In the current economic climate it is becoming more likely that companies will submit abnormally low tenders to win new work. Whilst the benefit of going through a procurement exercise is to get competitive bids, what you don’t want is to enter into a contract with a company if their tender looks too good to be true as you run the risk that the contract fails and you have to go through the entire exercise again.
If you suspect a tender is abnormally low what can you do? Recent changes to the Public Contract Regulations introduce some greater clarity and guidance in identifying abnormally low tenders.
The new Public Contracts Regulations 2015 provide that before you reject a tender on the grounds that it appears abnormally low you must require the tenderer to explain the price or costs proposed. If the tenderer can give good reasons e.g. they are able to source materials at lower cost or the type of service they have devised means that it is lower priced than other methods, then you cannot reject the tender. You may only reject a tender where the evidence supplied does not satisfactorily account for the low level of price or costs.
If you reject a tender without either allowing the tenderer to explain, or you do not adequately consider its explanations, then you risk a challenge by that tenderer. With this in mind it is vital that you have a paper trail in place showing the questions you have asked, an analysis of the responses received and your explanation for rejecting the tender.
If you have any questions about abnormally low tenders and how to deal with a problematic tender please contact Lorraine at email@example.com or on 01256 467107