A tender with a conspicuously low — or high — price inevitably attracts the attention of the evaluation committee. The legislation obliges the authority to investigate abnormal prices before excluding a tender on the basis of price. For the tenderer, it is essential to understand when a price is considered abnormal and how to defend it effectively.

What is an abnormal price?

The Act of 17 June 2016 and the Royal Decree on Placement of 18 April 2017 define a price as abnormal when it is manifestly disproportionate to the performance to be delivered. This applies to both abnormally low and abnormally high prices, although low-price issues are far more common in practice.

Detection mechanisms

The Royal Decree provides a mechanical detection system for contracts awarded on price:

With at least four tenders: a price is considered apparently abnormal if it is at least 15% below the average of the submitted tenders (after any correction of the highest tender).

With fewer than four tenders: the authority assesses itself whether a price appears abnormal, possibly based on the estimate, market knowledge or comparison with previous contracts.

This mechanical threshold is an indication, not an automatic exclusion. The authority may also consider a price suspicious outside this mechanism.

The price investigation

Mandatory procedure

When a price has been identified as apparently abnormal, the authority is obliged to conduct a price investigation. It may not exclude the tender without first giving the tenderer the chance to justify its price.

The procedure follows three steps:

Written request. The authority asks the tenderer in writing for a justification of the price. It indicates which items or elements are considered abnormal.
Justification by the tenderer. The tenderer submits a substantiated explanation demonstrating that the price is realistic and feasible.
Assessment. The authority assesses the justification and decides whether the price is acceptable.

Elements of a strong justification

Directive 2014/24/EU (Article 69) lists which elements can support a justification:

Production method or service delivery. Efficient processes, automation, economies of scale.
Technical solutions. Innovative approach that saves costs without quality loss.
Exceptionally favourable conditions. For example a stock of materials purchased at lower prices, or proximity to the site.
Originality of the tender. An original approach that structurally reduces costs.
Compliance with social and labour legislation. The tenderer demonstrates that the price does not come at the expense of workers’ rights or minimum wages.
State aid. If the price is explained by state aid, the tenderer must demonstrate this. The authority informs the European Commission if the state aid is incompatible with the internal market.

What does not work as justification?

A generic statement that the price is “market-conform” without substantiation.
A reference to commercial reasons without specification.
The argument that the tenderer is “willing to accept a lower margin” without demonstrating that the price covers costs.

Abnormally high prices

Although less common, the authority may also investigate abnormally high prices — for example when one tenderer is significantly above the average. In framework agreements with multiple participants, an abnormally high price can be relevant for the ranking.

Exclusion for abnormal price

The authority may exclude a tender with an abnormal price when:

The tenderer submits no or an inadequate justification.
The justification does not remove the abnormality.
The authority establishes that the price jeopardises compliance with social, environmental or labour legislation.

The exclusion must be reasoned. A mere finding that the price is lower than the average is insufficient — the authority must demonstrate why the justification is not convincing.

Strategic implications

For the tenderer with a sharp price

Anticipate the investigation. If you know your price will be significantly lower than the competition, proactively prepare a price justification. Include it as an annex to your tender if appropriate.

Be specific. Substantiate each item that deviates from the market price. Refer to concrete supplier quotes, collective labour agreement wages, productivity data and material prices.

Prove feasibility. The best justification is a detailed cost price calculation demonstrating that each item covers actual costs and that a reasonable margin is built in.

For the competitor who loses to a low price

Check the reasoning. If you lose to an abnormally low price, check whether the authority conducted a price investigation. Failure to conduct this investigation is a procedural defect that can lead to suspension.

Request further reasoning. You have the right to ask why the authority considered the low price acceptable.

If you submit a sharp price, anticipate a price investigation and have your justification ready immediately. Structure it per item or per cost component showing how you achieved the low price: process efficiency, technical innovation, favorable supplier terms, economies of scale. Substantiation with quotes, data and calculations is essential.

A statement that your "margin is lower" or you "are willing to work at lower profit" does not justify an abnormally low price. You must show that the price actually covers your costs and demonstrates a realistic path to profitability. If you cannot substantiate this in a price investigation, you will be excluded regardless of tender quality.

Abnormal prices and price investigation in public procurement