Abnormally low tenders: how to justify your own and how to challenge a competitor's

The rule

When a bid appears abnormally low in relation to the subject matter of the contract, the contracting authority must ask the bidder to explain the price or cost it proposes (article 88 of Law 4412/2016, as amended by Law 4782/2021). It cannot reject the bid as low without having requested and assessed the explanations. Nor can it award the contract ignoring that the bid is low, if a competitor points it out.

When a bid is considered low

For supplies and services the law sets no percentage. The authority judges by the estimate, the other bids, market prices and the labour cost that follows from legislation, especially in labour-intensive services such as cleaning, security and catering, where a bid below the statutory labour cost is by definition abnormally low.

For works, studies and technical services Law 4782/2021 added an objective test: a bid whose discount deviates by more than ten percentage points from the average discount of the admissible bids is presumed abnormally low and the authority must request explanations. The presumption is rebutted by the justification. The authority retains the option to request explanations for smaller deviations as well.

What justification is accepted

Article 88 lists, non-exhaustively, the grounds that can explain a low price:

• The economics of the construction method, the manufacturing process or the services provided.
• The technical solutions chosen or exceptionally favourable conditions available to the bidder: own production, existing stock, premises near the place of performance, low-priced supply contracts.
• The originality of the works, goods or services.
• Compliance with environmental, social security and labour law obligations, demonstrably.
• Compliance with subcontracting obligations.
• The possible receipt of state aid, with proof that it is compatible with the internal market.

The justification that convinces is numerical. A detailed costing with labour cost per hour and person under the applicable collective agreement, social security contributions, materials at supplier prices, overheads and the profit margin, so that the authority sees that the price covers the cost. General assurances about "economies of scale" without figures are rejected, and ΕΑΔΗΣΥ decisions confirm this consistently.

The consequences

• No reply within 20 days. The bid is rejected as irregular and the participation guarantee is forfeited.
• Insufficient justification. The authority may reject the bid, with specific reasoning explaining why the explanations do not account for the low price level.
• Breach of labour or environmental law. If the low price results from non-compliance with those obligations, rejection is mandatory.
• State aid. If the low price is due to state aid, the bid is rejected if the bidder cannot prove within a reasonable time that the aid is lawful.
• Binding effect. Since 2021 the accepted explanations become part of the contract and cannot be modified during performance. Whatever you promise to justify your price, you owe.

How to use it against a competitor

If a competitor offers a price that cannot cover the cost, you are entitled to point it out to the authority in a memorandum before the award, and to challenge the award with a pre-judicial appeal before ΕΑΔΗΣΥ if the authority did not request explanations or accepted them without scrutiny. Appeals of this kind often succeed when they rest on a calculation: set out the statutory labour cost for the hours the tender requires and show that the competitor's bid is below it. Without figures, the appeal is a mere disagreement with the committee's judgement.

How to price so it does not come up

The safest way to avoid a request for explanations is to know where contracts close in your category. Award decisions in ΚΗΜΔΗΣ show the discount at which each contracting authority's tenders are won, and the average of the last 24 months is a better guide than any estimate.