How to detect an abnormally low tender and what to do about it

There is no universal numerical definition. Neither the French procurement code nor good practice on private projects sets an absolute threshold — no "−20 % means automatically abnormal". The classification results from a body of indications analysed by the economist, cross-checking several sources of comparison.

On public projects the procurement code defines it as an offer whose price is manifestly under-valued and which risks compromising the proper performance of the contract. That functional definition, centred on the risk to execution, is the right lens: an abnormally low offer is not simply the cheapest one, it is the one whose price manifestly fails to cover the real cost of the work.

ℹ Abnormally low is not the same as lowest An offer can be significantly cheaper than the others without being abnormally low, if the contractor has found an innovative construction method, favourable purchasing terms or a more efficient site organisation. That is precisely why the procedure requires a request for justification before any rejection: the aim is not to eliminate competitive offers but to distinguish real performance from dangerous under-pricing.

Detection rests on analysis at two levels: the overall gap against the available references, and the item-by-item analysis of the pricing schedule or bill. The second is the more revealing.

An overall gap of −18 % may be within the range if every item is coherent. An overall gap of −12 % can conceal an abnormally low offer if the foundations item is priced at a third of the median — a sign the contractor has not allowed for the special foundations the ground investigation shows to be necessary.

The economist identifies the aberrant items — below 50 % or above 200 % of the median price for the same item among the competitors — and analyses them against the project: is there a credible technical explanation? Has the contractor omitted an item? Has it deliberately unbalanced its prices?

Once an abnormally low offer is identified, the procedure is well defined, and following it matters, particularly on public projects.

The request must be precise and targeted. It should not stop at "explain why your offer is cheaper" — too vague a formulation, which lets the contractor answer in generalities without addressing the problem.

A good request identifies the specific items that raise questions, asks for the price build-up for each, and puts precise questions: "Your unit rate for the special foundations is X €/linear m. On the basis of the drawings and the ground investigation available, can you justify how that rate covers the cost of the 12 m micropiles required in section 3.2 of the specification?"

The economist tests the reply against the technical material in the file. Admissible justifications include: a demonstrated and priced alternative construction method, purchasing savings evidenced by framework agreements, a particular site organisation reducing overheads.

Insufficient or inadmissible justifications include: a general assurance with no figures, reference to past experience unrelated to this project, no answer on the items targeted, or figures manifestly incompatible with real production costs.

ℹ On public projects: do not skip steps Setting aside an abnormally low offer without following the justification procedure exposes the client to a challenge from the excluded candidate before the administrative court. The court checks that the procedure was followed, not only that the decision was justified on the merits. Every request and every reply must be kept on the tender file so that the decision remains traceable.

A particularly hard form to detect is the deliberate unbalancing of unit rates in a priced bill. The contractor offers very low rates on items whose estimated quantities are over-stated, knowing the real quantities will be lower, and very high rates on items whose estimated quantities are under-stated.

The result: the overall offer looks competitive at tender, but the final payment, calculated on real quantities, comes out significantly above what the bill suggested. The strategy is lawful but unfair, and it justifies systematic item-by-item analysis on remeasurable contracts.

Another strategy is to bid deliberately low on the main package, counting on recovering the margin through claims for additional work during construction. The contractor knows, or believes it knows, that the project contains imprecision in the specification or poorly defined interfaces that will let it bill for work not foreseen.

That is one reason a rigorous specification and clearly defined interfaces are the best defence against this kind of strategy, independently of the tender analysis itself.

An offer below the others can be accepted if the justifications are convincing and verifiable: a documented economical construction method, demonstrated purchasing terms, a site organisation producing real savings. The economist then records this explicitly in the analysis report, stating that the justifications were examined and found admissible.

The offer must be set aside if the justifications are insufficient or if the analysis shows the price cannot cover the real cost of production. The economist formalises the decision in the report with the technical material that founds it. On public projects the decision is notified to the candidate with its reasons.

On private projects, and under the adapted public procedure where negotiation is allowed, the economist can propose a third way: keep the candidate in the competition and ask it to revisit its prices on the items that cause concern, in the light of the technical material. This corrects dangerous under-pricing without eliminating an offer that otherwise carries good technical guarantees.

As part of its award-stage assignments, Quostra carries out systematic item-by-item analysis of every offer received, whatever the overall price level. Aberrant items are identified, requests for justification are drafted in targeted form and the replies analysed against the technical material. The analysis report includes a dedicated section on the abnormally low offers identified, the procedure followed and the decision recommended, with detailed reasons.

You have better things to do. Submit your project on quostra.com and an economist analyses your offers, detects abnormally low bids and protects you contractually.

An abnormally low tender is detected through a body of indications — the overall gap, aberrant unit rates, omissions in the schedule — and not by applying a mechanical threshold. Handling it follows a precise procedure: a formal, targeted request for justification, analysis of the reply, a reasoned decision. On public projects, failing to follow that procedure exposes the client to challenge. On private ones, accepting an abnormally low offer without analysis exposes the client to execution risks that can far exceed the apparent initial saving.