The rules on abnormally low tenders are often not straightforward to apply and can give rise to difficult practical questions. When does a tender appear abnormally low? How does a contracting authority decide if the explanations provided by the tenderer are satisfactory? On what basis can a decision of the contracting authority to admit what appears to be an abnormally low tender be challenged? Various other questions can arise and this area is the subject of not infrequent disputes, where a tenderer challenges its exclusion, or where losing bidders contend that the successful tenderer ought to have been excluded on the basis that its tender was abnormally low.
Under the EU rules, contracting authorities may exclude tenders that are abnormally low and, in limited cases, are required to exclude such tenders. Contracting authorities also face an obligation to investigate tenders that appear abnormally low. The underlying rationale for these rules arises from a concern that a tenderer who puts forward an abnormally low price may not be reliable and may not be able to perform the contract.
The UK Procurement Act 2023 also makes provision for the exclusion of abnormally low tenders. The provisions concerning abnormally low tenders in the Act are short and it remains to be seen what differences emerge in the application of the Act compared to the previous, EU-governed regime. However, as discussed in our review of the cases, there have in the past been some significant differences in the approach taken by the English courts to this issue, when compared to the EU courts and those at national level in other Member States of the EU.
Below, we cover the leading cases not only in the CJEU but also a number of important General Court cases, as well as cases from England and Wales, Northern Ireland and Ireland (the Irish courts have delivered four significant judgments on abnormally low tenders in 2024-2026). We analyse a number of important aspects of the law, including:
- When is a tender abnormally low?
- To whom must a tender appear abnormally low?
- What obligations arise if a tender appears abnormally low?
- When can apparent abnormally low tenders be rejected?
- Is the analysis by reference to overall price? Or are other elements relevant?
- What is the scope for judicial review of decisions about abnormally low tenders?
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EU
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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.
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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.
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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:
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(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.
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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:
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(c) the reasons for the rejection of tenders found to be abnormally low
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Recitals 37, 40, 103
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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.
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Article 69 Abnormally Low Tenders
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Commission Guidance on the participation of third-country bidders and goods in the EU procurement market OJ [2019] C271/43
“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.”
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Directive 2014/24
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Ireland
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S.I. No. 284/2016 - European Union (Award of Public Authority Contracts) Regulations 2016
The Irish Regulations directly transpose the provisions of Directive 2014/24 on Abnormally Low Tenders. See, in particular, Regulation 69.
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S.I. No. 284/2016 - European Union (Award of Public Authority Contracts) Regulations 2016
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UK
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Procurement Act 2023
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19 Award of public contracts following a competitive tendering procedure
View section / regulation
(1) A contracting authority may award a public contract to the supplier that submits the most advantageous tender in a competitive tendering procedure.
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(3) In assessing tenders for the purposes of this section a contracting authority—
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(c) may disregard any tender that offers a price that the contracting authority considers to be abnormally low for performance of the contract;
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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).
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19 Award of public contracts following a competitive tendering procedure
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Cabinet Office Guidance: Guidance: Assessing Competitive Tenders
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.”
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Procurement Act 2023
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England and Wales
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J Varney & Sons Waste Management Ltd v Hertfordshire County Council [2010] EWHC 1404 (QB) (Flaux J)
Region: England and Wales
Duty to investigate abnormally low tender only arises where authority was intending to reject the tender; whether tender "appears" abnormally low depends on how the tender actually appeared to the authority; no manifest error in failing to consider tender to be abnormally low
Contracts for the operation of waste recycling centres
Two complaints re abnormally low tenders
“(1) That the Council was under a duty which he submitted arises under both the Directive and the Regulations to investigate suspect tenders and to do so properly before deciding whether to accept or reject the tender in question.
(2) Even in the absence of the provisions in the Directive and the Regulations, there remains a duty on an authority to act at all times including in its assessment of tenders without obvious or manifest error.”
Duty to investigate only where authority intending to reject tender
“155 In relation to Renco, Mr Howell submitted that it was not a case where the European Court was saying that there was a duty to investigate all tenders which appeared abnormally low irrespective of whether they were going to be rejected. In my judgment that submission is correct. Neither Renco nor the earlier case in the European Court of Justice of Impresa Lombardini v ANAS [2001] ECR I-9233, to which Arnold J refers, were cases where the issue arose directly for decision whether the relevant authority owed a duty to investigate “abnormally low” tenders generally, as opposed to where the authority was considering rejecting the tender. In both those cases, the authority was proposing to reject the tenders in question. Furthermore, although the point did not arise directly in the later decision of the General Court in TQ3 Travel Solutions Belgium SA v The Commission [2005], in my judgment it is implicit in the reasoning of the Court at paragraphs 49 and 50 that the relevant authority is not under a duty to investigate a tender which appears abnormally low unless it intends to reject it.
156 Mr Howell submitted that Arnold J had misread the Directive as imposing an obligation to investigate “suspect” tenders generally, when it did not, save in cases where the authority was proposing to reject the tender in question. I agree with that submission. In my judgment, despite the difference of wording, there is no difference in substance between the provisions of the Directive and those of the Regulations. The thrust of both provisions is that an authority cannot reject a tender which is abnormally low unless it does certain things in terms of investigating that tender. For present purposes, there is no difference between saying that you shall do certain things before an entitlement to reject arises and saying that you may reject the tender provided you have done certain things.
