Didn’t document why 4 – 5 % lower prices were an unusual low offer

Low price offer
Didn’t document why 4 – 5 % lower prices were an unusual low offer

 

One price which was only 4 – 5 % lower than the second lowest offer was considered as an unusual low offer. The buyer in an appeal for the Swedish courts had neither given any explanations to how it was decided that this was an unusually low price. Therefore, there was no basis for explaining the supplier’s price. Violation of the principle of equal treatment, the court ruled.

 

The case nr 207 – 208 in the Court of Appeal in Sundsvall was about offerings in tender competitions considered as unusually low price offers. It was about a framework agreement for ventilation work, divided into various subdivisions. One of the suppliers got their offer rejected on a specific subarea. The reason for the rejection was that the buyer believed that the offer had an unusual low price and that the supplier’s price explanation was to of satisfaction. The supplier complained, reasoning the explanation was not good enough. 

When the Court of Appeal received the complaint, they concluded that it is the buyer that should show proof if it is assumed that the offer price is so low that there is a reason to question whether the offer is serious. Then it is up to the supplier convince that their offer is serious.

 

4 – 5 % lower

A circumstance which makes the price unusual low is that it is positioned significantly lower than the market price, or the other offers. In the present case, the supplier’s offer price is 4 -5 % lower than the competing offers. According to the court, the latter is not considered as unusually low price offers. As a consequence, it is concluded that the supplier’s price is not as low as it should be considered an unusually low price.  

The Court of Appeal, in this case, notes that the buyer did not give any further explanation on how it was concluded that 350 NOK/hour is unusually low. The buyer has not presented any evaluation of the market price or price for the service, but just assumed that the price is low in relation to the price level in the industry.

 

Second lowest and third lowest offer

The second lowest offer in the tender competition offered 365 NOK/hour, while the third lowest offered 370 NOK/hour.

Therefore, the buyer in this tender competition did not have any reason to ask for an explanation regarding the low price from the supplier. To reject this offer was against the principle of equal treatment, and since the supplier had the lowest bid price he had been violated in this competition. It is stated in the ruling that a new evaluation must be conducted, where the supplier’s offer is to be examined.

 

This article first appeared at Anbud365, Norway’s leading online newspaper for public procurement. Published by Lennart Hovland on August 1st 2018. The full article can be found in Norwegian here.

 

>> Case nr 207-208-18

 

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