What constitutes an abnormally low tender
An abnormally low tender (commonly abbreviated ALP) is a bid whose price is so far below what the contracting authority would expect — based on the subject matter, market conditions, and the other bids received — that it raises a genuine question about whether the bidder can perform the contract at that price without compromising quality, cutting corners on legal obligations, or simply walking away mid-contract.
Neither S.L. 601.3 nor EU Directive 2014/24/EU defines a precise threshold at which a bid becomes abnormally low. There is no rule that a bid must be X% below the next lowest offer, or Y% below the estimated contract value, to trigger an investigation. The standard is intentionally qualitative: the contracting authority must investigate when a bid "appears" to be abnormally low in relation to what is being procured. This is a judgment call, and the evaluation committee is expected to exercise it based on its knowledge of the market and the spread of offers received.
In practice, contracting authorities commonly look at:
- The spread between the lowest and second-lowest bids — a very large gap (say, 40% or more) between the lowest and the field typically prompts scrutiny
- The relationship between the bid price and the estimated contract value set by the authority
- Whether the bid appears to undercut known cost floors — for example, a service contract priced below what the applicable collective agreement wages would require
- Market intelligence from the preliminary market consultation phase or from the committee's general knowledge of the sector
Some member states apply mathematical formulas for determining abnormal lowness — for example, Italian law uses a formula based on the average of all bids with a cut-off applied. Malta's S.L. 601.3 does not mandate any such formula: the assessment is the evaluation committee's, subject to review by the PCRB if challenged.
The contracting authority's obligation to investigate
The obligation to investigate is mandatory. Under S.L. 601.3, reflecting Article 69 of Directive 2014/24/EU, when a bid appears abnormally low the contracting authority must request a written explanation from the bidder. This is not a discretionary step — the authority cannot skip it and proceed to reject the bid on ALP grounds without giving the bidder an opportunity to explain.
The clarification request must give the bidder a reasonable deadline to respond. It should identify the specific concerns that prompted the investigation — for example, that the price appears insufficient to cover known mandatory cost items — so that the bidder knows what it needs to address. A vague or unduly short request that effectively prevents a proper response can itself be challenged.
The process runs as follows:
- The evaluation committee identifies a bid that appears abnormally low in light of the subject matter and the other bids received.
- The committee issues a written clarification request to the bidder, setting out the concerns and giving a reasonable deadline to respond.
- The bidder provides a written explanation, with supporting documentation where relevant.
- The committee assesses the explanation, consulting the bidder further if necessary, and makes a reasoned decision either to accept the bid as genuine or to reject it as abnormally low.
- The decision — including the reasons — must be recorded in the evaluation report and communicated to the bidder as part of the award/rejection notification.
A contracting authority that bypasses this process — or that goes through the motions of requesting clarification without genuinely assessing the response — exposes its decision to successful challenge before the PCRB. The Board has jurisdiction to examine whether the investigation was properly conducted, not just whether the formal steps were taken.
What the bidder must demonstrate
The bidder's response to an ALP clarification request carries the burden of showing that performance at the tendered price is genuinely achievable. Article 69(2) of Directive 2014/24/EU, implemented in S.L. 601.3, sets out the types of explanation that may be put forward. These are not an exhaustive list but represent the principal grounds on which legitimate low pricing is typically justified:
Manufacturing method, construction technique, or service delivery model
If the bidder's price reflects a production process, technical method, or service delivery approach that is materially more efficient than the market norm, that efficiency must be explained and substantiated. Vague references to "operational efficiencies" without underlying detail will not satisfy a thorough evaluation committee. The explanation should describe the method concretely and explain why it produces the cost advantage.
Technical solutions or particularly favourable conditions
The bidder may demonstrate that it has access to unusually favourable supply chain conditions, long-term raw material contracts, existing plant or infrastructure that eliminates capital costs, or geographic proximity advantages that reduce logistics costs. The key is that the advantage must be real and documented — not merely asserted.
Originality of the proposed solution
For service or works contracts, a genuinely innovative approach that fundamentally changes the delivery model may result in a cost structure that has no precedent in the market. Where this is the case, the bidder must explain the innovation in sufficient detail for the evaluation committee to assess whether the claimed efficiencies are realistic.
Compliance with employment, environmental, and social law
The bidder must demonstrate that its price accounts for all applicable obligations under employment law (including minimum wages and working conditions), environmental law, and social law. This is a critical area in lowest-price Malta tenders. A bid that undercuts the market by assuming below-minimum-wage labour costs, ignoring mandatory social contributions, or not accounting for environmental compliance costs is not legitimately low — it is non-compliant. The evaluation committee is entitled to require evidence of compliance, including payroll structures and subcontractor terms.