157 Either way, there is nothing in either provision to support the contention that there is a general duty owed by the authority to investigate so-called “suspect” tenders which appear abnormally low. Nothing in the European Court decisions to which Arnold J refers dictates a different conclusion. In any event, Morrison is only a decision as to what was arguable on an interlocutory basis. Having heard full argument on the point at trial I am quite satisfied that neither the Directive nor the Regulation imposes a duty to investigate so-called suspect tenders generally.
158 It follows that, on the correct interpretation of both the Directive and the Regulation (save in the case of Fourways where the Council did consider the tender abnormally low and was contemplating rejecting the tender at least in part if not totally), the Council was not under a duty generally to investigate so-called “suspect” tenders in circumstances where the Council had no intention of rejecting those tenders. In my judgment, this aspect of Varney’s complaint that the Council was in breach of duty in failing to investigate the tenders other than Fourways fails at the first hurdle.
159 Furthermore, I consider that there is another fundamental obstacle to Varney’s case that the Council was in breach of duty in failing to investigate the other tenders. Although Regulation 30(6) talks in the abstract of an offer which is abnormally low, the Directive refers to tenders which “appear to be abnormally low” which only makes sense as a reference to what “appears” to the relevant authority. In the circumstances, it seems to me that the duty for which Varney contends could only arise where the Council either knows or suspects that the tender in question is abnormally low. Leaving Fourways out of account, it is quite clear on the evidence of Mr Shaw and Mr King (which I accept) that neither of them actually knew or suspected that the other tenders were abnormally low.”
No manifest error
“160 Mr Coppel contended in his cross-examination of Mr Shaw and Mr King and in his submissions that the Council ought to have known or suspected that the other tenders were abnormally low. He submitted that it was a manifest error to have accepted tenders which the Council should have recognised as unsustainable. Alternatively, he submitted that there was a duty to reject such tenders. In terms of what is the correct test in law, I am firmly of the view that the duty for which Varney contends (even if, contrary to the decision I have already indicated, such a duty could arise) cannot arise save in the case where the relevant authority actually knows or suspects that a tender is abnormally low. What it is contended an authority ought to have known or suspected, but did not know or suspect, is not sufficient to impose the duty for which Varney contends. Were it otherwise, an authority would have to investigate all tenders in detail to satisfy itself of the economic viability of each tender, an unrealistic and onerous burden.
163 Mr King explained in his witness statement and in his oral evidence that the tenders other than that of Fourways were not considered abnormally low, because they were consistent with one another and did not deviate from the mean average of all tenders received for the sites for which they had tendered. In other words, the Council adopted an “anomaly threshold”, which is a perfectly permissible approach as a matter of European law: see Impresa Lombardini v ANAS [2001] ECR I-9233, where the European Court held that an authority has a discretion as to what test it uses for identifying what may be an abnormally low tender and that it is permissible to use a comparison with the average of the tenders submitted for the contract as a threshold for determining whether a tender is abnormally low.
164 Mr Coppel attacked the Council for having adopted this mathematical threshold alone and said that the Council should have gone on to investigate the tender price against the likely cost of performing the relevant services. However, in my judgment, there is nothing in either Lombardini or TQ3, upon which Mr Coppel also sought to rely, which suggests that an authority is under a duty to apply a number of criteria or “thresholds” or that other unsuccessful tenderers can come along later and say that the authority should have applied another threshold.”
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NATS (Services) Ltd v Gatwick Airport Ltd [2014] EWHC 3728 (TCC) (Akenhead J)
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.
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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.”
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SRCL Ltd v NHS England [2018] EWHC 1985 (TCC) (Fraser J)
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
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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.
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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.”
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J Varney & Sons Waste Management Ltd v Hertfordshire County Council [2010] EWHC 1404 (QB) (Flaux J)
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EU - CJEU
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Cases C-285/99 and C-286/99 Lombardini & Mantovani
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.
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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.
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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.”
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Cases C-147/06 and C-148/06 SECAP
Region: EU - CJEU
For below-threshold contracts of cross-border interest, Treaty principles preclude national legislation imposing automatic exclusion of abnormally low tenders (based purely on a mathematical formula) without any possibility for the contracting authority to seek explanations and verify the tender; automatic exclusion permissible only where justified by an unduly large number of tenders and coupled with a reasonable threshold
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Case C‑568/13 Azienda Ospedaliero-Universitaria di Careggi-Firenze v Data Medical Service srl
Region: EU - CJEU
A tenderer cannot be automatically excluded because it receives public funding and can offer a price lower than other tenderers; however, in assessing the tender under the abnormally low tender rules, account can be taken of the existence of public funding
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Case C‑367/19 Tax-Fin-Lex
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.
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Case C‑669/20 Veridos
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.”
