Abnormal prices and price verification

The act of 17 June 2016 on public procurement (a federal act, applicable in all three regions) provides for price verification (art. 84). The royal decree of 18 April 2017 on the award of contracts organises the sequence (art. 33).

Step	Article of the royal decree	Purpose	What the contracting authority gains
1. Correction	art. 34	correct errors in the tenders	amounts comparable with one another
2. Price verification	art. 35	verify the prices or costs of all tenders	an item-by-item reading
3. Abnormal prices	art. 36	question abnormally low or high prices	a written justification, then reject or give reasons

The order matters. A price that looks abnormal in an uncorrected tender may result from a simple error; a ranking drawn up before verification may be reversed afterwards. The pouvoir adjudicateur (contracting authority) follows the sequence, and the auteur de projet (designer) assisting it prepares the tables in the same order.

Before any comparison, the tenders are corrected (royal decree, art. 34). This is the most mechanical step and the one most often underestimated: a multiplication error on a heavy item or a total carried forward wrongly is enough to move a tender one place in the ranking.

For the budget, correction also serves as a check on the estimate. The same checks applied to the estimate (quantities, units, carry-forwards) sometimes reveal that the error lies there. A gap between estimate and tenders can only be read once both have been corrected.

Verification covers every tender, not only the cheapest (royal decree, art. 35). It consists of examining prices or costs, item by item, against the estimate and the other tenders.

The useful reading is done in three columns. For each significant item: the estimate's price, the median of the tenders and the price in the tender under examination. An item where every tender departs from the estimate points to an estimating problem; an item where a single tender departs from the median points to a price to be questioned.

Provisional quantity items deserve particular attention. Their unit price will be multiplied by the quantity actually carried out. A tender that puts a high unit price on an item whose quantity is underestimated (it will rise during the works), and a very low price on an item whose quantity is overestimated (it will fall), may look the cheapest and cost more in the final account.

Article 36 works in both directions. It is not only about "abnormally low" prices: an abnormally high price is also a signal, and the royal decree treats it in the same way.

The procedure is framed. Where a price appears abnormal, the contracting authority invites the tenderer to provide written justifications within a time limit of 12 days. It is not required to demand justifications for negligible items.

The outcome is binary (art. 36, § 3). Either the contracting authority rejects the tender, notably where a non-negligible item or the total amount remains abnormal after justification, or where the tender contains a substantial irregularity; or it states, in the award decision, why the amount is not abnormal.

Situation after justification	Decision of the contracting authority
Convincing justification	award possible, stating why the price is not abnormal
Non-negligible item still abnormal	reject the tender
Total amount still abnormal	reject the tender
Negligible item	no obligation to justify

Reject or give reasons: either way, a written record. That record protects the award decision and, during the works, recalls what the contractor declared it could do at that price.

The award price is not the final cost. A contractor that tendered below its costs will try to recover the gap during execution, or will fail to.

Through variations. Every imprecision in the specification becomes an opportunity to claim. In a public contract, modifications ordered in writing are valued at the unit prices in the tender (general rules for execution, royal decree of 14 January 2013, art. 80): an abnormal unit price is therefore carried into every modification.

Through quantity variances. Where the quantities actually carried out exceed three times or fall below half the provisional quantities, either party may request revision of the unit prices (general rules for execution, art. 81). An unbalanced price in the tender opens that ground for discussion.

Through default. A contractor in difficulty slows down, walks away or goes bankrupt. The performance bond, set at 5% of the initial amount (general rules for execution, art. 25), covers only part of what a halted site, a takeover by another contractor and the lost time cost.

The budget should therefore read a low price as a costed risk. A price gap that looks like a saving at award can turn into higher expenditure in the final account.

A high price on an isolated item often says something about the tender documents. It may signal an ambiguous description, a poorly explained site constraint, or a risk the contractor priced because it could not assess it. Questioning that price sometimes means discovering a gap in the specification before it becomes a variation for every tender.

When every tender is high, it is no longer an abnormal price, it is an estimating or market gap. The response then lies in the options described in the article on tenders above the estimate: abandon, negotiate if the procedure allows it, or retender.

From the budget's point of view, the examination comes down to five steps. They apply to every tender examined:

1. Rank the items by weight. The items that account for most of the amount are examined in detail; negligible items, which the royal decree does not require to be justified, are read as a group.
2. Compare against three references: estimate, median of the tenders, tender under examination. A single reference is not enough to characterise a price.
3. Spot the imbalances. A high unit price on an item whose quantity is likely to rise, offset by a very low price on an item whose quantity is likely to fall, forms a pattern to be questioned, even if the total looks normal.
4. Ask precise questions. A request for justification that cites the item, the quantity and the gap gets a usable answer; a general question gets a general answer.
5. File the answers with the contract. They will be needed during execution, when the item comes back under discussion.

The private maître d'ouvrage (bouwheer, the client) has no procedure to follow, but the same reading protects them. Compare quotes item by item on an identical basis, spot the abnormally low quote and ask the contractor to explain its prices before signing, as the article on comparing two quotes per m² sets out.

The stakes are even higher in a private lump-sum contract. In a marché à forfait (lump-sum contract) based on a plan drawn up and agreed, article 1793 of the old Civil Code forbids the contractor from asking for a price increase without a change authorised in writing and an agreed price. A contractor that underpriced its lump sum therefore has, in principle, no simple way to recover, and the risk is often shifted onto quality, time or financial soundness.