Abnormally Low Tenders

• EU
  • Directive 2014/24

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    • Article 69 Abnormally Low Tenders
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      1.   Contracting authorities shall require economic operators to explain the price or costs proposed in the tender where tenders appear to be abnormally low in relation to the works, supplies or services.

      2.   The explanations referred to in paragraph 1 may in particular relate to:

      (a) the economics of the manufacturing process, of the services provided or of the construction method;

      (b) the technical solutions chosen or any exceptionally favourable conditions available to the tenderer for the supply of the products or services or for the execution of the work;

      (c) the originality of the work, supplies or services proposed by the tenderer;

      (d) compliance with obligations referred to in Article 18(2);

      (e) compliance with obligations referred to in Article 71;

      (f) the possibility of the tenderer obtaining State aid.

      3.   The contracting authority shall assess the information provided by consulting the tenderer. It may only reject the tender where the evidence supplied does not satisfactorily account for the low level of price or costs proposed, taking into account the elements referred to in paragraph 2.

      Contracting authorities shall reject the tender, where they have established that the tender is abnormally low because it does not comply with applicable obligations referred to in Article 18(2).

      4.   Where a contracting authority establishes that a tender is abnormally low because the tenderer has obtained State aid, the tender may be rejected on that ground alone only after consultation with the tenderer where the latter is unable to prove, within a sufficient time limit fixed by the contracting authority, that the aid in question was compatible with the internal market within the meaning of Article 107 TFEU. Where the contracting authority rejects a tender in those circumstances, it shall inform the Commission thereof.

      5.   Upon request, Member States shall make available to other Member States by means of administrative cooperation any information at its disposal, such as laws, regulations, universally applicable collective agreements or national technical standards, relating to the evidence and documents produced in relation to details listed in paragraph 2.

    • Article 18 Principles of Procurement
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      2. Member States shall take appropriate measures to ensure that in the performance of public contracts economic operators comply with applicable obligations in the fields of environmental, social and labour law established by Union law, national law, collective agreements or by the international environmental, social and labour law provisions listed in Annex X.

    • Article 26 Choice of Procedures
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      4.   Member States shall provide that contracting authorities may apply a competitive procedure with negotiation or a competitive dialogue in the following situations:

      …

      (b) with regard to works, supplies or services where, in response to an open or a restricted procedure, only irregular or unacceptable tenders are submitted…

      In particular, tenders which do not comply with the procurement documents, which were received late, where there is evidence of collusion or corruption, or which have been found by the contracting authority to be abnormally low, shall be considered as being irregular.

    • Article 84 – Individual reports on procedures for the award of contracts
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      1. For every contract or framework agreement covered by this Directive, and every time a dynamic purchasing system is established, contracting authorities shall draw up a written report which shall include at least the following:

      …

      (c) the reasons for the rejection of tenders found to be abnormally low

    Recitals

    Recital 37

    With a view to an appropriate integration of … labour requirements into public procurement procedures it is of particular importance that Member States and contracting authorities take relevant measures to ensure compliance with obligations in the fields of … labour law that apply at the place where the works are executed or the services provided and result from laws, regulations, decrees and decisions, at both national and Union level, as well as from collective agreements, provided that such rules, and their application, comply with Union law.

    Recital 40

    Control of the observance of the environmental, social and labour law provisions should be performed at the relevant stages of the procurement procedure, when applying the general principles governing the choice of participants and the award of contracts, when applying the exclusion criteria and when applying the provisions concerning abnormally low tenders. The necessary verification for that purpose should be carried out in accordance with the relevant provisions of this Directive, in particular those governing means of proof and self-declarations.

    Recital 103

    Tenders that appear abnormally low in relation to the works, supplies or services might be based on technically, economically or legally unsound assumptions or practices. Where the tenderer cannot provide a sufficient explanation, the contracting authority should be entitled to reject the tender. Rejection should be mandatory in cases where the contracting authority has established that the abnormally low price or costs proposed results from non-compliance with mandatory Union law or national law compatible with it in the fields of social, labour or environmental law or international labour law provisions.

  • Commission Guidance on the participation of third-country bidders and goods in the EU procurement market OJ [2019] C271/43

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    “The directives do not provide a definition of what constitutes an abnormally low tender, nor a specific method to calcu­late an anomaly threshold. Some Member States have established voluntary or compulsory methods. Member States are free to set up national rules or methods to be used for identifying tenders that are suspected of being abnormally low, provided that these rules are objective and non-discriminatory. They may apply arithmetical methods, based on an assessment of the deviation of a tender from the average price of all tenders, or from the public buyer’s own estimated value of the procurement. A valid method can also be to refer to the difference between the lowest and second lowest tenders. Such rules may include specific percentage thresholds to be applied for the identification of abnormally low tenders. In case national law has not set up a method, public buyers themselves can establish transparent and non- discriminatory methods.

    Offers may appear to be abnormally low in relation to any of the relevant parameters and award criteria. This may be the case, for example, if the relationship between the quality offered and the price is suspicious.

    Where a public buyer receives an offer that it suspects to be abnormally low, it is under a legal obligation to request an explanation of the price offered from the economic operator concerned. The public buyer may not reject an offer without having given the economic operator the opportunity to explain and justify the price. This also applies to arith­metical methods used to identify suspicious tenders. Such methods do not allow for immediate rejection without investigation.”

• Ireland
  • S.I. No. 284/2016 - European Union (Award of Public Authority Contracts) Regulations 2016

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    The Irish Regulations directly transpose the provisions of Directive 2014/24 on Abnormally Low Tenders. See, in particular, Regulation 69.

• UK
  • Procurement Act 2023

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    • 19 Award of public contracts following a competitive tendering procedure
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      (1) A contracting authority may award a public contract to the supplier that submits the most advantageous tender in a competitive tendering procedure.

      …

      (3) In assessing tenders for the purposes of this section a contracting authority—

      …

      (c) may disregard any tender that offers a price that the contracting authority considers to be abnormally low for performance of the contract;

      …

      Before disregarding a tender under subsection (3)(c) (abnormally low price), a contracting authority must—

      (a) notify the supplier that the authority considers the price to be abnormally low, and

      (b) give the supplier reasonable opportunity to demonstrate that it will be able to perform the contract for the price offered.

