Procurement in a nutshell – abnormally low tenders
27th March, 2015
In this Procurement in a Nutshell update we will be looking at the rules for dealing with abnormally low tenders under the Public Contract Regulations 2015.
The full regulations are available here.
To save you time and to help all practitioners, each week we will issue succinct notes on key changes.
Regulation 69 sets out the rules that Contracting Authorities (CAs) must follow in relation to abnormally low tenders:
- Where a tender appears to be abnormally low in relation to the works, supplies or services, the CA has to require an explanation of the price / costs in the proposed tender from the tenderer concerned.
- That explanation can cover any of the issues set out at reg 69(2).
- The CA must then assess the information provided by consulting the tenderer.
- The CA can only reject the tender where the evidence does not provide a satisfactory explanation.
- The CA must reject the tender where the reason for it being abnormally low is that the tenderer is not complying with obligations in the field of environmental, social and labour laws.
- If the CA establishes that the tender is abnormally low due to the receipt of state aid, the CA can reject the tender on that ground only after consultation with the tenderer and where the tenderer is unable to prove, within a sufficient time limit set by the CA, that the state aid was compatible with the internal market. It must also inform the Commission of the rejection in these circumstances.
Why is it important?
Under the Public Contracts Regulations 2006, if a tender was abnormally low, a CA was obliged to reject it, provided they had first requested an explanation, verified the evidence and taken account of it.
In this way, CAs were only obliged to investigate tenders they had already identified as being abnormally low.
In contrast, the position under the 2015 Regulations is that the CA is required to ask for an explanation before it considers whether a tender is abnormally low and the reasons for this.
CAs can then only reject such tenders in the circumstances set out above. This change should assist CAs in identifying and dealing with abnormally low tenders.
How can I find out more?
If you have any queries on the issues raised or on any aspect of procurement, please contact us via our procurement hotline on 0191 204 4464.
Please note that this briefing is designed to be informative, not advisory and represents our understanding of English law and practice as at the date indicated. We would always recommend that you should seek specific guidance on any particular legal issue.
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