When all tenders exceed the estimated value

The section headed “Rejection of all tenders” (unofficial translation) gives the contracting authority two independent grounds. The contracting authority may reject all tenders by a written, reasoned decision if “1) the prices of all tenders or of the tenders declared compliant exceed the estimated value of the public contract, or 2) the contracting authority has, on an objective and non-discriminatory basis, provided for the rejection of all tenders in the procurement documents and that ground exists”.

The first ground is price-based and needs no prior provision. It is enough that the prices of all tenders, or only of the tenders declared compliant, exceed the estimated value. The second wording option matters in practice: if the only tender cheaper than the estimated value has been declared non-compliant, the price-based ground remains available.

The second ground must be written into the procurement documents before the procurement is advertised. The law requires the ground to be objective and non-discriminatory and to actually exist. For example, a contracting authority may consider a ground that links completion of the procurement to confirmation of funding; the wording must still meet the requirements of the law, and its suitability has to be assessed for each procurement separately.

The lever also works lot by lot. Under § 116(2), the rejection decision can be taken for a lot if the procurement is divided into lots. Rejecting one expensive lot does not prevent contracts being signed for the other lots.

Rejection ends the procedure. Under RHS § 73(3)(3), a procurement procedure ends, among other things, “with the rejection of all tenders on the grounds set out in § 116 of this Act”. The same procedure cannot be continued afterwards: whatever price comes next comes from a new procurement.

The law gives an option, not an obligation. The word “may” leaves the decision to the contracting authority. If a tender exceeds the estimated value but the contracting authority has sufficient funding and the price is justified, § 116 does not force it to end the procedure; the decision is a budgetary one and is worth documenting.

The price-based ground is exactly as usable as the estimated value. RHS § 23 sets requirements for it that directly affect whether § 116 can be used.

An estimated value that is too low makes the lever useless. If the estimate was built on outdated prices, every tender exceeds it and the ground formally exists, but a new procurement in the same market will probably produce the same prices. Rejection then costs time and procedural expense rather than saving money.

An estimated value that is too high puts the lever out of reach. If an unjustified margin has been added to the estimate, even excessive tenders stay below it and the price-based ground is missing. A contracting authority that wants to keep control of the price must therefore estimate realistically, not high out of caution.

The method for calculating the estimated value is not repeated here. It is covered by the article on how to calculate the estimated value in the procurement guide. For this article one conclusion matters: the estimate must be updated immediately before the procurement is advertised, because that amount later becomes the basis of the decision.

The following example is fictitious and shows only the logic of the calculation. The contracting authority's estimated value is 1,200,000 euros excluding VAT. Three tenders are received.

The prices of all tenders do not exceed the estimated value, but the prices of all tenders declared compliant do. Tender C is cheaper but non-compliant, so the contracting authority may rely on § 116(1)(1). Whether it does so depends on the considerations described in the next section: a gap of 90,000 euros may or may not be fundable, and its cause may be the market rather than the tenderer.

Four questions are worth answering before deciding, each in writing. If the tenders are rejected, the answers also form the reasoning for the decision that the law requires.

Does the gap come from the market or from the estimate? If all tenders exceed the estimated value by a similar amount, it is more likely that the estimate no longer reflects the average market price. A new procurement with the same estimate will not change the result.

Does the gap come from the scope or from the terms? Costly contract terms, a short time limit, unclear risk allocation or a procurement run as one large lot can push all prices up. These sit in the contracting authority's own documents and can be changed in a new procurement.

Can the funding absorb the gap? If the contracting authority has the means and the price is justified, signing the contract may be more sensible than a delay of several months. Delay has its own price: construction prices may move in the meantime and funding may have deadlines.

Is there a temptation to sign a smaller contract and add works later? That is the most expensive route. Once the contract is signed, works can only be added in the cases allowed by RHS § 123(1) and within the limits covered by the article on the limits on changing a public contract: 15 and 50 per cent. A contracting authority that knowingly leaves out of the procurement works it needs uses up the modification limit before construction has even started, and the price of the added works is set outside competition.

Whether tenders can be negotiated depends on the type of procedure. Whether, and to what extent, the contracting authority can negotiate the price with tenderers is a procedural question, covered in the procurement guide. § 116 works regardless.

The rejection decision is only the start: the new procurement must differ from the previous one, otherwise the result will be the same. Four things can be changed.

• The estimated value. Update it immediately before the new advertisement and document the data it is based on. If the tenders in the previous procurement pointed to the market price, they are one source of information, but the estimate must meet the requirement of § 23(3).
• The scope of works. Review which works are essential and which can be left for a later, separate procurement. Works left out must not be works that are planned to be added later as a change to the same contract.
• Division into lots. Smaller lots may attract more tenderers and allow only the expensive lot to be rejected under § 116(2). The effect of division on the procedure and thresholds is covered in the procurement guide.
• Contract terms. A price review clause, a realistic time limit and a clear allocation of risk can reduce the risk margin tenderers add to their price. The elements of a price review clause are covered in the article on price review in the same branch.

The question of an abnormally low tender is a separate topic. If one tender is noticeably cheaper than the others, the rules on abnormally low tenders apply (RHS § 115), covered in the article on abnormally low tenders.

A private tellija (the client) has no equivalent of § 116, because it has no procedural obligation either. It can simply set tenders aside, negotiate the price or choose whether the amount agreed in the contract is binding on the contractor. That choice, and the presumption in VÕS § 639 that an eelarve (estimate) is binding unless the parties have agreed otherwise, are covered in the article on a binding or a non-binding estimate. For a contracting authority, according to the Supreme Court (Riigikohus) case law review, the court found in judgment 3-2-1-102-14 that the price agreement in a public contract cannot be entirely non-binding; the price question must therefore be settled before the contract, not during it.

Until 31 October 2026 the current rules apply. The Act amending the Public Procurement Act and other Acts (RT I, 03.07.2026, 3) enters into force on 1 November 2026. It does not change § 116: the two grounds for rejecting all tenders stay the same.

The thresholds that determine the procedure do change. For example, the simplified procurement threshold for construction works rises from 60,000 euros to 100,000 euros and the provision on the national procurement threshold is repealed; the construction works threshold in the abnormally low tender provision (§ 115(2)) also changes. Under the transitional provision (§ 219^3), procurement procedures begun before 1 November 2026 are completed under the version in force until 31 October 2026. A contracting authority that rejects the tenders and advertises the procurement again after 1 November starts a new procedure, which this transitional provision does not cover: the documents for the new procurement must therefore be prepared under the new version.