Abnormally Low Bid

An Abnormally Low Bid is a submitted price that appears implausibly low relative to the buyer's independent cost estimate, the market rate, or the other bids received, triggering a mandatory enquiry before the buyer can either accept or reject it.

What is an Abnormally Low Bid?

Most MDB and UN procurement rules require buyers to investigate any bid that is significantly below the estimated contract value or below the range of competing offers. The investigation involves requesting a written explanation from the bidder: a breakdown of the price, the method by which the work will be done at that cost, the technical solutions proposed, and any exceptional conditions the firm has identified. If the explanation is satisfactory, the low bid must be accepted. If the buyer concludes after the enquiry that the price is genuinely inadequate to perform the contract, the bid can be rejected as abnormally low on documented, substantiated grounds.

The purpose of the rule is protective in two directions. It protects buyers from awarding to a supplier who will default mid-contract or cut corners on quality when they discover the margin cannot support proper performance. It also protects legitimate low-price bidders from arbitrary rejection: a bidder with genuine cost advantages, access to cheaper materials, or a more efficient method cannot be rejected simply because rivals charge more. The buyer must give the low bidder the opportunity to explain before any rejection.

Why Abnormally Low Bid matters for bidders

If you are a genuinely low-cost competitor, be ready to substantiate your price in writing. Prepare a detailed cost breakdown, document your supply chain advantages, and explain your methodology clearly, because an unexplained low bid invites rejection even if the price is entirely achievable. If you receive a request for clarification of your price, treat it seriously: a vague or incomplete response weakens your position. On the other side, if a competitor's price strikes you as implausibly low, that information is useful market intelligence but it is the buyer's responsibility, not yours, to investigate and act.

FAQ

Is there a defined threshold that triggers an abnormally low bid investigation?

There is no universal percentage threshold. Some procurement rules use a formula such as the bid being more than 15 to 20 percent below the average of other bids or the estimate, but the actual rule depends on the specific procurement framework. The trigger criterion is always published in the bidding documents.

Can a buyer reject an abnormally low bid without asking for an explanation?

No. Under MDB rules and most procurement frameworks, the buyer must first request a written explanation and consider the response before making a rejection decision. Rejecting without the enquiry step is a procedural breach.

Does the abnormally low bid rule apply to consulting services?

It applies primarily to goods and works contracts where price is the ranking criterion. In quality-weighted consulting methods, a very low fee is captured differently: it affects the financial score in the combined calculation but is not subject to the same abnormally-low investigation procedure.