Elements of abnormally low tenders: A comparative analysis of EU procure-ment directive and case law

• Author: Orjana Ibrahimi
• Position: Albanian Ministry of Finance
• Pages: 91-97

European Journal of Economics, Law and Social Sciences

IIPCCL Publishing, Graz-Austria

Vol. 1 No. 2

June, 2017

ISSN 2519-1284

Acces online at www.iipccl.org

91

Elements of abnormally low tenders: A comparative analysis of EU procure-

ment directive and case law

Orjana Ibrahimi

Albanian Ministry of Finance

Abstract

Nowadays remains a challenge for the Contracting Authorities to organize procurement

in a way that contracts are awarded to competitive tenders, without adverse e ects on the

contract implementation. Due to the descending pressure on prices, clients are receiving

with increasing frequency bids that are substantially lower than estimated or than the other

bids. The EU Directives on public procurement refer to this phenomenon through the term

of ‘‘Abnormally Low Tenders’’ (ALT). Although the concept is regulated, there is no working

def‌i nition of what constitutes an ALT in reality. Therefore dealing with ALT becomes more

complex if we consider that both the Contracting Authorities and the bidders aim for low

tenders. The questions that emerge in such situations is below what price should a tender be

considered abnormal and what is the process to determine such tenders. In this context the

issue of ALT has two main parts: the detection of ALT and the decision on whether to reject

or not. However, the focal point of the problem, on which this article focuses, remains the

identif‌i cation of ALT, examine the potential of se ing standards for the identif‌i cation of ALT

and formulate suggestions on how to improve the outcome of tendering processes.

Keywords:abnormally low tenderers, procurement, contracting authority, rejection.

Introduction

There are various reasons for the appearance of abnormally low tenders (ALT) in

public procurement procedures.

Misunderstanding or misinterpretation: The submission of an abnormally low tender

may be the result of the economic operator’s misunderstanding or misinterpretation

of the requirements of the contracting authority.

Underestimation of risks: The submission of an abnormally low tender can be the

result of an underestimation of the risks a ached to the execution of the contract. This

phenomenon is referred to in economic literature as “the winner’s curse”.

Non-compliance with social, labour and environmental laws: The submission of

an abnormally low tender can be the result of non-compliance with binding legal

requirements concerning social, labour or environmental law.

Subsidy: The submission of an abnormally low tender may be the consequence of the

receipt of a subsidy by the economic operator. Subsidized companies are allowed to

participate in public procurement procedures but, as explained below, their tenders

should be rejected if they are abnormally low because of illegal state aid.

Deliberate strategy of an economic operator: The submission of an abnormally low

tender may represent the deliberate action or strategy of an economic operator in order

to provide continued employment for sta or to drive competitors out of the market.