      (5) If the supplier demonstrates to the contracting authority’s satisfaction that it will be able to perform the contract for the price offered, the authority may not disregard the tender under subsection (3)(c) (abnormally low price).

  • Cabinet Office Guidance: Guidance: Assessing Competitive Tenders

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    Para 6: ” Unlike (where relevant) under the previous legislation, where in some instances (but not all) it was mandatory, contracting authorities are not required under the Act to ask suppliers to explain their price where it appears to be abnormally low. They are required under the Act, however, as in the previous legislation to investigate an abnormally low price and provide the supplier with an opportunity to demonstrate that it will be able to perform the contract for the price proposed before disregarding a tender on that basis. Unlike in the previous legislation, the Act does not include an illustrative list of the types of explanations that suppliers may provide to explain their price (for example, the economics of the manufacturing process) but these may still be relevant and under the Act contracting authorities can seek explanations about anything related to a supplier’s ability to perform the contract for the price offered.”

• England and Wales
  • NATS (Services) Ltd v Gatwick Airport Ltd [2014] EWHC 3728 (TCC) (Akenhead J)

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    Region: England and Wales

    Refusal of application to amend pleadings to add an abnormally low tender point, on the basis that the point had no realistic prospect of success

    This judgment concerned an application to amend pleadings. The claimant was refused leave to amend its claim to add an abnormally low tender point, on the basis that it had no realistic prospect of success. The judgment records a number of general comments about abnormally low tenders, and makes the point that low pricing may be a legitimate strategy and necessary toi dislodge incumbents

    “20. One needs to understand that the legislation and Directives encourage competition and competitiveness. A key aspect of this is price and tenderers who are keen to secure a project will want to pitch their prices at a level which will be the lowest. They might be keen to break into a market or establish their market share. There is nothing wrong with that for them or for the utilities or contracting authorities, who are (almost) always keen to place contracts at the lowest price and, preferably, at lower than they have budgeted. One needs to consider how, commercially, a tenderer, which is not the incumbent provider or not the market leader, will ever get a contract unless it puts in attractively low prices. Provided that the lowest tenderer is sufficiently robust enough in financial/economic terms to provide the services which have been tendered for (or put another way will not become bankrupt part way through the contract), most utilities/contracting authorities will foreseeably be delighted to place the contract with such a tenderer; their constituents or the people or bodies (e.g. Parliament) would not only expect the truly most economically advantageous tender to be accepted but also would require an explanation as to why possibly millions of pounds have been wasted by rejecting a so-called “abnormally low” tender from a tenderer who is able effectively to provide the tendered services.

    …

    27. I draw from all the above authorities and indeed from the wording of Regulation 30 the following:

    (a) It is important, legitimate and proper to interpret statutory instruments in this country which deal with public procurement in the light of EC Directives and legislation. The implementation of such directives and legislation is left to the British legislature. Provided however that the statutory instrument in question is, properly construed, drafted in such a way as not to offend against the contents of EC Directives and legislation, it can be enforced.

    (b) The relevant Directives do not require the contracting authority (or GAL assuming it is a utility in this case) to determine whether or not a tender is abnormally low. What they do address is what is to happen if the authority does determine or consider that a given tender is “abnormally low”. The authority in those circumstances must, but only if it is considering an option to reject that abnormally low tender, give the relevant tenderer the opportunity to explain itself. The Utilities Contract Regulations 2006 are, in this context, not inconsistent with the relevant Directives.

    (c) There is no definition either in the Directives or in the 2006 Regulations as to what “abnormally low” means. Various expressions are used in the European decisions, but often not by way of definition: “genuine” (Lombardini and Fratelli), “genuine and viable” or “sound and viable” ( SECAP Case C-147/06 [2008] 2 CMLR 56), “reliable and serious” (Renco and TQ3 Travel Solutions Belgium) or “serious” (PC-Ware Information Technologies BV T-121/08 [2010] ECRII-1541). I would not wish to add to any confusion but the words “abnormally low” must encompass a bid which is low (and almost invariably lower than the other tenderers) and the bid must be beyond and below the range of anything which might legitimately (in the context of a particular procurement) be considered to be normal. Obviously, a bid which is ridiculously low and which could not be justified on any intelligible commercial basis might well not be considered as genuine and therefore could well be abnormally low. A very low bid which is effectively illegal, such as what is sometimes referred to as “predatory pricing” by a tenderer in effect to eliminate competition, can be rejected because it undermines competition and comprehensiveness and itself runs counter to general Treaty and other European requirements.

    (d) There is no obligation on the part of utilities or contracting authorities to determine or consider that bids are “abnormally low”. There is no obligation to reject “abnormally low” bids. There is no such express statutory requirement or any expressed requirement in the Directives or European legislation, all of which are primarily directed to giving rights to a tenderer, which has submitted what is considered by the utility or contracting authority to be an abnormally low tender, to be given by the utility or contracting authority the chance to explain itself before its tender is rejected. The Court should be very slow to interpret the 2006 Regulations as imposing some obligation on the contracting authority or utility to determine that either there is or might be an abnormally low tender. It is not usual to imply obligations into a statute or statutory instrument in the same way as in this country one implies terms into contracts; that is not to say that a purposive interpretation of statutes is not permissible (it often is).

    (e) If that is right, it would not be necessary to consider whether there was independently some “manifest error” on the part of the given contracting authority or utility in failing to appreciate that there was or might have been an abnormally low tender. However, at best, even if the “manifest error” approach could in these circumstances sensibly be adopted, one would have to be able to determine that it was an error which no reasonable contracting authority or utility could realistically have made.”

  • SRCL Ltd v NHS England [2018] EWHC 1985 (TCC) (Fraser J)

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    Region: England and Wales

    Duty to investigate only where tender appears abnormally low and contracting authority considers it should be rejected

    Following NATS, this Judgment emphasises that low pricing may be a legitimate competitive strategy.