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Case C-101/22 P Commission v Sopra
Region: EU - CJEU
If an unsuccessful tenderer makes an express written request that clearly seeks the reasons why the successful tender was not considered abnormally low, the contracting authority must provide a detailed response (going beyond a purely internal prima facie “appears/not appears” assessment), so that the tenderer can exercise the right to an effective remedy under Article 47 of the Charter
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Cases C-285/99 and C-286/99 Lombardini & Mantovani
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EU - General Court
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Case T-495/04 Belfass SPRL v Council
Region: EU - General Court
The rules on abnormally low tenders apply not only to price, but, here, to the hours tendered; the contracting authority could not eliminate the applicant on the basis of low hours, without first seeking an explanation
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Case T-121/08 PC-Ware Information Technologies BV v Commission
Region: EU - General Court
Commission was entitled (within its broad margin of assessment) not to treat the successful tender as abnormally low where the applicant’s evidence did not substantiate the alleged abnormally low price; there was no manifest error in not excluding the tender
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Case T-392/15 European Dynamics Luxembourg SA v European Union Agency for Railways
Region: EU - General Court
Contracting authority not required to state explicitly the reasons for accepting a tender that does not appear abnormally low; by accepting the tender, it is implicit that the authority considers that there was no evidence it was abnormally low; but those reasons must be provided if requested
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Case T-161/24 NTT Data Belgique
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.”
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Case T-495/04 Belfass SPRL v Council
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Ireland
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White Mountain Quarries Limited t/a Breedon v Mayo County Council [2024] IEHC 259 (Quinn J)
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).”
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Killaree Lighting Services Limited v Mayo County Council [2024] IEHC 79 (O'Moore J)
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]
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Killaree Lighting Services Limited v Mayo County Council [2025] IECA 7 (Hyland J)
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.”
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Kerrigan Sheanon Newman v Sustainable Energy Authority of Ireland [2026] IEHC 70 (Mulcahy J)
Region: Ireland
In challenge to €75m management agent services contract, Court held that contracting authority conducted a Reg 69 inquiry into an apparently abnormally low tender and no manifest error in conclusion that the winning tender was genuine including in relation to cost breakdown, contractor resources, productivity assumptions, and alleged dependencies on transformation initiatives. The High Court also rejected a claim that the authority accepted a methodology that departed from prescribed requirements.
Re Abnormally Low Tender Claim
8 As regards its pricing claim, KSN’s principal complaints are that Abtran failed, when requested, to provide clear answers regarding the number of personnel it proposed to engage, and that SEAI failed to determine that the productivity assumptions made by Abtran in its tender were unrealistic.
Discussion – the pricing claim
292 From its submissions, the extensive reports exchanged by the experts, and the further oral evidence which they gave, it appears that there are, in substance, four bases on which KSN argues, by reference to that evidence, that SEAI’s acceptance of the Abtran bid as genuine, i.e. not abnormally low, was a manifest error. SEAI suggest that the court should consider the information provided by Abtran in the round, and not focus on individual elements, the approach taken by KSN. When considering whether there has been a manifest error, it is permissible, as KSN suggests, to seek to identify individual errors which undermine confidence in the correctness of the decision. However, in considering whether there has been a manifest error, it would be a mistake to disregard the context in which the error was said to arise.
293 Before discussing those alleged errors, a couple of preliminary observations are merited. As Quinn J noted in White Mountain, a contracting authority is not obliged to reject a tender even where it concludes that it is abnormally low. However, the ISFT here stated in terms that any abnormally low tenders would be rejected.
294 SEAI does not, therefore, rely on any discretion it may have had in law to accept an abnormally low tender. Rather it relies on its margin of discretion in determining whether Abtran’s tender here was in fact abnormally low, i.e. was not genuine. It contends that it was entitled to conclude that it wasn’t abnormally low and that its conclusion wasn’t vitiated by any manifest error.
295 In assessing whether there was a manifest error, the court is not entitled to substitute its view for that of the contracting authority. I am not required, therefore, to assess whether the tender was abnormally low. Rather, I am to assess whether SEAI committed any obvious error in concluding that it was not. As noted by O’Donnell J (as he then was) in Word Perfect Translation Services (No. 3), manifest doesn’t import any “exaggerated description of obviousness”, rather, SEAI’s decision should be annulled where an error has clearly been made. As the General Court put the matter in NTT Data Belgique, the evidence must be sufficient to render the assessments made in the decision “implausible”. As appears from that case (at §47), the onus rests on KSN to establish an error.
296 Assistance on calibrating the test is available from the two Irish decisions regarding abnormally low tenders. In White Mountain, the contracting authority’s decision was annulled because it failed to assess the contractor’s share mechanism, relevant to pricing, and the ability of the tenderer to perform the contract at the tendered price.
297 In Killaree, the Court of Appeal concluded that the contracting authority was entitled to reject a tender as abnormally low, and, in particular, it was not obliged to accept the tenderer’s explanation for items priced at effectively zero in the tender, which was that the tenderer had successfully completed other contracts tendered on the same basis. As the court concluded (at §45) this was “a generic statement that did not in any way discharge the tenderer’s obligation to provide the necessary evidence to allay the contracting authority’s concerns”.
298 The question, therefore, is whether KSN has established that SEAI made a clear error in its assessment of Abtran’s tender in overlooking a key element in its assessment of whether Abtran’s bid was genuine, or in accepting explanations which were clearly inadequate?
Inadequate cost breakdown
299 As appears from above, the most detailed breakdown of Abtran’s costs was provided in its reply dated 29 May 2024. This broke down each task or service into four cost components, direct and indirect labour costs, and direct and indirect non-labour costs, with each element said to include margin. Its earlier response, dated 2 May 2024, had identified four cost categories (people, travel, IT, indirect) and indicated what was included within each cost category.
