits that the agency's use of last year's delivery orders is the 
most reliable basis for calculating the current solicitation quantity 
estimates; to the extent the protester contends that selected 
fluctuation ratios from prior contract years should be part of the 
agency's pricing analysis under the current solicitation, its protest 
is untimely as Allstate clearly was on notice of the inherent 
unpredictability in the needed levels of these services, and knew from 
the face of the solicitation that no fluctuation ratios were intended 
to be applied in the pricing evaluation.  To be timely, the protester 
should have raised this concern with the agency prior to the closing 
time; since it did not, Allstate cannot now argue that these ratios 
should be applied.  Allstate Van & Storage, Inc., B-247463, supra.

Further, we do not agree that the pricing disparity in P&C's offer 
between CLIN Nos. 0001 and 0003 either renders the offer 
mathematically unbalanced, or otherwise violates the Integrity of Unit 
Prices provision.  First, contrary to Allstate's argument, we are 
persuaded by the agency and the intervenor that the services required 
by these two CLINS are not essentially identical, and reasonably could 
involve separate costs.  The record shows that typically, oversize and 
overflow articles are high-priced, valuable goods.  As such, the risk 
involved in damaging these items is frequently higher than for CLIN 
No. 0001 items.  According to the agency, and as confirmed by the 
awardee's pricing methodology, the additional special handling, 
packaging, and shipping involved in dealing with overflow and/or 
oversize articles under CLIN 0003 reasonably can require a more 
expensive packaging and moving approach by the contractor because of 
additional costs necessary to minimize the risk of damage to the 
items.  

Additionally, unlike CLIN No. 0001--where the government provides the 
standard 196 cubic foot containers---CLIN No. 0003 requires the 
contractor to provide its own container for oversize and overflow 
goods--which the record shows typically requires constructing a 
specialized crate at a cost of approximately $125 per container.  
Next, the packaged oversize/overflow articles must be reunited with 
the rest of the packaged CLIN No. 0001 freight and prepared for 
shipment--again, usually requiring special handling--at the 
contractor's cost.  In this regard, packing and moving CLIN No. 0003 
items frequently delays completing corresponding work on CLIN No. 0001 
items.  Given the additional time, work, special handling, and delays 
typically presented by CLIN No. 0003 items, we think it is reasonable 
for the agency--and the contractor--to conclude that these services 
are going to be more costly.[2]

To the extent Allstate contends that P&C's prices for CLIN No. 0001 
are nominal and its prices for CLIN No. 0003 are overstated, the 
record similarly does not support this contention.  All 
parties--including the protester--admit that there are numerous ways 
to price packaging and moving services, and that a difference in 
contractors' technical approach may correspondingly raise and lower 
various performance costs.  In this case, P&C has presented a detailed 
breakdown of its $7 per NCWT unit price for CLIN No. 0001; P&C has 
pointed out that since it is also the contractor for performing 
inbound services for military personnel moving into the San Diego 
area, it expects to perform routine packing and moving services under 
CLIN No. 0001 at a reduced price since it already has a truck and 
labor force performing inbound services in the same area.[3]  With 
regard to its $110 unit price for CLIN 0003, P&C has provided this 
Office with an itemized breakdown of this unit price--which reflects 
the awardee's position that a higher premium constitutes a reasonable 
market price in light of the special handling, packaging, and 
transportation costs associated with this CLIN.

Finally, the record shows that P&C's offered prices for these two 
CLINs have been compared with, and are consistent with, competitive 
awards made for similar services in other contracting regions, 
including Lemoore, California and Corpus Christi, Texas. 

Under these circumstances, we conclude that P&C's offer is not 
mathematically unbalanced or in violation of the Integrity of Unit 
Prices clause.

The protest is denied.

Comptroller General 
of the United States  

1. Allstate also challenged several other CLIN prices in P&C's offer 
which it has since abandoned.

2. We note that Allstate's offered unit price for CLIN No. 0003 is 
twice that of its CLIN No. 0001 unit price.

3. The record shows that the contracting officer performed a detailed 
preaward survey which concluded that P&C is a responsible contractor.