Abnormally Low Tender (EU)

Abnormally Low Tender is the term used in EU public procurement law for a tender whose price or cost is so low that it calls into question the ability of the tenderer to perform the contract under the conditions offered. EU contracting authorities are legally required to investigate before rejecting such a tender.

What is an Abnormally Low Tender under EU rules?

The EU Procurement Directives (2014/24/EU for public contracts and 2014/25/EU for utilities) require contracting authorities to ask tenderers to explain their price or cost in writing when the tender appears abnormally low. The tenderer is entitled to demonstrate that the price is genuine, citing factors such as innovative production methods, favourable supply agreements, technical solutions, or exceptionally efficient operations. If the authority determines after the enquiry that the price is inadequate, it may reject the tender, but it must state its reasons in writing.

The regime shares the same protective rationale as the abnormally-low-bid concept used in MDB procurement: avoid contract failures that harm service delivery while protecting legitimate low-cost competitors. Under meat-most-economically-advantageous-tender evaluation, where quality also carries weight, an abnormally low tender might score well technically but still trigger a financial investigation before award. One additional trigger specific to EU rules is state-aid: if a tenderer's low price is supported by unlawful government subsidies, the contracting authority must reject the tender if the tenderer cannot disprove the subsidy.

Why Abnormally Low Tender rules matter for bidders

If you receive a written request to explain your price from an EU contracting authority, respond thoroughly. Provide a line-item cost breakdown, explain your supply chain, document any exceptional efficiencies, and confirm that wages and working conditions comply with applicable law. A credible, detailed explanation preserves your bid; a thin or delayed response risks rejection on the grounds of inadequate substantiation. Competitive pricing is a strength, not a liability, as long as you can demonstrate it is achievable at the price you quoted.

FAQ

Is there an EU-wide percentage below which a tender is automatically considered abnormally low?

No. The EU Directives do not set a fixed percentage threshold. The assessment is contextual: authorities consider the tender in relation to the estimated value, the range of other tenders received, and market conditions. Some member states publish national guidance thresholds, but the EU framework requires case-by-case judgement.

What must the contracting authority consider when evaluating the explanation?

The authority must consider the economics of the production process, technical solutions chosen, any exceptionally favourable conditions available to the tenderer, the originality of the works, compliance with environmental and social law, and whether the tenderer has received state aid.

Can a tenderer challenge a rejection for being abnormally low?

Yes. Tenderers may challenge the rejection through the review mechanisms available under national law implementing the EU Directives, or through the contracting authority's own internal review process.