300 In her reports, Ms O’Connor had compared the information provided by Abtran unfavourably with that provided by KSN. However, as emerged in evidence, Ms O’Connor had operated on the mistaken belief that the KSN breakdown of costs on which she relied had been submitted as part of its tender. It had not. This somewhat undermines Ms O’Connor’s complaint that the level of detail contained in Abtran’s responses was inadequate by reference to what KSN had provided. Ms O’Connor, however, maintained her opinion that inadequate information had been given. In particular, she relied on the fact that the cost breakdown did not include Abtran’s proposed gross margin.
301 There was disputed evidence between Ms O’Connor and Mr Delaney regarding whether this information would ever be provided in a tender. Mr Delaney indicated that this would never be provided to an employer, as it would provide that employer with too much information when seeking to negotiate on price (e.g. in this instance, for a Value Added Service). In his view, a tenderer would endeavour to avoid providing this information. Ms O’Connor accepted that a profit margin would not be included, but argued that a margin for risk should have been disclosed so that SEAI could assess the level of risk which Abtran had allowed for in their pricing.
302 I am unable to agree that the failure to be provided with such a figure fatally undermines SEAI’s assessment of the Abtran tender. There was no agreement between the experts as to whether such a figure would typically be provided. There was certainly no agreement that it was an essential element of a tender such that its failure to include it rendered any assessment of whether a tender was genuine implausible. Although I accept that there is a distinction to be drawn between profit margin and margin for risk, I am not convinced, and the evidence did not establish, that a tenderer would be entitled to withhold the former, but that a tender could not properly be assessed without the latter. It is difficult to understand why that should be so. SEAI never specifically asked for this figure. Ms O’Connor expressly accepted that the information sought by SEAI was appropriate.
303 It was not, therefore, a clear error on the part of SEAI to assess the tender without obtaining detailing of Abtran’s gross margin (or margin for risk). I am not persuaded that it renders SEAI’s conclusion that the bid was genuine implausible or sufficiently undermines confidence in SEAI’s decision to award the Contract to Abtran to justify annulling that decision.
Inadequate information on contractor resource
304 KSN’s complaints on this issue are based on the failure of Abtran to specify what contractor resources it will use to operate the Contract despite express requests from SEAI for this information. Therefore, the complaint has two components. First, that it was a manifest error for SEAI to conclude its assessment without having obtained information that it had requested. And second, and in any event, it was a manifest error for SEAI to conclude that the tender was not abnormally low without this information.
305 The first of these can readily be dismissed. Abtran did provide a response to the request for this information and explained why it was not possible at that time to specify the number of contractors which it would be required to use, because it depended on its uberisation proposal. Abtran also referred to resources “flexing” to meet demand. The response can readily be distinguished from the generic reassurances given in Killaree, which did not address the substance of the query. Here, the tenderer engaged with the request and explained why, by reference to its proposal, it couldn’t give a definitive answer to the question posed. If KSN is not correct about the second aspect of its argument, SEAI was entitled to accept that explanation. Although KSN sought to argue in oral submissions that SEAI’s error was thinking that it had been provided with this information, this is not correct. In this regard, KSN referred to Philip Lee’s letter of 21 June 2024, quoted above. There is nothing in that letter, or anything else, to suggest that SEAI erred in assessing the Abtran bid on the basis of information which it thought it had but didn’t.
306 In the circumstances, SEAI asked an appropriate question, seeking relevant detail. It was given a reasoned response, which confirmed that the costs of contractors had been accounted for, although the precise number of contractors could not be specified at that time, and didn’t need to be because, as stated in its reply of 10 June 2024, all costs for services were included in its tendered rates “whether performed by permanent staff or contractors”. Unless the tender could not have been adequately assessed without the number being specified, KSN’s second argument, then the acceptance of this explanation falls within the discretion afforded to a contracting authority when carrying out its assessment.
307 Could the question of whether the tender was abnormally low be assessed without the number of contractors being specified? The argument, expressed with admirable clarity by Ms O’Connor in her final report, is superficially attractive: “if we do not know the number of FTEs, we cannot know whether the tendered costs are sufficient to cover the outlay required to fund the core services”. However, I am not satisfied that there was any manifest error by SEAI.
308 The information provided by Abtran indicated the number of field workers which would be allocated to the core services. Abtran did not specify how many would provide each individual service. In this regard, it will be recalled that Abtran proposed that some services would be combined, and therefore, some individual field workers will of necessity provide more than one service: based on that proposal – which I have already concluded was compliant with the SoR – providing a global figure for the number of field workers was reasonable.
309 Abtran also specified that it hoped to uberise its service, engaging skilled workers on an ad hoc basis to provide services. And that in the event of increased demand, it would flex, engaging additional contractor resources.
310 Critically, it explained that all costs for services whether provided by contractors or permanent employees were incorporated in the unit prices provided: put otherwise, from SEAI’s perspective, it will make no difference whether a service is provided by a contractor or a permanent employee, it will face the same price. This is consistent with the information provided by Abtran in relation to non-domestic inspectors.
311 Abtran provided a figure for the total field resource it had allowed for in its tender in its reply of 5 June 2024, giving a figure of [REDACTED] FTE. It referenced that these numbers would flex to meet demand, and that it would seek to employ field workers who could perform multiple roles. It then states:
Please note that these totals exclude contract resources which will employed to manage peaks in demand or to cover short term requirements.
