BNUMBER:  B-271215
DATE:  May 24, 1996
TITLE:  Nomura Enterprise, Inc.

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Matter of:Nomura Enterprise, Inc.

File:     B-271215

Date:May 24, 1996

Al Weed, Nomura Enterprise, Inc., for the protester.
Kerry Miller, Esq., Government Printing Office for the agency.
Charles W. Morrow, Esq., and James A. Spangenberg, Esq., Office of the 
General Counsel, GAO, participated in the preparation of the decision.

DIGEST

1.  No basis exist to object to the agency's price reasonableness 
determination of the awardee's bid merely because the price was higher 
than the protester's intended bid.
 
2.  Bid is not materially unbalanced where there is no evidence that 
the awardee's bid will not result in the lowest ultimate cost to the 
government.

3.  Alleged oral advice from government official that varies the terms 
of an unambiguous solicitation is not binding on the agency and may 
not reasonably be relied upon by potential bidders. 

DECISION

Nomura Enterprise, Inc. protests the award of a contract to I-NET, 
Inc. under invitation for bids (IFB) No. A-899-S, issued by the 
Government Printing Office (GPO), for electronic conversion and 
Standard Generalized Markup Language (SGML) tagging of technical 
publications.  Nomura contends that the agency made award to I-NET at 
an unreasonably high price, that I-NET's bid was mathematically and 
materially unbalanced, and that an IFB amendment and oral advice 
rendered the specifications ambiguous or defective, which caused 
Nomura to submit a bid containing a mistake.

We deny the protest.

The GPO issued the IFB to obtain a contractor to convert paper-based 
technical publications to electronic text and graphic files with 
embedded SGML tags for the Department of the Army, Aviation and Troop 
Command (ATCOM).  The IFB contemplated the award of a fixed price 
requirements contract for a 6-month base period with 2 option years.  
Bidders were required to submit individual line item pricing for eight 
specified tasks.  For each task line item, unit prices per 100 pages 
were solicited and estimated units of production were designated, 
e.g., the estimated units of production for the first line item were 
165 (i.e., 16,500 pages).  The IFB informed bidders that the low bid 
would be determined by applying the unit prices offered to the 
designated units of production stated in the IFB and totaling these 
line item prices.  Amendment No. 1 to the IFB revised the estimated 
units of production.  

GPO received seven bids by the August 14 bid opening.  The bids ranged 
from Nomura's low bid of $173,346 to $1,020,925.  I-NET submitted the 
second low bid of $373,163.82.  Because Nomura's bid, particularly for 
the first line item, was very low when compared to the other bids, the 
agency requested Nomura to verify its bid.   Nomura verified its bid 
on August 22 and the agency awarded Nomura the contract on October 1.  
On October 15, Nomura advised the agency of a substantial difference 
between its asserted intended bid price ($277,545) and the 
government's calculation ($173,346) of its price.  Thus, Nomura 
requested the agency to either reform the contract or rescind it.  GPO 
subsequently determined that Nomura's bid indeed reflected a mistake, 
but that Nomura had not established its intended bid by clear and 
convincing evidence.  Therefore, on February 6, the agency rescinded 
the award to Nomura and made award to I-NET.  Nomura filed this 
protest on
February 23.[1]

Nomura first challenges the award to I-NET on the basis that the price 
was unreasonably high because I-NET's bid was 35 percent higher than 
Nomura's alleged intended bid.    

An agency's determination of price reasonableness is a matter of 
administrative discretion involving the exercise of business judgment, 
which our Office will not question unless that determination is 
clearly unreasonable or there is a showing of fraud or bad faith on 
the part of the contracting official.  See Satin Am. Corp., B-261068, 
Aug. 16, 1995, 95-2 CPD  para.  70; Porter-Cable Corp., B-227401, June 19, 
1987, 87-1 CPD  para.  618.  An agency may select whatever price analysis 
techniques will ensure a fair and reasonable price, including relying 
on such factors as government estimates, past procurement history, 
current market conditions, or any other relevant factors including 
those which have been revealed by the competition itself.  Satin Am. 
Corp., supra; Porter-Cable Corp., supra.  Here, GPO reports that 
I-NET's bid price was determined to be reasonable because it was 
approximately $120,000 lower than any of the remaining bids.  Under 
these circumstances, the fact that
I-NET offered a higher bid than Nomura's asserted intended bid is not 
a basis to object to the agency's price reasonableness determination.  
See Imperial Maintenance, Inc., 71 Comp. Gen. 407 (1992), 92-1 CPD  para.  
464.  The agency in its exercise of business judgment may properly 
consider a purported bid which is not established by clear and 
convincing evidence as an inadequate benchmark for comparison.

