Price justification: sufficient evidence for normal prices
The Council rejects an application to suspend an award decision for semi-paved roads because the justification for accepting the low prices was adequate.
What happened?
A contracting authority awarded a contract for the construction and repair of semi-paved roads to a tenderer whose price was significantly lower than the average. The competing tenderer challenged this, arguing that the price justification provided was insufficiently motivated. The award decision contained three indications that the prices were normal: realistic estimates for the tenderer's working method, large volumes and economies of scale, and comparable prices from previous contracts. The Council examined each argument separately and concluded that the justification, taken as a whole, was adequate and that the applicant provided no plausible evidence that it was insufficient.
Why does this matter?
This ruling clarifies that contracting authorities do not need to provide ultra-detailed numerical justifications when protecting confidential commercial information. The Council recognises that a concise justification can be sufficient, as long as it adequately explains to tenderers why a low price is acceptable. This provides clarity for contracting authorities dealing with abnormally low prices.
The lesson
Justify the acceptance of low prices with concrete, verifiable elements (working method, volumes, economies of scale, track record). Ensure that all three or four indicators together form a consistent picture, not each argument on its own. Bear in mind that the whole of the justification counts, not the individual parts separately.
Check yourself
For the lowest prices, have you provided multiple indications why these prices are still realistic, and do they together form a coherent justification?