State Aid
Where the low price is attributable to State Aid received by the bidder — for example, a public subsidy, preferential financing, or a State-owned entity being underwritten by public funds — the bidder must be able to confirm that the aid is compliant with EU State Aid rules. If the aid cannot be justified under the applicable EU framework, the bid must be rejected. The contracting authority cannot knowingly award a contract that would constitute a distortion of competition through unlawful State Aid.
| Type of explanation | What strong evidence looks like | What is insufficient |
|---|---|---|
| Delivery method efficiency | Detailed process description, productivity data, case studies from comparable contracts | "We have efficient operations" without specifics |
| Supply chain advantage | Copies of supplier agreements, price schedules, long-term contract terms | Verbal assertion of good supplier relationships |
| Labour law compliance | Payroll structure, minimum wage confirmation, subcontractor agreements | A bare declaration of legal compliance |
| Existing assets / infrastructure | Asset register entries, depreciation schedules, proof of ownership | Reference to owning relevant assets without documentation |
| State Aid | Aid notification or block exemption reference confirming EU compliance | Denial that any State Aid was received where records suggest otherwise |
When a bid can be rejected
Following the mandatory investigation, the contracting authority may reject the bid on ALP grounds in the following circumstances:
Failure to respond
If the bidder does not respond to the clarification request within the deadline given, the contracting authority may proceed to reject the bid without further process. Silence is treated as an inability to justify the price. Bidders that miss the response deadline — even through inadvertence — lose the right to defend the bid.
Unsatisfactory explanation
The response is received but does not satisfactorily account for the low level of price or costs. The evaluation committee must conduct a genuine assessment of the substance of the explanation. A committee that goes through the motions of assessing a response, but applies a predetermined conclusion, risks having its decision overturned on PCRB challenge. Equally, a response that is internally inconsistent, that rests on assumptions the committee can disprove by reference to known market data, or that is wholly unsubstantiated is a proper basis for rejection.
Non-compliance with applicable law obligations
The explanation reveals that performance at the tendered price would require or assume non-compliance with applicable employment, environmental, or social law obligations. This is mandatory rejection under Article 69(3) of Directive 2014/24/EU, reflected in S.L. 601.3: the contracting authority must reject a bid where it establishes that the price is abnormally low because the bidder has not complied with mandatory law. This provision is intended to prevent bidders from gaining a competitive advantage by externalising costs that lawful competitors must internalise.
Undisclosed or non-compliant State Aid
The low price is attributable to State Aid that the bidder has received and either failed to disclose or cannot demonstrate as EU-compliant. A contract award premised on distortive State Aid would itself be unlawful — hence the mandatory rejection obligation.
Challenging a rejection: the PCRB route
A bidder whose tender has been rejected on ALP grounds has the right to challenge that decision before the Public Contracts Review Board (PCRB), the independent quasi-judicial tribunal with exclusive jurisdiction over Malta procurement disputes. The challenge must be filed within 10 calendar days of the award decision — including the ALP rejection — being published.
Grounds of challenge
A successful ALP challenge typically rests on one or more of the following:
- Procedural failure: the contracting authority did not request an explanation before rejecting — it skipped the mandatory investigation step entirely.
- Inadequate investigation: a clarification request was made, but the process was not genuinely conducted — for example, an unreasonably short deadline, a vague request that prevented a proper response, or a committee that did not engage with the substance of the explanation.
- Unreasoned or inadequately reasoned rejection: the decision to reject did not identify specific grounds, or the reasons given are not supported by the evidence in the evaluation file.
- Disproportionate application: the bid was flagged as abnormally low despite being consistent with market pricing, and no genuine concern about deliverability was substantiated.
- Unequal treatment: the ALP investigation was applied to one bidder but not to others with comparably low prices, in breach of the principle of equal treatment.
What the PCRB can order
The PCRB cannot substitute its own assessment of the bid's adequacy for the evaluation committee's assessment — it is a review body, not a technical evaluator. But it can and will examine whether the mandatory procedure was followed, whether the committee applied its mind genuinely to the explanation provided, and whether the reasons given hold up. If the PCRB finds the rejection was procedurally or substantively defective, it may order a re-evaluation of the bid under a properly conducted ALP process, or, in more egregious cases, the cancellation of the entire award decision.
Equally, the PCRB can reject a challenge if it is satisfied that the investigation was properly conducted and the grounds for rejection were substantiated. The burden on the challenging bidder is to show that something went wrong in the process or the reasoning — not simply that the bidder disagrees with the outcome.
Timing: act fast
The 10-calendar-day post-award challenge window is strict. It runs from the date the award or rejection decision is published on the eTenders/ePPS platform. A bidder that waits to receive its formal notification letter, or that assumes it can file at any point within the standstill period, may find the window has already closed. File the challenge application — or at minimum take legal advice — on the day the award notification is received.
Practical advice for bidders
If you are pricing aggressively and know your bid may attract ALP scrutiny
Prepare your explanation before you submit the tender, not after you receive a clarification request. The explanation should be a byproduct of how you built the price — if you cannot explain the cost structure in detail at the time of submission, that is a warning sign that the price may not be achievable. Key preparation steps:
- Maintain a detailed cost build-up showing every significant cost category, the rates applied, and the basis for those rates (supplier quotes, payroll data, asset depreciation schedules).
- Document any cost advantage clearly — long-term supply agreements, existing plant, favourable financing terms. The documentation should be contemporaneous, not retrospective.
