Abnormally Low Tenders in Non-pricing Criteria: the Need for Control

Abstract

[EN] As public procurement accounts for approximately 10 to 15% of gross domestic product (GDP) in developed countries, tendering mechanisms should be clearly defined in order to avoid any actions that could endanger the basic principle that all bidders should be on equal terms. An Abnormally Low Tender (ALT) is defined as an offer too low to provide a normal level of profit and that cannot be explained on the basis of construction methods, the technical solution chosen, the originality of the work, or the favorable conditions of the tenderer. Public bodies are well aware of the risk of accepting an offer that cannot be carried out and despite the difficulty of detection recommendations for their prevention usually focus on the price criterion. Most tenders are awarded to the economically most advantageous tender (EMAT), which is assessed by various criteria (including price), though other criteria often have equal or greater weight in the final decision. The method used in this research study is divided into two main phases. First, the score of the bidders is obtained for criteria evaluated by formulae other than price, based on the contract terms of three case studies, after which new scores for these award criteria are obtained from ALT formulae, then, the results of both scoring methods are analyzed. This paper defends the need to control abnormally low tenders by means of award criteria evaluated by formulae other than those of price.