312 KSN appears to have interpreted the information provided as suggesting that Abtran has included the cost of its permanent staff in the tender, but has excluded a significant additional and unquantified cost, that of the contractors it also requires to deliver the services. I do not believe that that is a correct reading of the information, or consistent with what Abtran expressly stated throughout the Regulation 69 inquiry process.
313 Nowhere does Abtran indicate that there will be an additional cost for contractors which has not been provided for in its tender. It repeatedly stated that contractor costs were included. What can be understood from the responses given in the Regulation 69 inquiry is that Abtran was unclear what portion of the services will be provided by permanent employees and what portion will be provided by contractors, for the various reasons explained, but that the tender prices include whatever costs may be associated with engaging contractors. In this regard, although it was agreed that the price per task of an individual contractor will typically be higher than the price of an individual permanent employee doing the same task, it is Abtran’s intention to use contractors to improve efficiency and lower costs. Thus, the possible use of additional contractor resources does not necessarily translate into increased cost, or increased risk for SEAI, as KSN seems to assume, still less does it suggest that the Abtran bid was not genuine.
314 Nor does the reference above to employing contract resources to manage peaks and cover short term requirements suggest an additional unquantified cost, not accounted for in the tender. In context, it means no more than that the figure of [REDACTED] FTE, itself an estimate, may not reflect the required resources at any given time.
315 In its letter of 21 June 2024, Philip Lee, on behalf of SEAI, stated as follows:
Our client was satisfied that the salary costs included in the Successful Tenderer’s tendered price were consistent with current market salaries for the various roles included in its tender.
The Successful Tenderer provided a resourcing profile for the term of the contract with confirmation that all contractor costs were included in the tendered rates. This included a detailed explanation of the basis on which these resourcing numbers were established and how the Successful Tenderer will deliver the services at the tendered price.
316 I am not satisfied that KSN has identified any clear error by SEAI in reaching such a conclusion by reference to the absence of a contractor resource profile.
317 KSN’s counsel asked, rhetorically, what was the point of asking for the information if the tender could be assessed without it, but it cannot be the case that by asking a question in a Regulation 69 inquiry, a contracting authority trammels its discretion to decide whether a bid is genuine in the absence of a direct answer to that question. Here, in any event, there was an answer, an explanation why a precise figure couldn’t be given. It was within SEAI’s discretion to determine whether that explanation meant that the bid was not genuine, and there was no manifest error by SEAI in concluding that it was.
318 The contractor resource required to complete the contract is, of course, related to the productivity assumptions which form the basis of the tender, as acknowledged by Mr Delaney in his reports. Put otherwise, if, as KSN suggests, it would simply be impossible for Abtran to complete the services required in the manner required with the resources indicated in the tender, then that might suggest that there were additional resources required but not allowed for and assessed, either due to the failure to provide a contractor resource profile, or because the number of FTEs required had been underestimated. It is KSN’s productivity claim I consider next.
Inadequate assessment of productivity
319 KSN’s claim under this head is straightforward. The tender document provides for an indicative number of each service to be provided. Each service, be it survey, pre-BER assessment, inspection or other takes a certain amount of time, including travel time. On Abtran’s figures, KSN contends, there simply isn’t the time to complete the tasks required in the manner prescribed in the SoR. If this were established, it would in my view, have constituted a manifest error on the part of SEAI to have concluded that the bid was genuine despite the fact that it could not be performed with the resources proposed.
320 It has not, however, been established and KSN’s argument is based on at least three misinterpretations by it of the figures provided by Abtran.
321 As above, I will concentrate on the example of surveys. On Ms O’Connor’s analysis, based on Abtran’s estimate of how many surveys its surveyors could complete in 1 week, each survey would have to be completed in 1.72 hours. She says that this is clearly inadequate.
322 Ms O’Connor’s calculation, explained above, is as follows. The tender estimates 8700 surveys per annum. Abtran estimates that each FTE will complete [REDACTED] surveys per annum. Therefore, Ms O’Connor calculates, Abtran will have [REDACTED] FTE to conduct surveys.
323 Ms O’Connor then takes that calculation of FTEs and multiplies it by the number of hours an individual employee might be expected to work in a year, which she calculates at 1650 hours for the total number of hours worked by [REDACTED] FTEs. She then divides that by the total number of surveys to be conducted in a year, to calculate 1.718 hours per survey.
324 As Mr Delaney indicates in his third report, changing any of these variables may have a significant impact. In particular, he suggests that Ms O’Connor’s assumption of 1650 hours per FTE is incorrect. I agree.
325 As noted above, there was some discussion and confusion regarding whether FTE referred to full-time employee or full-time equivalent. In the SoR, the abbreviation FTE is defined as meaning full-time equivalent. This can be a significant distinction. A full-time equivalent is not a real person, entitled to holidays, sick days, etc. Rather it is a notional employee, a means of calculating the total resources available for a task. In this context, it was agreed, Abtran expressly stated that its full-time equivalent calculations were done on the basis of a 52-week working year. Of course, no individual employee could be required to work a 52-week year. But in calculating total resources, it is entirely permissible to calculate what is required based on a notional full-time person working 52 weeks. This is what Mr Delaney contended that Abtran had done, and how I interpret the evidence.