    “193 I consider there is no basis for imposing a general duty to investigate such tenders in all cases. If, in any particular competition, the contracting authority considers that a particular tender has the appearance of being abnormally low, and the contracting authority considers that the tender should be rejected for that reason, there is a duty upon the contracting authority to require the tenderer to explain its prices. Absent a satisfactory explanation, it is obliged to reject that tender as expressly stated in Article 69, namely non-compliance with certain legislation in the specified fields of environmental and social legislation. Otherwise, it is entitled to reject it if the evidence does not satisfactorily account for the low level of price, but is not required to do so

    …

    197. I also consider that the court’s function in a challenge such as this one is not to substitute its own view for that of the contracting authority on whether a tender has the appearance of being abnormally low. The correct approach, which I consider to be entirely consistent with the approach of the courts to procurement challenges generally and the principles summarised in Woods v Milton Keynes, is only to interfere in cases where the contracting authority has been manifestly erroneous. The courts, in so many cases over the years in this field, have made it clear that their function is not to reconsider and remark every evaluation of each tender in which a challenge is brought. In matters of judgment, the contracting authority has a margin of appreciation. In matters of evaluation, only manifestly erroneous conclusions or scores will be reconsidered. This approach has its parallel in other public law fields, for example decisions of Ministers. In general terms in judicial review, the test the court applies is not whether it agrees with the decision of the Minister in question, but rather, whether the decision was reached lawfully by taking account of all relevant matters, and not taking into account irrelevant ones.

    …

    207. Secondly, the concept of considering whether there is independently some “manifest error” on the part of a contracting authority in failing to appreciate that there was or might have been an abnormally low tender shows that, in the majority of cases, the conclusion of the contracting authority will be given substantial weight by the court. Going further, as SRCL seek to do in this case, risks placing an impossible burden on contracting authorities, and stifling true commercial competition. As Akenhead J stated in NATS, particularly for an economic operator attempting to break into a market or increase its market share, attractively low pricing may be the only way that this can be done. If the courts interfere unduly with this operation of market forces, the advantages and aims of open and fair competition will be lost.

    208. urning therefore to the facts of this case, I consider that there was nothing in the change of wording of the Directive and Regulation 69 that imposes a positive obligation upon NHSE in this case to investigate any allegedly abnormally low tender. The first step is to consider whether there was anything in the HES tender that suggested it was abnormally low. In my judgment, there was not. The winning tender in the bid for Wave 6 was in the same region as all the other winning bids in the other five Waves, including (somewhat ironically) the winning bids of SRCL itself, before it changed its strategy and imposed its own artificial margin of minimum of 25%.

    209. The fact that the Sharpsmart bid, compiled in a very different way, and using different considerations and economic business factors, was so very close to the bid of HES, is a highly relevant consideration but is not determinative. Even in the absence of a correspondingly similar bid from a competitor, my conclusions on the HES bid would be the same. In order to be clear, not only do I not consider that the conclusion by NHSE on this matter is free from manifest error, but I consider it was the correct conclusion in any event.

    210. SRCL cannot get around this insurmountable obstacle. In my judgment, the claim brought by SRCL in relation to an allegedly abnormally low tender falls at this hurdle. The different factors set out at [20] in NATS were obviously relevant so far as HES was concerned, as were the other features listed by Mr Pettigrew when he was cross-examined. HES has other contracts in the same geographical area, and he explained that if he had a 30 ton vehicle doing collections in any event for other contracts, the additional cost of collecting extra clinical waste for the Wave 6 contract was very much reduced. This sort of obvious commercial point would affect the HES price very considerably, and was not considered at all by SRCL. Another factor was HES has a waste disposal facility in Scotland. Thus, economic considerations to HES’ advantage for the Wave 6 competition (which would not apply to the same degree if the contract were for such services in, say, Cornwall) also applied.

    211. SRCL’s attack on the HES tender price to demonstrate it was abnormally low focused on rates for particular types of waste, the “gate rate” SRCL charged to customers using SRCL’s incineration facilities – which HES did not intend to use and would not be paying – and whether HES would be receiving sufficient profit (the concept of “sufficient” being one peculiarly directed to SRCL’s subjective view of what profit HES ought to recover in this respect).

    212. The latter point, as argued by SRCL, ignored two important factors. Firstly, HES was trying to improve its market share. It has done well in this respect in the last 15 years and wished to continue to do this. Secondly, this contract was for a 1 year term. As Akenhead J stated at [20] in NATS:

    “One needs to consider how, commercially, a tenderer, which is not the incumbent provider or not the market leader, will ever get a contract unless it puts in attractively low prices.”

    213. I find that neither the HES nor Sharpsmart tenders appeared to be abnormally low.”

• EU - CJEU
  • Joined Cases C-285/99 and C-286/99 Lombardini & Mantovani

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    Region: EU - CJEU

    Italian legislation providing for automatic exclusion where tenders were at a certain level was contrary to the Directive; a contracting authority can take all manner of explanations into account when examining what appears to be an abnormally low bid

    Lombardini

    • Criterion for awarding the contract – “the maximum discount on the price schedule and on the cost of the rough work contracted for” ([10])
    • Contracting authority to determine which bids were abnormally low according to criteria in Italian legislation
    • Tenderers were required to include with their bids explanations concerning the most significant price components equivalent to 75% of the basic contract value
    • Explanations about prices (which had to be submitted in a separate envelope) would be examined “only in respect of tenders offering a discount higher than the arithmetical anomaly threshold” ([11])
    • Anomaly threshold fixed at 28.004%
    • Lombardini’s discount was above this threshold (29.88%) – it and all other tenderers above this threshold had their explanations, as set out in the envelopes submitted with the tenders, examined and were all excluded – however, they were not give any opportunity to submit further explanations after their tenders were deemed abnormally low ([13])
    • Lombardini challenged and said Italian law breached the Directive – as no opportunity to explain price

     

    Mantovani

    • Similar situation
    • Different contract for road construction
    • Again, it offered a price above the anomaly discount threshold and was excluded as being abnormally low
    • Art 29(5) of Dir 71/305 is referred to at [42] – basically, imposes a requirement on the CA to seek explanations

     

    “55.    It is apparent from the very wording of that provision, drafted in imperative terms, that the contracting authority is under a duty, first, to identify suspect tenders, secondly to allow the undertakings concerned to demonstrate their genuineness by asking them to provide the details which it considers appropriate, thirdly to assess the merits of the explanations provided by the persons concerned, and, fourthly, to take a decision as to whether to admit or reject those tenders. It is therefore not possible to regard the requirements inherent in the inter partes nature of the procedure for examining abnormally low tenders, within the meaning of Article 30(4) of the Directive, as having been complied with unless all the steps thus described have been successively accomplished.

