UK: Too Good To Be True? Abnormally Low Tenders In Public Procurement

Last Updated: 14 August 2013
Article by David Gollancz

Abnormally low tenders ("ALTs") create serious risks – as was demonstrated by the collapse of Connaught plc in September 2010 – but the law about them is ambiguous. This article sets out the headline issues and arguments1.

What does the legislation say?

Article 55(2) of Directive 2004/18/EC and Regulation 30(6) – (9) of the Public Contracts Regulations 2006 provide that a contracting authority ('CA') may (not must) reject an ALT, but only after the CA has given the tenderer an opportunity to explain its tender2.

The Directive refers to tenders which 'appear to be' abnormally low; the Regulations to a tender which 'is' abnormally low. Otherwise the two provisions are, despite some differences in wording, the same in effect. 'Abnormally low' is not defined.

It has been argued (see for example Morrison Facilities Services Ltd. v Norwich City Council [2010] EWHC 487) that, whatever the legislation says on its face, it means that CAs are required to identify and investigate ALTs, regardless of whether they intend to reject them.

That position appears to be supported by the judgment in joined cases Lombardini and Mantovani Case C-285/99 [2001] ECR I-9233, in which the European Court said:

"...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."

However, it is apparent from the context that the Court was not in that case considering whether there is a primary duty to identify and examine ALTs, but expanding on its previous observation that:

"It is essential that each tenderer suspected of submitting an abnormally low tender should have the opportunity effectively to state his point of view in that respect."

Certainly the legislation does not expressly impose such an obligation on the CA. Nor – as appears to be acknowledged by the judgment in Lombardini and Mantovani – does it require the CA to reject an ALT even if the tenderer cannot show that it is economically viable3.

That construction is supported by the fact that the European Commission, when drafting the Directive, had before it the Opinion of the Economic and Social Committee of the European Council4, which proposed that:

"In the case of abnormally low should be stipulated that contracting authorities are to examine tenders which seem to be abnormally low...It should be clearly stated that the tenders in question are to be rejected if adequate justification is not forthcoming."

The Commission did not implement that recommendation and it must be supposed that it did not wish to impose those obligations.

What is the provision for? It appears that originally it was intended – like procurement law generally – to prevent national preference, by protecting tenderers from having their tenders unfairly rejected. If (for example) a German company could undercut a Dutch one, on the basis of lower costs or more efficient processes, its tender should not be rejected merely because its price was surprisingly low.

However, the provision has come to be seen as protecting CAs from tenderers winning contracts with unsustainable prices; the risk being that the tenderer will re-negotiate prices after award, oppress their workforce or subcontractors, or cut corners in performance. The European Commission has stated that this is a particular problem in the construction industry5. It has been suggested too that it prevents 'predatory pricing', where a dominant undertaking drives efficient competitors out of the market by absorbing losses.

Who can enforce the obligations? A tenderer who submits an ALT can enforce the CA's obligation to investigate before rejecting it.

Can a competitor which has submitted a realistic tender enforce any obligation against the CA, for example either to investigate, or, having investigated, to reject the ALT?

That will depend on the purpose of the legislation: if it is there only to protect low tenderers from unfair exclusion and CAs from being forced to accept non-viable tenders, there is no reason why other tenderers should be able to enforce the provision.

But if it is intended also to protect fair competition, arguably other tenderers should be able to enforce6 – particularly if it can be argued that an economically unreliable tender cannot, by definition, be the most economically advantageous ('MEAT').

What have the cases said?

The cases in the European Court assist very little: essentially they have all re-emphasised that an ALT cannot be rejected unless the tenderer has been afforded a genuine chance to justify its tender7.

They do make it tolerably clear that an ALT is one which raises the suspicion that the tenderer will not be able to deliver the contract on the terms tendered, and they say explicitly that there is no universal rule to determine whether a tender is abnormally low. In all the cases, the court has treated the baseline for comparison as the average of other compliant tenders. That may be because, in those cases, such a definition was set out in domestic legislation. It seems clear though that comparison with other tenders cannot be the only criterion for identifying an ALT.

If the definition of 'abnormally low' is 'too low to be economically sustainable', the majority of tenders might be abnormally low and a sole higher tender might be the only reliable offer.

One domestic case does tackle two of the thornier issues arising from the legislation. In J Varney & Sons Waste Management Limited v Hertfordshire County Council [2010] EWHC 1404 (QB), Flaux J first concluded (expressly disagreeing with Arnold J in Morrison) that "neither the Directive nor the Regulation imposes a duty to investigate so-called suspect tenders".

Secondly, Flaux J noted that the Directive applies where a tender 'appears' abnormally low, where the Regulations refer to a tender which 'is' abnormally low. Applying the principle that, EU legislation prevails over inconsistent domestic law, he concluded that such duty as does exist could only arise where the contracting authority "actually knows or suspects" that the tender is abnormally low. Varney was appealed but not on these issues, so Flaux J's robust findings stand, but as first instance decisions only.

In the author's view it makes no practical sense to say that the obligation to investigate (if such a duty exists) arises only after the CA has formed the intention to exclude the EO. Until the CA has investigated the tender it is not in a position to form such an intention.

The rational sequence of events – at least where the basis of award is the MEAT– is that the CA identifies a tender as abnormally low; investigates it; then forms the intention to exclude it.

However, the CA is entitled to accept an ALT if it wishes – for example, in a short contract for a non-essential service, the CA might decide that the benefit of a low price outweighed the risk that the contractor would not be able to deliver.

When considering an ALT, CAs should take into account all the factors suggested above: is the reliability of the contractor a critical issue, or is a low price (or other element) sufficiently attractive to outweigh any risks to delivery? Is there the potential for damage to fair competition?

If so, how does that potential damage balance against the possible benefits to the authority of a low tender?

Provided that CAs do not reject ALTs without affording the tenderer the opportunity to justify their offer, and provided that their decisions are reasoned (and the reasons recorded), they are likely to be able to defend their decisions.

Economic operators wishing to challenge a CA's award to an ALT should prepare to demonstrate its non-viability, the risk of harm to the workforce or supply chain and the potential damage to fair competition.


1 Readers interested in reading a longer article on this subject should contact the author's clerk at

2 The legislation does not say so in terms but makes it clear by illustration that the explanation will be aimed at showing that the low tender is based on low inputs while meeting legal standards concerning employment

3 Where the basis of award is the most economically advantageous tender, it may be questionable whether a tender that remains suspect after it has been explained can be the most economically advantageous

4 CES 515/2001

5 Prevention, Detection and Elimination of Abnormally Low Tenders in the European Construction Industry DG III 5 June 1999

6 There is a case for saying that taxpayers too should be able to enforce this provision. If they fear that their money is to be spent on, or their services provided by, an unreliable contractor, they should be able to resort to judicial review to require the contracting authority to investigate

7 Note that in Belfass Case T-494/04 the Court confirmed that it is not only prices which may be abnormally low: other elements such as the number of hours or personnel required to carry out the contract might also be considered abnormally low

The articles and papers published by Keating Chambers are for the purpose of raising general awareness of issues and stimulating discussion. The contents must not be relied upon or applied in any given situation. There is no substitute for taking appropriate professional advice.

This material is prepared for Chambers by our Director of Research and Professional Development, Professor Anthony Lavers (LL.B. M.Phil Ph.D. D.Litt MCI.Arb FRICS Barrister) Visiting Professor of Law, Oxford Brookes University.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

In association with
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.