326 As Mr Delaney illustrated in his evidence, assuming a 52-week working year, [REDACTED] FTEs would have had 2.031 hours per survey.
327 The second error made by Ms O’Connor is in her calculation of [REDACTED] FTEs for surveys, and a total of [REDACTED] FTE for all field work. This is based on the total number of surveys which it is proposed each FTE will do, based on an estimate of [REDACTED] per week. However, this ignores the fact that Abtran made clear that the figure of [REDACTED] per week was not intended to reflect the rate at the start of the Contract, but rather over the lifetime of the Contract at a time when its efficiency will, if its transformation initiatives (including the combining of services and uberisation) deliver the efficiencies Abtran anticipates, have improved. Ms O’Connor accepted that she did not take this into account.
328 In fact, at no time has Abtran suggested that it will commence the Contract with [REDACTED] field workers, or [REDACTED] surveyors. As Ms O’Connor points out, Abtran has provided different figures for its total number of field workers in different documents, depending on what is incorporated within the aggregate figures, but at no point did it suggest that the total number of field workers will be as low as [REDACTED]. The only place Ms O’Connor identifies a separate figure for FTE surveyors, as reflected in her table, the figure provided is [REDACTED]. On a quick calculation, [REDACTED] FTEs at 52 weeks per annum allows 2.24 hours per survey.
329 Notably, Abtran’s figure of [REDACTED] for field workers (albeit it includes a clerk of work and non-domestic inspectors) is not greatly different than Ms O’Connor’s figure for the total number of field workers allowed for in KSN’s tender, 46 FTEs, as reported at §71 of her first report.
330 The third error is alluded to above, but is difficult to quantify. Ms O’Connor assumed that the figures provided by Abtran of [REDACTED] surveys per annum (or [REDACTED] per week) per FTE was a year one figure. However, as Abtran made clear, that was a figure given over the whole life of the Contract, on the assumption that it would become more efficient at delivering services over the course of the Contract as its transformation initiatives took hold. Thus, Abtran did not anticipate that it would, on the figures above, be carrying out surveys in 2.24 hours from day one of the Contract. Rather, this is what it hoped to achieve on average over the life of the Contract.
331 This is not to suggest that there is any evidence that SEAI carried out these calculations as part of its assessment. Indeed, KSN did not argue that it was required to show that it had. Rather, it contends that SEAI erred in accepting a tender which was based on unachievable productivity rates. Has KSN identified a manifest error in this regard? I think not.
332 Ms O’Connor’s evidence regarding how long surveys took was based on a very limited survey, as she accepted, but also her experience and an ability to make an assessment of what was required. I accept that her experience entitled her to comment on the length of time a survey of the type described in the SoR might typically take. She was, however, appropriately reluctant to identify a precise figure, although in her first report, she calculated that 2.78 hours per survey was allowed for on KSN’s figures. Her oral evidence, therefore, was limited to saying that, on the basis of the current model of operations, 1.72 hours was insufficient but, at least implicitly, 2.78 hours was enough.
333 Mr Delaney’s evidence was even more limited. He attended just one survey in what appears from Ms O’Connor’s replying report to have been a much larger than average house. He did not contend that he had any experience of conducting surveys or was in any position to offer an opinion on an appropriate length of time. The survey itself took 1.75 hours excluding travel (and possibly writing up time). One can surmise that a survey of an average house might take somewhat less time.
334 Abtran’s figures did not imply an average time of 1.72 hours to complete surveys, for the reasons stated above. Properly understood, considerably more time was allowed, even assuming that there were no room for efficiencies in how surveys were carried out. Of course, a variety of efficiencies were proposed by Abtran, including the combining of services and its uberisation initiative.
335 It will be recalled that in its letter of 7 June 2024, SEAI expressly queried how Abtran could manage the survey workload in light of SEAI guidance of 2 hours per survey for an average 3-bedroom house. Abtran explained its position regarding averaging over the life of the contract and confirmed that it had validated its figures with surveyors who had worked with SEAI and with the market. Approaching the evidence in the manner suggested in NTT Data Belgique, I am satisfied that SEAI was entitled to accept that explanation based on the totality of the information provided by Abtran, and that KSN has not adduced sufficient evidence to render SEAI’s assessment that the tender was genuine implausible on this basis.
336 As an aside, I should note that if Ms O’Connor has underestimated the resources which Abtran’s tender indicated would be made available under the Contract, she has likely overestimated the salaries proposed by it. However, at no point did KSN argue that there was any infirmity in the tender by reference to the salaries proposed. On Ms O’Connor’s analysis, Abtran proposed rates 50% above advertised market rates. There was, therefore, considerable scope for overestimation without calling in to question the genuineness of Abtran’s bid.
Reliance on dependencies
337 The final complaint made is that SEAI erred in accepting a tender reliant on dependencies. In this regard, we return to some of the issues arising under the methodology claim, Abtran’s proposal to combine services and for uberisation. KSN contends, and Ms O’Connor’s evidence is, to the effect that, Abtran’s bid was reliant on the success of these uncertain proposals and, in particular, its uberisation proposal relied on a successful pilot.