    …

    58.    Having regard to the foregoing considerations, it must be held that Article 30(4) of the Directive precludes legislation and administrative practice, such as that applicable in the cases referred, which allow the contracting authority to exclude a tender as abnormally low solely on the basis of explanations of the most significant price components, produced at the same time as the tender itself, without carrying out any inter partes examination of the suspect tenders by requesting clarification on points of doubt emerging on first examination and giving the undertakings concerned the opportunity to put forward their arguments in that regard before the final decision is taken.

    …

    83.    It follows that, having regard to both its wording and its purpose, the second subparagraph of Article 30(4) of the Directive does not establish an exhaustive catalogue of explanations that are capable of being submitted, but merely gives examples of explanations which the tenderer may provide in order to demonstrate the genuineness of the various price elements proposed. A fortiori, the provision in question does not authorise the exclusion of certain types of explanation.

    84.    As the Austrian Government and the Commission have argued in their observations, and the Advocate General has emphasised in paragraphs 50 and 51 of his Opinion, any limitation in that regard would clearly contradict the Directive’s aim of facilitating the operation of free competition between the tenderers as a whole. Such a limitation would involve the outright exclusion of tenders explained by considerations other than those allowed by the applicable national legislation, despite a price which may be more advantageous.”

  • Case C‑367/19 Tax-Fin-Lex

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    Region: EU - CJEU

    A tender cannot be automatically rejected because its price is EUR 0.00

    31 “[Since] a tender at a price of EUR 0.00 could be classified as an abnormally low tender within the meaning of Article 69 of Directive 2014/24, where a contracting authority is presented with such a tender, it must follow the procedure provided for in that provision and ask the tenderer to explain the amount of the tender. It follows from the underlying logic of Article 69 of Directive 2014/24 that a tender cannot be automatically rejected on the sole ground that the price proposed is EUR 0.00.

    32      Thus it is clear from paragraph 1 of Article 69 that where a tender appears to be abnormally low, contracting authorities are to require the tenderer to provide an explanation for the price or costs proposed in the tender, which could relate, inter alia, to the elements set out in paragraph 2 of that article. The explanation provided is thus to be used in the assessment as to whether the tender is reliable and enables the contracting authority to establish that, although the tenderer proposes a price of EUR 0.00, the tender at issue will not impair the proper performance of the contract.

    33      In accordance with paragraph 3 of the same article, the contracting authority must assess the information provided by consulting the tenderer and it may reject such a tender only where the evidence supplied does not satisfactorily account for the low level of price or costs proposed.

    34      The assessment of that information must also be carried out in compliance with the principles of equal treatment and non-discrimination between tenderers, and the principles of transparency and proportionality, which are binding on the contracting authority under Article 18(1) of Directive 2014/24.

    35      Therefore, the argument made by a tenderer which has submitted a tender at a price of EUR 0.00 that the price proposed in its tender is explained by the fact that it anticipates obtaining access to a new market or references if the tender is accepted must be assessed in the context of the possible application of Article 69 of Directive 2014/24.

  • Case C‑669/20 Veridos

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    Region: EU - CJEU

    Contracting authority must identify suspect tenders by reference to all features of the tender; "Decision" that a tender is not abnormally low is subject to judicial review

    “33 EU law does not define the concept of an ‘abnormally low tender’. However, as the Advocate General noted in points 30 to 32 of his Opinion, the outlines of that concept have already been defined by the Court in the context of the interpretation of directives relating to public contracts other than the directive referred to in the preceding paragraph.

    34      Thus, the Court has held, on several occasions, that it is for the Member States and, in particular, the contracting authorities to determine the method of calculating an anomaly threshold constituting an abnormally ‘low’ tender (see, inter alia, judgments of 27 November 2001, Lombardini and Mantovani, C‑285/99 and C‑286/99, EU:C:2001:640, paragraph 67, and of 18 December 2014, Data Medical Service, C‑568/13, EU:C:2014:2466, paragraph 49) or to set its value, provided that an objective and non-discriminatory method is used. It has also held that the contracting authority is under an obligation ‘to identify suspect tenders’ (see, to that effect, judgment of 27 November 2001, Lombardini and Mantovani, C‑285/99 and C‑286/99, EU:C:2001:640, paragraph 55).

    35      Furthermore, the Court has stated that the abnormally low nature of a tender must be assessed in relation to the service concerned. Thus, in the course of examining the abnormally low nature of a tender, the contracting authority may, for the purpose of ensuring healthy competition, take into consideration all the factors that are relevant in the light of that service (see, inter alia, judgments of 29 March 2012, SAG ELV Slovensko and Others, C‑599/10, EU:C:2012:191, paragraphs 29 and 30, and of 18 December 2014, Data Medical Service, C‑568/13, EU:C:2014:2466, paragraph 50).

    36      In that regard, Articles 38 and 49 of Directive 2009/81 mean that the contracting authority is under an obligation, first, to identify suspect tenders, second, to allow the tenderers concerned to demonstrate their genuineness by asking them to provide the details which it considers appropriate, third, to assess the merits of the information provided by the persons concerned and, fourth, to take a decision as to whether to admit or reject those tenders. It is only on condition that the reliability of a tender is, a priori, doubtful that the obligations arising from those articles are imposed on the contracting authority (see, by analogy, judgment of 19 October 2017, Agriconsulting Europe v Commission, C‑198/16 P, EU:C:2017:784, paragraphs 51 and 52 and the case-law cited).

