DKCO wins Market Court case on abnormally low tenders in Public Procurement
DKCO successfully defended a Finnish contracting authority in a Market Court ruling that clarifies how public entities should assess abnormally low tenders - without automatically rejecting competitive pricing.
Background: Legal challenge triggered by a 65 % price difference
A contracting authority selected a service provider whose bid was 65 % lower than its competitors. An unsuccessful tenderer challenged the decision, arguing the price was unrealistically low and should have been rejected under public procurement rules.
Under EU public procurement rules, contracting authorities are required to investigate abnormally low tenders.The authority applied these principles to protect the procurement process against unrealistic tenders. The key question: did the authority conduct adequate due diligence?
The contracting authority had requested detailed cost breakdowns and evaluated the pricing against contract-specific factors - including geographic efficiency and the tenderer's business model. Each partial tender was assessed separately, with some accepted, while others from the same tenderer were rejected in less densely populated regions.
Market Court's decision
The Market Court ruled in favour of the contracting authority. The decision confirms that procurement law does not require automatic rejection of low tenders - it requires thorough verification.
The authority's approach included:
- Requesting detailed cost breakdowns from the tenderer
- Evaluating geographic and operational factors specific to each service area
- Analysing different business models and cost structures
- Applying consistent evaluation criteria across all tenders and regions
The Court noted that rejecting the same tenderer's pricing in other regions demonstrated contextual judgment rather than blanket acceptance.
Implications for public procurement
This ruling provides contracting authorities clearer guidance on managing abnormally low tenders. Verification is more important than automatic thresholds. Authorities must conduct thorough investigations and document their reasoning, but competitively priced tenders should not be rejected solely for being significantly below the market average – as long as they can be justified.
The decision strikes a balance between taxpayer value and fair competition – allowing innovative suppliers to compete on pricing when they can demonstrate genuine cost efficiency.
For contracting authorities: Prioritize thorough investigation and well-documented reasoning over rigid pricing formulas.
For tenderers: Exceptionally low pricing is defensible when supported by transparent cost breakdowns and credible operational explanations.
