Abnormally Low Tenders: Can a Low Bid Be Rejected?

An abnormally low tender is one where the price offered is so low that the buyer doubts the supplier can actually perform the contract for it. There is no fixed percentage or formula that makes a bid "abnormally low" - it is a judgement the contracting authority forms, typically when a price sits well below the other bids, below the buyer's own estimate, or below what the work plausibly costs to deliver. The concern is not that the buyer is getting a bargain; it is that the bargain may collapse - late delivery, corner-cutting, or the supplier walking away mid-contract because the numbers never worked.

The concept is not new - it existed under the old Public Contracts Regulations 2015 - but the Procurement Act 2023 restates it more cleanly. Under the Act, the buyer has a power, not a duty, to disregard such a tender, and crucially can only exercise it after following a set process. A low price does not disqualify you automatically; it triggers a conversation.

The rules sit in section 19 of the Procurement Act 2023. Section 19(3)(c) lets a contracting authority disregard a tender that offers a price the authority considers abnormally low for performance of the contract. But that power is fenced by section 19(4) and (5), which impose a mandatory fair-hearing step before any rejection.

• ·The buyer forms the view that the price is abnormally low for performing this contract (section 19(3)(c))
• ·Before disregarding it, the buyer must notify the supplier that it considers the price abnormally low (section 19(4)(a))
• ·The buyer must give the supplier a reasonable opportunity to demonstrate it can perform the contract for the price offered (section 19(4)(b))
• ·If the supplier demonstrates, to the authority's satisfaction, that it can perform at that price, the buyer may not disregard the tender on that ground (section 19(5))
• ·Only if the supplier fails to satisfy the buyer can the tender then be disregarded as abnormally low

If a buyer challenges your price as abnormally low, that is not the end - it is your opportunity to prove it is deliverable. The Act deliberately does not prescribe a checklist of acceptable explanations (unlike the old regulations, which listed examples), so the buyer can ask about anything bearing on your ability to perform at the price. Your job is to show, with evidence, that the number is sound and not a mistake or a loss-leader you cannot sustain.

A convincing response points to the real reasons your cost base is genuinely lower: a lean structure, an efficient method, existing local resource that cuts mobilisation, materials secured at a keen rate, economies from adjacent work, or a technical approach that does the job with less. What does not convince is hand-waving. This is exactly why a documented cost build-up matters even when you are pricing keenly - if you can hand the buyer the breakdown that shows the price is real, the abnormally-low query resolves in your favour. A low price you can evidence is defensible; a low price you cannot explain is the one that gets disregarded.

The safe way to price low is to price low on purpose, from a real cost build-up, not to price low by accident because you guessed and hoped. A deliberate low price - lean, evidenced, still covering your costs and a thin margin - is legitimate and defensible under section 19. An accidental low price, where you have under-scoped the work or forgotten a cost, is the dangerous one: it invites the abnormally-low challenge and, if you win anyway, saddles you with a contract you cannot deliver profitably. Our guide on how much to bid covers keeping the number above your costs.

This is where building the price properly protects you twice over. It keeps you from the accidental underprice, and it hands you the evidence to defend a deliberate one. BidSquirrel builds that costed breakdown with you - the labour, materials, overhead and margin - and drafts the value-for-money case that shows a keen price is good value, not an unsustainable gamble. So if a buyer ever asks you to justify your number, you already have the working. See the reasoning on our methodology page, or run it on a live tender via pricing a bid. For the wider award test that sits behind all of this, see our guide on the most advantageous tender.