    37      As the Advocate General noted in point 38 of his Opinion, the contracting authority has to identify tenders which appear suspect, and are therefore subject to the inter partes examination procedure provided for in Article 49 of Directive 2009/81, in the light of all the features of the subject matter of the invitation to tender concerned. Comparison with other, competing tenders, however useful it may be in certain cases for the purpose of identifying any anomalies, cannot constitute the sole criterion used by the contracting authority in that regard.

    38      The examination of all the components relating to the invitation to tender and the contract documents concerned must enable the contracting authority to determine whether, despite the existence of distance between the suspect tender and the tenders submitted by the other tenderers, that tender is sufficiently genuine. In that regard, the contracting authority may rely on national rules which define a particular method for identifying abnormally low tenders.

    39      Nevertheless, in the light of the foregoing considerations, it must be stated that Directive 2009/81 does not preclude the abnormally low nature of a tender from being assessed where only two tenders have been submitted. On the contrary, the inapplicability of the criterion laid down by national law for the purpose of assessing the abnormally low nature of a tender is not such as to exempt the contracting authority from its obligation, set out in paragraph 36 of the present judgment, to identify suspect tenders and to carry out, where there are such tenders, an inter partes examination.

    40      It follows from the foregoing that Articles 38 and 49 of Directive 2009/81 must be interpreted as meaning that a contracting authority, where there is suspicion that a tender is of an abnormally low nature, is required to verify whether this is actually the case by taking account of all the relevant components of the invitation to tender and the contract documents, without the impossibility of applying the criteria laid down for that purpose by a piece of national legislation or the number of tenders submitted being relevant in that regard.”

• EU - General Court
  • Case T-161/24 NTT Data Belgique

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    Region: EU - General Court

    EIB decision rejecting a tender on the basis that it was abnormally low was not made in manifest error or disproportionate

    “43      It is apparent from Article 69(1) and (3) of Directive 2014/24, to which point 5.1.3 of the EIB Guide to procurement refers, that the contracting authority is to require a tenderer to explain the price or costs proposed in the tender where the latter appears to be abnormally low and that it may only reject the tender where the evidence supplied does not satisfactorily account for the low level of price or costs.

    44      In that regard, while there is no definition of an abnormally low tender (see judgment of 10 October 2017, Solelec and Others v Parliament, T‑281/16, not published, EU:T:2017:711, paragraph 113 and the case-law cited), it is apparent from the case-law that the abnormally low nature of a tender must be assessed in relation to the service concerned. Thus, in the course of examining the abnormally low nature of a tender, the contracting authority may, for the purpose of ensuring healthy competition, take into consideration all the factors that are relevant in the light of that service (see judgment of 15 September 2022, Veridos, C‑669/20, EU:C:2022:684, paragraph 35 and the case-law cited).

    45      According to the case-law, in the absence of a definition of the notion of an ‘abnormally low tender’, it falls to the contracting authority to determine the method used to identify abnormally low tenders, provided that that method is objective and non-discriminatory (see, to that effect, judgment of 19 October 2017, Agriconsulting Europe v Commission, C‑198/16 P, EU:C:2017:784, paragraph 55 and the case-law).

    46      It should also be borne in mind that, according to settled case-law, the contracting authority has broad discretion with regard to the factors to be taken into account in order to decide whether a tender is abnormally low, and the Court’s review must be limited to verifying that the rules governing the procedure and statement of reasons have been complied with, that the facts are materially accurate, and that there has been no serious and manifest error of assessment or misuse of powers (see, to that effect, judgment of 20 March 2024, Westpole Belgium v Parliament, T‑640/22, not published, EU:T:2024:188, paragraph 110 and the case-law cited).

    47      In addition, in order to establish that, in the assessment of the facts, the contracting authority committed an error so obvious as to justify annulment of the decision rejecting a contract tender as abnormally low, the evidence adduced by the applicant must be sufficient to render the assessments made in the decision at issue implausible. In other words, a plea alleging a manifest error must be rejected if, in spite of the evidence put forward by the applicant, the assessment challenged may be accepted as genuine or valid (see judgment of 20 March 2024, Westpole Belgium v Parliament, T‑640/22, not published, EU:T:2024:188, paragraph 111 and the case-law cited).

    …

    72      First of all, it should be borne in mind that, in accordance with settled case-law, the principle of proportionality, which is one of the general principles of EU law, requires that acts of the EU institutions be appropriate for attaining the legitimate objectives pursued by the legislation at issue and do not exceed the limits of what is necessary in order to achieve those objectives; when there is a choice between several appropriate measures, recourse must be had to the least onerous, and the disadvantages caused must not be disproportionate to the aims pursued (see judgment of 4 May 2016, Philip Morris Brands and Others, C‑547/14, EU:C:2016:325, paragraph 165 and the case-law cited).

    73      In the present case, it should be observed in the first place that, as stated in paragraph 13 above, and contrary to what is claimed by the applicants, the EIB, after examining the relevant information and explanations provided by the tenderer concerned, is obliged to reject a tender which it considers to be abnormally low. In that regard, it must be observed, as the EIB has done, that the rejection of a tender as abnormally low depends on its intrinsic aspects, the context and the relevant explanations offered by the tenderer concerned, and not on the presence of purely exceptional circumstances.

    74      In the second place, the fact that the applicants, in their view, provided satisfactory answers to most of the questions raised in the request for clarifications is irrelevant. It cannot be held that a contracting authority infringes the principle of proportionality where it finds, on the basis of all the evidence provided by a tenderer and without making a manifest error of assessment, that that tenderer will be unable to perform the contract on the basis of certain prices which represent a substantial part of the tender. In such a situation, contrary to what the applicants claim, the contracting authority cannot have recourse to another appropriate, less onerous measure.”

• Ireland
  • White Mountain Quarries Limited t/a Breedon v Mayo County Council [2024] IEHC 259 (Quinn J)

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    Region: Ireland

    Contracting authority erred in failing to conduct Regulation 69 inquiry as to whether tender, which included labour rates below industry standard, was abnormally low

    Obligation to investigate apparently abnormally low tender

    “424. The clarifications reveal a reliance on blending rates for labour with rates for equipment. Blending of rates generally is not of itself objectionable or unlawful. But rates of pay for people attract special rules (Regulation 18(4)(b)) designed to ensure compliance with applicable obligations. This is a cardinal value in public contracts and is consistent with the ‘level playing field’ objective of the Regulations. Where the recipe used in the blend incorporates rates below industry standard this must raise at least the suspicion of abnormality and Regulation 69 mandates the performance of an inter party inquiry.