338 It is true that SEAI accepted a tender in which the precise means by which the successful tenderer would provide the service would depend on various factors such as how successfully it could combine services, and how well its proposed uberisation model worked, as well as the success of its other transformation initiatives. But that itself does not render the award of the tender unlawful. Indeed, KSN confirmed that it made no complaint about many of what Abtran characterised as “transformation initiatives” (Transcript, Day 3, pp. 5 – 6), and Ms O’Connor confirmed that there was nothing wrong with tendering on the basis that efficiencies would be achieved and passing on the benefits of those efficiencies to the employer (Transcript Day 2, pp. 21 – 22). KSN’s complaint is that Abtran’s price was dependent on the success of these initiatives. Abtran made abundantly clear that it was not.
339 As set out above, I have concluded that it was permissible for Abtran to tender on the basis that it would combine services or seek to uberise its service provision. It was entitled, therefore, to take the view, that pursuing permissible options would enable it to achieve cost efficiencies. Ms O’Connor accepted as much in her evidence. Abtran did not, however, suggest that the cost of its services to SEAI will depend on how successful those initiatives are. In Mr Delaney’s evidence, he referred to Abtran having “sharpened its pencil” when preparing its tender, suggesting that it appeared to him that it sought to be as competitive as possible. This seems to me fair comment. There is no evidence, however, on which I could conclude that Abtran proposed, or SEAI accepted, the tender on the basis that the price would depend on how well Abtran’s transformation initiatives played out. There was therefore no error, still less a manifest error, by SEAI in accepting that the tender was a genuine bid and was not abnormally low, just because Abtran priced its bid on the basis of achieving efficiencies which were not certain to arise.
340 In the circumstances, KSN has failed to establish any manifest error by SEAI in its determination that Abtran’s bid was genuine and was not abnormally low.
Conclusion on the pricing claim
341 KSN has failed to establish that SEAI’s decision conclusion that Abtran’s tender was not abnormally low was implausible or that it made a clear error in so concluding. SEAI was entitled to conclude that Abtran had adequately explained its costs and proposed resources. The evidence does not establish that there was a clear error by SEAI in accepting that Abtran could perform the contract with the resources proposed. There is no evidence that Abtran proposed or SEAI accepted a bid where the price was dependent on the success or otherwise of transformation initiatives proposed by Abtran.
342 In the circumstances, I reject SEAI’s claim that there was a manifest error in SEAI’s assessment of whether Abtran’s tender was abnormally low within the meaning of Regulation 69.
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White Mountain Quarries Limited t/a Breedon v Mayo County Council [2024] IEHC 259 (Quinn J)
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Northern Ireland
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F P McCann Ltd v Department for Regional Development [2016] NICh 12 (Colton J)
Region: Northern Ireland
Plaintiff's tender for road construction contract wrongfully rejected as being abnormally low where plaintiff was not given an opportunity to provide explanations; plaintiff entitled to damages
“64 I am concerned that matters which were expressly excluded as contributing to the recommendation in fact did or may well have contributed to the actual decision taken by the defendant to reject the plaintiff’s bid … A consideration of this material leads me to the view that the rates for the core management team, the fee and drainage are likely to have contributed to the Board’s decision. If one considers the bullet points at the start of the executive summary justifying the conclusion that BBMC’s tender price is abnormally low reference is made to “an overall comparative analysis against the other tender prices” and “a comparative analysis against the Chandler KBS benchmark” which was completed prior to the receipt of tenders. Clearly the matters to which I have referred must have been included in this overall analysis. I also formed the view that the Chandler KBS benchmark was of little value to the exercise since all of the tenders were significantly lower than the benchmark. Many of the example projects used to assist in compiling its benchmark where largely based in Wales or the Republic of Ireland and provided little assistance as a comparator. Furthermore, it is clear that specific reliance is placed on a “comparative analysis of drainage, earthworks, pavements and structures” notwithstanding the fact that drainage was excluded as a reason for the bid being abnormally low according to the evidence of the defendant.
73 I am concerned that BBMC were not given the opportunity to explain matters which ultimately contributed to the decision to reject the tender. Under Regulation 30(6)(a) before an authority can come to any decision that a tender is “abnormally low” it must request “in writing an explanation of the offer or of those parts which it considers contribute to the offer being abnormally low”.
74 Following on from concern number one above it is clear that both tender clarification requests focussed on the areas of drainage, earthworks, pavements and structures. No clarification was sought in respect of the fee and core management team prices which as I have indicated above, in my view, at the very least could have and probably did contribute to the decision to reject the tender. This constitutes a clear breach of the requirements of the regulations.
76 The department failed to comply with its obligation to verify the offer or parts of the offer which were allegedly abnormally low. This obligation is an express requirement of Regulation 30(6)(c).
120 I have come to the view that there was a significant chance that the defendant’s decision would have been different had it not been guilty of the breaches to which I have referred. I have therefore come to the conclusion that the loss to the plaintiff is in effect a loss of chance to obtain the contract in accordance with the well-known Chaplin v Hicks [1911] 2 KB 786 CA principles.”
