Abnormally low tenders in Spain: detection and justification

The presumption of abnormality is assessed against the objective parameters set in the tender documents, which is the first place to look. Where the documents say nothing and price is the only criterion, the default rule of the procurement regulation applies, built on each bid's relationship to the average:

Number of bidders	The bid is presumed abnormal if...
One	It is more than 25% below the base budget
Two	It is more than 20 points below the other bid
Three	It is more than 10 points below the average (with a correction if the highest bid deviates strongly)
Four or more	It is more than 10 points below the average, after excluding outlier discounts and recalculating

Where the award combines several criteria, the documents must define their own parameters, which may refer to the bid as a whole and not only to price. Two practical consequences: first, the abnormality threshold is calculable in advance under budget-referenced formulas, but depends on competitors' behaviour under average-referenced ones; second, the presumption is not automatic exclusion, but the opening of a hearing procedure.

Once the presumption is triggered, the committee requires the bidder to justify the viability of its offer within the period set. It is a serious exercise: generic justification ("our company is very efficient") fails systematically before committees and tribunals. A justification with real chances is built on verifiable elements:

The company's own cost breakdown. The centrepiece is demonstrating, item by item, that the offered prices cover costs: real output rates of the company's crews, supplier prices evidenced with firm quotations, availability of already amortised own equipment. A cost study built on the design quantities, with the systematic approach described in the article on the bill of quantities, is the best raw material for the justification.

Exceptionally favourable conditions. Facilities close to the site, surplus materials from another project, framework agreements with suppliers, proprietary technical solutions that cheapen execution. The more specific and documented, the more weight.

Compliance with labour minimums. Wage costs cannot fall below the applicable collective agreement: a justification whose numbers imply below-agreement wages will be rejected, and it is the most frequent ground of rejection. The labour breakdown must reconcile explicitly with the agreement's wage tables.

The committee, with the technical reports, decides whether to accept the justification. The decision is discretionary but must be reasoned, and both acceptance and rejection can be challenged: a second-ranked bidder watching the award go to an abnormally low offer justified with generalities has in the special procurement review a route with reasonable success statistics.

If the justification does not convince, the bid is excluded and the tender continues with the next ones. If it convinces, the award comes with conditions: the authority may require an additional guarantee of up to a further 5 per cent (up to 10 per cent in total), and execution is placed under reinforced monitoring, because a loss-making contractor is a known driver of conflict on site.

That second part is worth internalising before bidding: passing the abnormality procedure does not turn a bad bid into a good one. The contract will be executed at the offered prices, monthly certificates will apply the discount to every item, and rebalancing mechanisms are exceptional. The discount decision belongs to the cost study, not to the bidding department; policing that boundary is developed, from the financial side, in the article on cost control and budget deviations.

Five companies bid for a project awarded on price alone, with no parameters in the documents, so the default rule applies. Bids as a percentage of the base budget: 92, 88, 86, 84 and 72.

First step, the arithmetic average: (92 + 88 + 86 + 84 + 72) / 5 = 84.4. Second step, check for bids more than 10 points above the average: the highest (92) sits 7.6 points above, so no recalculation is needed. Third step, the presumption threshold: average minus 10 points = 74.4. Result: the bid at 72 per cent of the budget (a 28 per cent discount) falls under the abnormality presumption; the one at 84, with its 15.6-point discount, passes clean.

Note the game-theory mechanics: had the most expensive bid (92) been 96, the average would have risen to 85.2 and the threshold to 75.2, still catching the 72 bid. Conversely, with aggressive competitors (bids at 80 and 78 instead of 92 and 88), the average drops to 80 and the threshold to 70: the same 72 bid would have passed without any procedure. Abnormality under average-based formulas depends not only on one's own discount but on the group's behaviour, which is why the authority's discount history is first-order bidding intelligence.

A professionally built justification file is organised in four blocks, in this order:

Financial report. The complete breakdown of the bid: direct costs by chapter with output rates and unit prices, site indirects, overheads and the residual margin (which may be thin, but must exist or be explained). It is the skeleton; everything else props it up.

Third-party support. Firm quotations from subcontractors and suppliers with validity covering the execution period, framework agreements, agreed rates. A supplier quotation with a name, an amount and a date is worth more than three pages of prose about the company's efficiency.

Proof of own conditions. Amortised machinery fleet (with an inventory), proximity of facilities (with distances), stable own workforce (with the headcount), surpluses from another project (with the reference). Every advantage claimed, with its evidence.

Labour reconciliation. A table crossing the estimated hours per category with the costs of the applicable collective agreement, demonstrating that the offered labour respects the minimums. It is the block the committee reads first and the one that sinks the most justifications.

The reasonable length of the whole file rarely exceeds 20 or 30 pages plus annexes: committees read breakdowns, not literature. A breakdown by items with prices and outputs is worth more than any argument.