    425. In paragraphs 93-103 I have described the principles which inform a contracting authority’s duty when faced with a tender which arouses suspicion. The duty includes an obligation to identify suspect tenders. Even a prima facie assessment in this case reveals that the preferred tender was suspect at least because it included rates below industry standard. No inquiry pursuant to Regulation 69 was performed. This omission is a breach of Regulation 69(1).”

    Re-statement of the principles relating to abnormally low tenders

    “93. Firstly, the purpose of the Directive is to encourage competition and competitiveness in identifying the most economically advantageous tender. In this respect price is a key aspect subject to

    i. The lowest tender being sufficiently robust in financial/economic terms to provide the services tendered for. Most contracting authorities will “foreseeably be delighted to place the contract with such a tender” and there is nothing objectionable in this (per Fraser J. in SRCL) and

    ii. The tender not breaching national laws regarding environmental, social or labour laws. (Regulation 69(5)).

    94. Secondly, the use of the word “appears” in Regulation 69(1) requires the contracting authority not, in every case, to carry out, on its own initiative, a detailed analysis of the composition of each tender in order to establish that it does not constitute an abnormally low tender but in every case to carry out a prima facia assessment of whether the tender is or arouses suspicion of being abnormally low (Sopra Steria Benelux, Case 101/22 and Regulation 69(1)).

    95. Thirdly, the contracting authority is under an obligation to identify suspect tenders (Veridos GMBH, Case No. 669/20).

    96. Fourthly, where a tender has the appearance of being abnormally low, including a suspicious tender, the contracting authority must perform the inter partes inquiry mandated by Regulation 69 namely the following:

    (a) Require the tenderer to explain the price or cost, including as appropriate by provision of the information identified in Reg. 69(2).

    (b) Assess the information provided,

    (c) Consult with the tenderer and

    (d) Make a decision to admit or reject the tender (see Veridos and Regulation 69).

    97. Fifthly, this examination must enable the authority to determine whether, despite the existence of distance between the tenders, the tender is sufficiently genuine (Veridos, op cit).

    98. Sixthly, there is no obligation to perform this inquiry, in respect of every tender. The obligation only applies where a suspicion arises and the tender is prima facie doubtful (Veridos).

    99. Seventhly, there is no general obligation on the contracting authority to adopt or express a reasoned decision finding that there are no abnormally low tenders (Veridos) but where an unsuccessful tenderer requests reasons for a determination that a tender is not abnormally low the authority is required to provide a detailed response. This must be more than a pre-emptory statement which does not put forward any justification (Sopra Steria).

    100. Eighthly, where a Regulation 69 Inquiry is performed the contracting authority must then formally adopt a reasoned decision admitting or rejecting the tender in question. (This does not arise in this case).

    101. Ninthly, apart from cases where the tender breaches national legislation regarding such matters as payment of wages, there is no general duty to reject tenders even where they are abnormally low. The duty conferred by the Regulation is that the contracting authority may only reject such a tender on the grounds that it is abnormally low after performing the Article 69 inquiry, including consultation with the tenderer. This obligation affords a measure of protection to the tenderer who may be excluded after an inquiry. That is not its only purpose. It also enshrines the integrity of the process as a whole. In its terms it is not confined to the protection of the rights of the tenderer rejected following the inquiry.

    102. Tenthly, the obligation to conduct the Regulation 69 Inquiry arises where a tender has the appearance of being abnormally low or where a suspicion is aroused to that effect. I reject the proposition that the obligation to conduct such an inquiry arises only where the tender has the appearance of being abnormally low and where the authority considers that the tender should be rejected for that reason. Insofar as the judgment in SRCL Ltd at para. 193 (paragraph 72 above) is relied on for such a proposition it is inconsistent with the plain language of Article 69 and the judgments of the ECJ discussed earlier.

    103. Eleventhly, the court’s function in these cases is not to substitute its own view for that of the contracting authority on whether a tender has the appearance of being abnormally low, or for that matter on other evaluative decisions of the authority. The correct approach is to intervene only in cases where manifest error has occurred (per Fraser J. in SRCL Ltd). This general principle of judicial review applies as much to procurement cases as to other forms of judicial review. See also Word Perfect Translation Services Ltd v. Minister for Public Expenditure and Reform [2019] IESC 38 and [2021] IR page 698).”

  • Killaree Lighting Services Limited v Mayo County Council [2024] IEHC 79 (O'Moore J)

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    Region: Ireland

    Decision to exclude tender as being abnormally low upheld; rates submitted by tenderer for a public lighting contract (including €0.01 values) did not cover the value of the works, supplies and services

    Note: This case was appealed and the Court of Appeal upheld the substantive decision of the High Court on its decision to exclude the tenderer as being abnormally low. However, the Court of Appeal decided (contrary to the High Court) that an alternative penalty should be imposed on the contracting authority owing to the fact that it issued a deficient regret letter. See Killaree Lighting Services Limited v Mayo County Council [2025] IECA 7.

    “[There is the dual purpose of the enquiry to be made of the tenderer.  The first is to establish whether the tenderer is reliable; as I have already observed, there is no point in a tender being successful in circumstances where it is not genuine, serious or reliable.  The second purpose is, of course, to allow the tenderer to explain the apparently suspect pricing.  Given the reason why this obligation is placed upon the contracting authority, it is not necessary that the contracting authority is considering rejecting the tender.  It is simply establishing whether or not an individual tender is a serious one.  Naturally, as a matter of practicality any findings that the tenderer is not serious or genuine is very likely to lead to its rejection.” [126]

    “Therefore, it is submitted that when one looks at Art. 69 in the round ‒ in terms of the words used on the scheme ‒ there is:

    ‘(1) a duty to investigate what the contracting authority suspects to be an abnormally low tender;

    (2) a duty to afford the tenderer an opportunity to offer an explanation; and

    (3) a discretion to eliminate the tender (save for the duty arising in connection with Article 18(2) (which does not apply here).”

