Abnormally Low Tender

An Abnormally Low Tender is a submission whose price or cost appears to be so low that it raises serious questions about whether the bidder can deliver the contract at that price while meeting all legal, environmental, and contractual obligations. EU procurement law does not permit a contracting authority to simply reject such a tender without first investigating.

What is an Abnormally Low Tender?

Article 69 of Directive 2014/24/EU establishes the abnormally low tender framework. Where a tender appears abnormally low in relation to the works, supplies, or services, the contracting authority must require the tenderer to explain the price or costs proposed.

The directive does not define what makes a tender "abnormally" low. There is no prescribed formula or threshold percentage below market rates that triggers the obligation automatically, though some member states have introduced national guidelines or formulae to help authorities identify candidates for investigation. The key is whether the price raises a genuine concern about deliverability, not simply whether it is lower than competitors.

The explanation requested from the bidder may cover:

• The economics of the manufacturing process, services provided, or construction method
• The technical solutions chosen or any exceptionally favourable conditions available to the bidder (proprietary access, scale, patents)
• The originality of the proposed approach
• Compliance with applicable obligations in the fields of environmental, social, and labour law, including those applicable to subcontractors
• The possibility of State aid received by the bidder

The contracting authority must assess the explanation in consultation with the tenderer. If the authority, after verification, concludes that the tender is genuinely abnormally low because it does not comply with applicable mandatory legal requirements (particularly labour, environmental, or social law), it must reject the tender. Rejection is also available, though not mandatory, where the explanation is inadequate.

Notably, if the investigation reveals that the low price results from State aid that does not comply with EU State aid rules, the contracting authority must reject the tender and notify the European Commission.

Why Abnormally Low Tender rules matter for bidders

The abnormally low tender rules cut both ways. As a competitive bidder, you may submit an ambitious price that triggers an investigation by the authority. Being prepared for this inquiry with a clear, documented explanation of how you will deliver at that price is essential. Common legitimate justifications include proprietary technology that reduces delivery costs, economies of scale from existing infrastructure, or favourable supply chain arrangements.

Equally, if a competitor submits a price that appears to undercut the market by a margin that cannot be explained by legitimate commercial advantages, you may draw this to the contracting authority's attention. Most European procurement rules permit interested parties to flag concerns about apparent abnormally low tenders to the contracting authority, though the authority retains discretion on whether and how to investigate.

Bidders in labour-intensive sectors (construction, facilities management, cleaning, security) should be particularly prepared for scrutiny. Authorities are increasingly alert to bids that appear to rely on non-compliant labour practices or wage levels below legal minimums as the mechanism for achieving a low price.

Example

A Romanian regional authority procures road maintenance services. Three bids are received. The lowest bid is 38% below the next-lowest bid and 45% below the authority's internal estimate. The authority issues an information request under Article 69. The lowest bidder explains that it owns its road maintenance plant outright (avoiding depreciation and hire costs), has a long-term aggregate supply agreement that locks in below-market material costs, and uses a workforce paid at national minimum wage rather than the industry collective agreement rate. The authority accepts the plant and material cost explanations but concludes that non-compliance with the collective agreement means the tender must be rejected on labour law grounds.

Frequently Asked Questions

Is there a standard EU formula for identifying abnormally low tenders?

No universal EU formula exists. The Commission has published guidance noting that some member states use arithmetic benchmarks (for example, a bid more than 20% below the average of all bids, or more than 15% below the contracting authority's cost estimate) as a trigger for investigation. These are indicators, not legal thresholds. The authority retains discretion to investigate any bid that raises genuine concern.

Can a bidder be rejected immediately for an abnormally low price?

No. Article 69 requires the authority to request an explanation before any rejection can occur. Bypassing this step and rejecting the tender without investigation would itself be unlawful and would expose the authority to challenge by the affected bidder.

What happens if the lowest bidder cannot justify its price?

If the explanation provided is inadequate or reveals non-compliance with mandatory obligations, the authority may reject the tender. The contract is then considered for the next-ranked compliant tender. If the next bid also appears abnormally low, the authority must repeat the investigation process.