- Confirm in writing (internally, and be ready to confirm externally) that the price assumes full compliance with all mandatory employment, environmental, and social obligations — and that the compliance is costed into the budget, not assumed away.
- If you have received any State Aid or public subsidy relevant to the contract, take advice on whether it is EU-compliant before submitting the bid.
If you receive a clarification request
Treat it seriously — this is not a formality. A response that is vague, generic, or fails to address the specific concerns raised in the request will not survive evaluation. Key points:
- Read the clarification request carefully. Address each specific concern identified by the committee. If the request is unclear, ask for clarification on what is being asked — a right that is implicit in the duty to give the bidder a genuine opportunity to explain.
- Provide documentary evidence, not bare assertions. A committee that sees a detailed cost breakdown with supporting supplier agreements and payroll data has something to evaluate. One that receives a covering letter saying "our prices are competitive because of our operational expertise" does not.
- Address the mandatory compliance point head-on: confirm specifically that the price accounts for all applicable wage obligations, social contributions, environmental compliance costs, and any other sector-specific legal requirements. If the committee's concern appears to be that the price is below what the minimum wage would require, provide a staffing plan with hours and rates.
- Respond within the deadline. If the deadline is unreasonably short — as in, genuinely insufficient for a substantive response — object to it in writing and request an extension before the deadline expires. Do not simply miss it.
The thin line in lowest-price Malta tenders
The ALP provisions interact most acutely with lowest-price procurement. When a contract is awarded on price alone, every bidder has maximum incentive to reduce their offer — and the evaluation committee has maximum reason to scrutinise the lowest price in the field. In a lowest-price tender, the margin between a competitively priced bid and an abnormally low one can be narrow and contested.
A few realities specific to lowest-price procurements in Malta:
- The committee cannot adjust the award criterion mid-process. If the procurement document specifies lowest price, it cannot retroactively introduce a quality filter to disadvantage a low-priced bid — the only tool available is the ALP investigation.
- Bidders who lose a lowest-price tender to a price they believe was abnormally low, and that the authority failed to investigate properly, have a viable PCRB challenge ground. Document your concern, obtain your debrief, and file within 10 days.
- Incumbent bidders should not assume that the ALP mechanism will protect them from a more efficient new entrant. If the low bidder can explain its price credibly and substantiate compliance, the investigation will conclude in its favour and the contract will proceed to award. The mechanism is a filter for genuine risks, not a barrier to entry.
Frequently asked questions
What is an abnormally low tender in Malta?
An abnormally low tender is a bid that appears disproportionately low relative to the works, supplies, or services being procured — to the point where the contracting authority cannot satisfy itself that the bidder can deliver at the stated price without compromising quality, conditions, or legal compliance. There is no fixed mathematical formula under S.L. 601.3 or Directive 2014/24/EU: the assessment is qualitative, based on the subject matter, market conditions, and the spread of bids received.
Is a contracting authority in Malta required to investigate an abnormally low tender?
Yes, the obligation is mandatory. Under S.L. 601.3, if a bid appears abnormally low, the contracting authority must request a written explanation from the bidder and assess it before proceeding. A contracting authority that simply rejects an apparently low bid without conducting the mandatory investigation exposes its decision to challenge before the PCRB — and will likely have the decision set aside and ordered to conduct a proper process.
What must a bidder demonstrate to survive an abnormally low tender investigation?
The bidder must explain — with supporting documentation — how performance at the tendered price is genuinely achievable. This typically means: a detailed cost breakdown showing how the price was built; the delivery method, construction technique, or service model that produces the cost advantage; evidence of favourable supply chain conditions, existing assets, or economies of scale; and confirmation (with evidence) of full compliance with applicable employment, environmental, and social law obligations. Bare assertions without documentation rarely survive thorough evaluation.
On what grounds can a contracting authority reject an abnormally low tender?
A contracting authority may reject an abnormally low tender where: the bidder fails to respond within the deadline; the response does not satisfactorily account for the low price; the explanation reveals that performance would breach applicable labour, environmental, or social law obligations; or the low price is attributable to undisclosed or EU non-compliant State Aid. Rejection on any of these grounds must be documented and reasoned — an unreasoned rejection is itself a basis for PCRB challenge.
Can I challenge an ALP rejection before the PCRB in Malta?
Yes. A bidder whose tender was rejected on ALP grounds can file a post-award challenge before the PCRB within 10 calendar days of the award decision being published. The PCRB will assess whether the mandatory investigation procedure was properly followed, whether the reasons given for rejection are substantiated, and whether the principles of equal treatment and transparency were respected. If the Board finds the rejection was unlawful, it can order a re-evaluation or cancellation of the award.
Can a competitor challenge an award on the basis that my price was abnormally low?
Yes. An unsuccessful bidder can challenge an award on the ground that the contracting authority failed to investigate an apparently abnormally low price submitted by the winning tenderer, or that the investigation was perfunctory rather than genuine. If the PCRB agrees, the likely remedy is an order for a properly conducted re-evaluation — not automatic exclusion of the winning bid. This risk underlines why the contracting authority's investigation must be documented, substantive, and defensible.