[Bedon292]

It would depend on the situation. This one, I believe, they were bound to accept the lowest bid. However if the lowest bidder failed to complete the work they could move up the ladder.

Most major contracts are, I think, 'Lowest bidder technically acceptable'. Which requires the bidder to meet minimum guidelines in their quality of work. So price is not the only factor, though it is a major one.

[tssva]

Most large federal contracts state the criteria for judgement in the RFP. It is usually some combination of technical solution, cost and past performance with the weight of each varying between RFPs.

Also for large contracts the government will have done some due diligence to determine a range which the contract should cost. If your bid is significantly below this range and your solution doesn't show some innovation to support the lower cost the government is likely to reject it as unrealistic.