Nomura next alleges that I-NET's bid is mathematically and materially 
unbalanced because I-NET's bid for the first line item is more than 
three times higher than Nomura's intended bid, whereas I-NET's prices 
for the remaining line items are significantly less.  

Before a bid can be rejected as unbalanced it must be shown to be both 
mathematically and materially unbalanced.  A bid is mathematically 
unbalanced where it is based on nominal prices for some of the items 
and overstated prices for other items.  Where there is reasonable 
doubt that the acceptance of a mathematically unbalanced bid will 
result in the lowest overall cost to the government, the bid is 
materially unbalanced and cannot be accepted.  Duramed Homecare, 71 
Comp. Gen. 193 (1992), 92-1 CPD  para.  126.  

Here, Nomura has offered no evidence that I-NET's low bid, even if 
mathematically unbalanced, would not result in the government 
obtaining the lowest ultimate cost.  The agency reports that I-NET's 
price for the first line item was lower than that of the remaining 
bidders.  Moreover, Nomura's allegation does not demonstrate that
I-NET's bid is materially unbalanced; specifically, Nomura does not 
challenge the accuracy of any of the IFB's estimated quantities or 
otherwise assert that the agency will deviate from its stated estimate 
quantities in ordering under the contract.  Absent a showing that the 
estimated quantities may be inaccurate, we have no basis to question 
whether award to I-NET would result in the lowest ultimate cost to the 
government.  Kdisc, Div. of Keysor Century Corp., B-240850, Aug. 24, 
1990, 90-2 CPD  para.  157.  

Finally, Nomura argues that amendment No. 1, which revised the 
estimated quantities of the line items, introduced a latent ambiguity 
into the IFB, and that the agency allegedly misled Nomura regarding 
the interpretation of the amendment, which caused the mistake in 
Nomura's bid.  Nomura explains that it interpreted the amendment as 
requiring the task that was encompassed by the first line item to be 
done on a "per 165 pages" basis, instead of on a "per 100 pages" 
basis, as GPO intended the IFB to read; that Nomura sought 
clarification of what was required by the amendment with GPO, which 
referred Nomura to ATCOM; that an ATCOM representative assertedly 
confirmed Nomura's interpretation, although advising that the 
interpretation should be confirmed with GPO; and that after 
unsuccessfully attempting to confirm ATCOM's interpretation by GPO, 
Nomura relied upon ATCOM's advice because of the short time left 
before bid opening and because GPO had previously stated that it would 
not extend bid opening in order to clarify the IFB requirements.

The agency denies that it or ATCOM gave any oral advice that was 
inconsistent with the IFB, as amended, which, as indicated, clearly 
required the first line item task to be done on a "per 100 pages" 
basis.  In this regard, amendment No. 1 only revised the estimated 
units of production, not the units themselves.  Thus, the IFB, as 
amended, was not ambiguous.  Since the IFB provided that all 
information provided to a prospective bidder must be provided to all 
prospective bidders and that only written amendments issued by the GPO 
would be binding, such oral advice that varied the terms of the 
unambiguous IFB, even if given by ATCOM, was not binding and Nomura's 
reliance on it was unreasonable.  See General Welding, Inc., B-236819, 
Dec. 8, 1989, 89-2 CPD  para.  532; A.R.S. Constr. Co., B-228476, Jan. 27, 
1988, 88-1 CPD  para.  82.  

The protest is denied

Comptroller General
of the United States  

1. Nomura's protest does not challenge the agency's decision to 
rescind Nomura's contract because of the mistake in bid.