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Fox Building & Engineering Ltd [2015] NIQB 71 (Weatherup J)
Region: Northern Ireland
Defendant ordered to provide information (as to the extent of nominal bidding) rather than disclosure of documents where reasonably arguable case on abnormally low bidding but where confidentiality concerns arose ordered to allow the claimant to test whether the alleged nominal bidding basis was made out where there was a reasonably arguable claim framed around transparency and the permissibility/assessment of widespread nominal (“penny”) pricing
“5 The tender documents contained a provision in relation to abnormally low
bids … It was provided that any tender price that was more than 15% lower than the adjusted average price and exceeded the proximity margin, that is, was more than 1% lower than the lowest qualifying price, would be deemed to be abnormally low and may be excluded from the competition.24 I am satisfied that it is reasonably arguable that adopting nominal bidding to an extent that creates unsustainable contracts is a breach of the obligations arising under the procurement scheme and a method of defeating the competitive tendering process which the Directive and the Regulations are designed to protect. Further I am satisfied that it is reasonably arguable that the approach to abnormally low bidding adopted by the defendant was not compatible with the principle of transparency.
25 The information about the assessment of the tenders is uniquely within the province of the defendant. The plaintiff identifies the basis on which they say that their complaint has a legal foundation. The plaintiff also identifies the material that is relevant to the complaint, not by reference to what appears in their schedule, which was much too wide, but in relation to the two matters identified above.
26 If, by the disclosure of the information which is peculiarly within the knowledge of the defendant, the plaintiff’s complaint about extensive nominal pricing can be shown to be incorrect, then the case that the plaintiff makes cannot be sustained. The notice parties raise the issue of confidentiality and that is a legitimate concern. Indeed, Mr Dunlop goes further by indicating bad faith on the part of the plaintiff in seeking to use a challenge to the tendering process to gain commercial advantage for the purposes of future bidding because of course these parties are commercial rivals and will remain so in respect of further tenders. The plaintiff, by reason of the commercial sensitivities has agreed to a confidentiality ring and also to a restriction on the information sought. The plaintiff seeks a record of the overall level of nominal bidding or a record of the level of nominal bidding within the nine bidding categories.
27 The modification of the plaintiff’s application means that it becomes not so much a discovery application but rather a mechanism for addressing the confidentiality aspect by requiring the defendant to produce a statement setting out the extent of the nominal bidding that actually took place rather than the production of the documents making up the bid. That is an appropriate approach to securing disclosure of the required information while addressing the issue of the commercial sensitivities. This becomes a request for information in lieu of discovery. I find this a useful way of dealing with the issue. The proposed disclosure by statement also provides the prospect of putting an end to the plaintiff’s challenge if it can be shown that the basis of that challenge grounded in nominal bidding is without foundation. I will direct disclosure of the relevant information. The exercise may require greater definition of the information to be provided by the defendant and the manner in which it is to be provided. In the first place the parties may seek to determine if they can agree a format by which the necessary information could be provided to establish the extent of nominal bidding.”
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TES Group Ltd v Northern Ireland Water Limited [2020] NIQB 62 (Horner J)
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.”
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F P McCann Ltd v Department for Regional Development [2016] NICh 12 (Colton J)
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]
The duties of a contracting authority can be summarised in four steps
“[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]
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]
The authority should ask for details of individual prices that seem suspect
“[The] applicant recalls that the Court held in Case T‑4/01 Renco v Council [2003] ECR II‑171, paragraph 76, that ‘the Council … must examine the reliability and seriousness of the tenders which it considers to be generally suspect, which necessarily means that it must ask, if appropriate, for details of the individual prices which seem suspect to it, a fortiori when there are many of them’ and that, in addition, ‘the fact that the applicant’s tender was considered to conform to the contract documents did not relieve the Council of its obligation, under the same article, to check the prices of a tender if doubts arose as to their reliability during the examination of the tenders and after the initial assessment of their conformity’.” Case T-148/04 TQ3 Travel Solutions Belgium SA v Commission [31]
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 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]
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])
The English Courts appear to have imposed less stringent requirements on contracting authorities to investigate abnormally low tenders; in particular by stating that a duty to investigate arises only if the contracting authority actually considers that the tender appears abnormally and considers that the tender ought to be rejected for this reason
“I consider that 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 it is not required to do so” SRCL Ltd v NHS England [2018] EWHC 1985 (TCC), [193]
“In relation to Renco, Mr Howell submitted that it was not a case where the European Court was saying that there was a duty to investigate all tenders which appeared abnormally low irrespective of whether they were going to be rejected. In my judgment that submission is correct.
Mr Howell submitted that Arnold J had misread the Directive as imposing an obligation to investigate “suspect” tenders generally, when it did not, save in cases where the authority was proposing to reject the tender in question. I agree with that submission.
Either way, there is nothing in either provision to support the contention that there is a general duty owed by the authority to investigate so-called “suspect” tenders which appear abnormally low” J Varney & Sons Waste Management Ltd v Hertfordshire County Council [2010] EWHC 1404 (QB) [155]-[157]
The EU authorities do not appear to support this narrower reading of the duty to investigate
See, e.g., the review of the EU case law in Killaree Lighting Services Limited v Mayo County Council [2024] IEHC 79 at [97]-[138]
It is apparent however that some of the EU cases had made reference to situations where the contracting authority was contemplating the elimination of a tender
“The examination procedure must be applied whenever the awarding authority is contemplating the elimination of tenders because they are abnormally low in relation to the transaction. Consequently, whatever the threshold for the commencement of that procedure may be, tenderers can be sure they will not be disqualified from the award of the contract without first having the opportunity of furnishing explanations regarding the genuine nature of their tender” Case 103/88 Fratelli Costanzo [26]