An abnormally low tender occurs when an economic operator offers a price that seems too low to cover the cost of the contract and therefore is doubted to be economically sustainable.
This could be caused by:
Contracting authorities must ask economic operators for an explanation of the price or costs proposed in the tender where tenders appear to be abnormally low in relation to the works, supplies, or services.
The economic operator must have the opportunity to explain why it was able to submit such a tender and cannot be automatically excluded without having had the opportunity to explain the bid in question.
It may only reject the tender where the evidence supplied does not satisfactorily account for the low level of price or costs proposed. The rejection of an abnormally low tender must be duly justified in the evaluation report.
The issue of a contract to a selected company or person.
When Bid Rigging occurs competing parties collude to submit uncompetitive bids in order to ensure that the contract is awarded to on particular bidder, often at a high price. In most or even all legal systems, this is an illegal practice.
A bidder is an individual, organization, or entity submitting a competitive proposal to an invitation to tender.
Bidding is when a contract is put up for auction. Whenever a public authority needs to contract, they have to start a bidding process in which they publish the conditions for contracting and economic operators can submit their proposals.
Bodies governed by public law
Public law bodies are those that have all of the following characteristics:
The competitive dialogue procedure aims to provide a certain amount of flexibility for particularly complex purchases. As with competitive procedure with negotiation, this process is only allowed in certain circumstances and the contracting authority must justify its use.
A selection is made of those who respond to the call for tender and the contracting authority begins dialogue with potential bidders, to develop one or more suitable solutions for its requirements. Based on this, chosen bidders will be invited to tender.
The Competitive Procedure process is only allowed in certain circumstances and the contracting authority must justify its use.
It involves shortlisting at least three candidates who responded to the call for tender in the OJEU and only those shortlisted are invited to submit an initial tender and then negotiate. The contracting authority may then open negotiations with the tenderers to seek improved offers.
Concessions are partnerships between the public sector and an economic operator (mostly private companies).The economic operator provides services or carries out work and is remunerated by being permitted to exploit the work or service and is exposed to a potential loss on its investment.
An example of a Concession Contract would be where a private company builds and manages a motorway and is remunerated through tolls, running the risk that the revenue generated will not cover its investment and other costs incurred.
This differs to a public contract where a company is paid a fixed amount for completing the required work or providing a service. For example, a private company builds and manages a motorway for a fixed price.
There are two types of concession contracts:
The body that issues a contract is known as the contracting authority. This will be a national, regional, or local authority, a body governed by public law, or an association formed by bodies governed by public law.
Two categories of Contracting Authorities have been introduced into Directive 2014/24/EU:
A main difference is that the threshold is higher for sub-central contracting authorities in the cases of supply contracts and most service contracts.
Any person or public entity that offers the execution of works, the supply of products or the provision of services on the market.
Innovation is the implementation of a new or significantly improved product, service, or process with the purpose of helping to solve societal challenges or to support, sustainable, and inclusive growth.
The aim of the innovation partnership is for the contracting authority to purchase research and development services to develop an innovative product, service, or works that cannot be met by purchasing products, services, or works already available on the market.
The contracting authority may decide to set up the innovation partnership with one partner or with several partners conducting separate research and development activities.
The contracting authority will then purchase the created innovative supplies, services, or works, provided that they correspond to the performance levels and maximum costs agreed between the contracting authorities and the participants involved in the innovation partnership.
The life cycle of a public contract comprises all the consecutive and/or interlinked stages throughout the existence of the product or the works or the provision of the service.
Lots are the lawful divisions of a large contract into smaller contracts, which may be awarded and performed by different economic operators. Article 46 of Directive 2014/24/EU allows these divisions as a way to encourage SMEs entering public procurement.
However, it constitutes a risk for corruption since in some cases contracting authorities will artificially divide contracts in order to decrease their value and curb European rules.
A contract can be modified without a new procurement procedure when “the modifications, irrespective of their monetary value, have been provided for in the initial procurement documents in clear, precise and unequivocal review clauses”.
If it is not in the contract, they can only be modified in the following exceptional circumstances, with the additional conditions that the modifications have an objective cause and that they do not alter the contract’s nature:
For all these cases, the sum of all modifications cannot be higher than 50% of the value of the original contract.
Official Journal of the European Union, commonly known as “the OJ”, is the official gazette of the EU and is the formal source of EU legislative information. It is published daily in all the official languages of the EU.
All tenders from the public sector which are valued above a certain financial threshold according to EU legislation must be published in the OJEU.
There are three main notices that must be advertised in the OJEU for above the threshold procurement projects:
In Open Procedures, tendering is public, therefore any interested economic operator may submit a tender in response to a call for competition within the Official Journal of the European Union (OJEU) by submitting a tender for the contract.
The selection and evaluation is carried out after the tenders have been submitted. All tenders must be considered without any form of prior selection process.
This process is also known as open tendering, competitive bidding, open competition, or open solicitation.
Before launching a procurement procedure, contracting authorities may conduct market consultations in order to prepare the procurement and inform economic operators of their procurement plans and requirements.
A preliminary market consultation involves interviewing market stakeholders or contacting experts within the field.
A written contract for pecuniary interest (the exchange of services ) between one or more economic operators and one or more contracting authorities. The object of the contract is the execution of works, the supply of products or the provision of services.
The restricted procedure is a two-stage process where a selection is made of those who respond to the call for tender and only pre-selected tenderers may submit tenders.
TED stands for “Tenders Electronic Daily”. It is the online version of the 'Supplement to the Official Journal' of the EU, dedicated to European public procurement. In this platform 520 thousand procurement notices are published a year, including 210 thousand calls for tenders which are worth approximately €420 billion. The Public Procurement Directives have made it compulsory for contracting authorities to publish all notices for those contracts above the EU threshold in this platform, in order to ensure fair competition and the correct functioning of the single market.
An economic operator that has submitted a tender.
To tender is to invite bids for a project or accept a formal offer.