    On the basis of the case law of the CJEU, and taking into account the observations of Professor Arrowsmith, I have concluded that this analysis is correct.” [137]-[138]

    “The challenge is not saved by the reference to Case C-367/19 Tax-Fin-Lex (September 10, 2020), referred to earlier in this judgment, where a tender was submitted for a total of €0.00.  There may well be other reasons, such as in Tax-Fin-Lex the entry into fresh markets, which must be taken into account in considering a possible abnormally low a tender.  In order to assess whether or not there are such reasons, the tenderer must, of course, be given an opportunity to outline these.  However, despite being told in terms that the genuineness of its tender was at issue from 14 August on, Killaree gave no such satisfactory explanation prior to its elimination from the competition.” [191]

  • Killaree Lighting Services Limited v Mayo County Council [2025] IECA 7 (Hyland J)

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    Region: Ireland

    Court of Appeal upholds High Court decision which upheld contracting authority's decision to exclude tender as being abnormally low; Contracting authority entitled to exclude a tender on the basis of specific items being priced abnormally low (as opposed to the total tender price)

    Note: While the Court of Appeal upheld the substantive decision of the High Court on its decision to exclude the tenderer as being abnormally low, the Court of Appeal decided (contrary to the High Court) that an alternative penalty should be imposed on the contracting authority owing to the fact that it issued a deficient regret letter.

    “3 Killaree argued the Council was obliged to accept its explanation for the abnormally low tender i.e. that it had performed other contracts satisfactorily based on the same pricing approach. Article 69 of the Procurement Directive specifies that contracting authorities shall require economic operators to explain the price or cost where tenders appear to be abnormally low. The contracting authority must assess whether a tender is reliable and will not impair the proper performance of the contract (Tax-Fin-Lex v Ministrstvo, C-367/19, EU:C:2020:685) and/or is genuine (Veridos, C-669/20, EU:C:2022:684). To do that, it must understand why the prices that appear at first glance to be abnormally low are justified. The Council was entitled to conclude that the apparent completion of other contracts by Killaree using a similar pricing approach did not satisfactorily account for the low level of price/costs in the instant tender.

    Nor can Killaree succeed on its argument that there was no entitlement to treat the tender as abnormally low because the tender total – a fortiori, a notional tender total as opposed to the constituent parts – was not abnormally low, and the Council were precluded from looking beyond the tender total to the constituent parts of the tender. First, the weight of case law is against that proposition, particularly European Dynamics Luxembourg SA v European Union Agency for Railways, T-392/15, EU:T:2017:462 and Commission v Sopra C-101/22P, EU:C:2023:396. Second, the wording of Article 69(1) TFEU draws a distinction between abnormally low costs and abnormally low price, suggesting that a contracting authority may look at either price or costs, or both.  Third, a purposive interpretation of Article 69 undermines Killaree’s argument. The objective of assessing whether a tender is abnormally low is to ensure that the tender is genuine, reliable and will not impair the proper performance of the contract. To restrict a contracting authority from looking behind the tender total, despite its concerns about the constituent parts, would significantly limit the scope of the inquiry. Some tender totals will be so low they will inevitably alert the contracting authority to a potentially abnormally low tender. But tenders requiring hundreds or thousands of items to be priced, such as the present tender, may contain abnormally low pricing in some areas but not in others. Killaree’s construction of Article 69 would effectively prevent a contracting authority from conducting the necessary assessment of such tenders.

    Finally, Killaree asserts that there was a failure to follow proper process by the Council because it launched an inquiry into whether its tender was abnormally low without comparing it with other tenders, despite indicating it would take such a course in the clarification document issued by the Council. Properly interpreted, the clarification document does not commit the Council to such a course. The RFT is the primary document: the clarification document is subsidiary to the RFT and must be read in the light of it. There is no conflict or ambiguity between the clarification and the RFT. The RFT does not limit the contracting authority to launching an inquiry only into those tenders that are abnormally low compared with other tenders.”

• Northern Ireland
  • TES Group Ltd v Northern Ireland Water Limited [2020] NIQB 62 (Horner J)

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    Region: Northern Ireland

    Automatic suspension lifted; obiter comments on abnormally low tenders

    “19 Under the Regulations there is only a duty to investigate if the contracting authority considers a particular tender is abnormally low and that contracting authority considers that the tender should be rejected for that reason. Further, under the Regulations, there is no duty to reject a tender if no satisfactory explanation is given for the low level of price, but there is a power to do so.

    22 There was never any legal requirement on the defendant to reject an abnormally low tender, only a power to do so. There is therefore no basis, legal or factual, which has been disclosed to the Court which would permit a conclusion that the defendant was legally compelled to reject any abnormally low tender in respect of Lot 2, if indeed there was one.”

The term “abnormally low” is not defined in Directive 2014/24; in general, the CJEU has held that it is for Member States and contracting authorities to determine the method for calculating a so-called anomaly threshold constituting an abnormally low tender

“33 EU law does not define the concept of an ‘abnormally low tender’. However … the outlines of that concept have already been defined by the Court in the context of the interpretation of directives relating to public contracts other than the directive referred to in the preceding paragraph.

34 Thus, the Court has held, on several occasions, that it is for the Member States and, in particular, the contracting authorities to determine the method of calculating an anomaly threshold constituting an abnormally ‘low’ tender (see, inter alia, judgments of 27 November 2001, Lombardini and Mantovani, C‑285/99 and C‑286/99, EU:C:2001:640, paragraph 67, and of 18 December 2014, Data Medical Service, C‑568/13, EU:C:2014:2466, paragraph 49) or to set its value, provided that an objective and non-discriminatory method is used. It has also held that the contracting authority is under an obligation ‘to identify suspect tenders’ (see, to that effect, judgment of 27 November 2001, Lombardini and Mantovani, C‑285/99 and C‑286/99, EU:C:2001:640, paragraph 55).” Case C-669/20 Veridos, [33]-[34]

See, also, e.g., Case C-568/13 Azienda Ospedaliero-Universitaria di Careggi-Firenze v. Data Medical Service srl., [49]

Abnormally low tenders are to be “assessed in the context of the industry in which the tender is made and the service to be provided”. 

