Overview
This regulation requires contracting authorities to seek an explanation from tenderers where the price or costs proposed in the tender appear abnormally low in relation to the works, supplies or services.
Among other reasons, explanations for abnormally low prices or costs may relate to issues such as economics of the manufacturing process, chosen technical solutions or whether the price or cost takes into account the grant of subsidies.
Following assessment of the information provided by the tenderer, the contracting authority may only reject the tender where the evidence does not satisfactorily account for the low level of price or costs proposed.
Contracting authorities must however, reject any tender where it is established that the tender is abnormally low for reasons relating to non-compliance with obligations relevant to social, environmental or labour law.
Objective at this commercial stage
The information provided by the tenderer must be assessed by the contracting authority before reaching a decision on whether to reject the tender. Tenders may only be rejected where the evidence supplied does not satisfactorily account for the low level of price or costs proposed, except where this is as a result of non-compliance with obligations relevant to social, environmental or labour law (in which case, rejection of the tender is mandatory).
Key considerations at this commercial stage
Contracting authorities should:
- consider any explanation provided by a tenderer that has submitted a potential abnormally low tender
- ensure that tenders are rejected only where the evidence provided by the tenderer does not satisfactorily account for the low level of price or costs proposed
- ensure that tenders are rejected where the low level of price or costs is a result of non-compliance with obligations relevant to social, environmental or labour law
- ensure the decision to reject or not to reject a potential abnormally low tender is investigated thoroughly and supported by relevant analysis.
Legal framework
See also in the Procurement Act 2023:
- Section 19: Award of public contracts following a competitive tendering procedure
Additional support and guidance
Make sure you:
- read the regulation
- seek legal and commercial advice in the context of specific procurements