In practice, this means that

“in the course of examining the abnormally low nature of a tender, the contracting authority may, for the purpose of ensuring healthy competition, take into consideration all the factors that are relevant in the light of that service …”. Case C-669/20 Veridos, [35]

A tender can be considered abnormally low having regard to the “constituent elements” of the tender in question

“The concept of ‘abnormally low tender’ is not defined either in the provisions of the Financial Regulation of those of the Implementing Regulation. However, it has been held that the abnormally low nature of a tender must be assessed by reference to the composition of the tender and the services at issue” Case T-392/15 European Dynamics Luxembourg SA v European Union Agency for Railways, [83]

“Thus, during that first stage, the contracting authority need only determine whether the tenders submitted contain evidence that they might be abnormally low. That is the case, in particular, where the price proposed in a tender is considerably lower than that of the other tenders or the normal market price. If there is no such evidence in the tenders submitted and they therefore do not appear to be abnormally low, the contracting authority may continue the evaluation and the award procedure for the contract.” Case C‑101/22 P Sopra, [72]

Commenting on this passage in the Irish Court of Appeal in Killaree Lighting Services Limited v Mayo County Council [2025] IECA 7, Hyland J said at [64]:

“In my view those words make clear that the contracting authority may carry out this prima facia assessment either where the price is “considerably lower”, or where the tenders contain evidence that they might be abnormally low. That must refer inter alia to the composition of the tender or its constituent parts, since it is contrasted with the “price alone” analysis.”

“[A] fundamental requirement in the field of public procurement, which obliges a contracting authority to verify, after due hearing of the parties and having regard to its constituent elements, every tender appearing to be abnormally low before rejecting it.” Case T-495/04 Belfass SPRL v. Council of the European Union, ECLI:EU:T:2008:160, [98]

Comparison with other tenders cannot be the sole criterion to determine abnormally low tenders

“[The] contracting authority has to identify tenders which appear suspect … in the light of all the features of the subject matter of the invitation to tender concerned. Comparison with other, competing tenders, however useful it may be in certain cases for the purpose of identifying any anomalies, cannot constitute the sole criterion used by the contracting authority in that regard” Case C-669/20 Veridos, [37]

A decision by a contracting authority that a tender is not abnormally low is subject to judicial review

“[The] obligation … according to which the decision to award the contract at issue must be amenable to effective review, requires that tenderers who consider themselves wronged must be able to challenge that decision by claiming that the successful tender should have been classified as ‘abnormally low’ Case C-669/20 Veridos, [46]

Submission of a tender price of €0.00 cannot lead to automatic rejection of the tender

“[Since] a tender at a price of EUR 0.00 could be classified as an abnormally low tender within the meaning of Article 69 of Directive 2014/24, where a contracting authority is presented with such a tender, it must follow the procedure provided for in that provision and ask the tenderer to explain the amount of the tender. It follows from the underlying logic of Article 69 of Directive 2014/24 that a tender cannot be automatically rejected on the sole ground that the price proposed is EUR 0.00.” Case C-367/19 Tax-Fin-Lex, [31]

Price competition is to be encouraged and it may be necessary to submit a low price to dislodge an incumbent

“One needs to understand that the legislation and Directives encourage competition and competitiveness. A key aspect of this is price and tenderers who are keen to secure a project will want to pitch their prices at a level which will be the lowest. They might be keen to break into a market or establish their market share. There is nothing wrong with that for them or for the utilities or contracting authorities, who are (almost) always keen to place contracts at the lowest price and, preferably, at lower than they have budgeted. One needs to consider how, commercially, a tenderer, which is not the incumbent provider or not the market leader, will ever get a contract unless it puts in attractively low prices. Provided that the lowest tenderer is sufficiently robust enough in financial/economic terms to provide the services which have been tendered for (or put another way will not become bankrupt part way through the contract), most utilities/contracting authorities will foreseeably be delighted to place the contract with such a tenderer; their constituents or the people or bodies (e.g. Parliament) would not only expect the truly most economically advantageous tender to be accepted but also would require an explanation as to why possibly millions of pounds have been wasted by rejecting a so-called “abnormally low” tender from a tenderer who is able effectively to provide the tendered services” (NATS (Services) Ltd v Gatwick Airport Ltd [2014] EWHC 3728 (TCC), [20])

If a tender appears abnormally low, it must be investigated to establish if it would impair proper performance of the contract

“[It] is clear from paragraph 1 of Article 69 that where a tender appears to be abnormally low, contracting authorities are to require the tenderer to provide an explanation for the price or costs proposed in the tender … The explanation provided is thus to be used in the assessment as to whether the tender is reliable and enables the contracting authority to establish that … the tender at issue will not impair the proper performance of the contract.” Case C-367/19 Tax-Fin-Lex ECLI:EU:C:2020:685, [32]

A tender can only be rejected where tenderer does not satisfactorily account for the low price

“In accordance with [Article 69(3)], the contracting authority must assess the information provided by consulting the tenderer and it may reject such a tender only where the evidence supplied does not satisfactorily account for the low level of price or costs proposed” Case C-367/19, Tax-Fin-Lex ECLI:EU:C:2020:685, [33]

“[The] contracting authority is under a duty, first, to identify suspect tenders, secondly to allow the undertakings concerned to demonstrate their genuineness by asking them to provide the details which it considers appropriate, thirdly to assess the merits of the explanations provided by the persons concerned, and, fourthly, to take a decision as to whether to admit or reject those tenders” Cases C-285/99 & 286/99 Lombardini and Mantovani, [55]

The contracting authority is required to take into consideration all the explanations put forward by the tenderer before adopting its decision whether to accept or reject the tender.

“[The] tenderer must be able to submit in support of his tender all the explanations … bearing in mind the nature and characteristics of the contract in question, he considers appropriate, without any limitation in that respect. The contracting authority is required to take into consideration all the explanations put forward by the undertaking before adopting its decision whether to accept or reject the tender in question” Cases C-285/99 & 286/99 Lombardini and Mantovani, [82]

• Papers

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