Procedure for Calculating Exceptionally Low Bids in Tenders

Procedure for Calculating Exceptionally Low Bids

When you have one tenderer, the reference shall be the Base Budget Bidding (PBL). It is considered an exceptionally low offer if less than 25% of the PBL. The offer is exceptionally low if: A < 0.75 PBL.

When there are two bidders, the difference will be the highest amount bid. Where A is the offer equal to or greater than the supply amount B, the offer is considered reckless if B is less than 20 percentage units of supply A. The offer will be reckless if B meets: B < 0.80 A

Where there are three bidders, A being the offer of equal or greater value than offer B, and B's offer is of equal or greater amount than supply C, the procedure for calculating disproportionate or reckless supply is as follows:

• If offer A is greater than the arithmetic mean X_ABC of the three offers submitted by more than 10 percentage units: A > 1.10 X_ABC. In this case, the reference is the arithmetic mean of the two lower bids: X_BC. Supply C is considered reckless if less than 10 percentage units below the X_BC average. Offer C is reckless if it satisfies: C < 0.90 X_BC
• If, on the contrary, supply A is equal to or less than the arithmetic mean X_ABC of the three tenders plus 10 percentage units: A ≤ 1.10 X_ABC. In this case, the reference is the arithmetic mean of the three bids: X_ABC. Offer C is considered reckless if it is less than 10 percentage units of the mean X_ABC. Offer C is reckless if it satisfies C < 0.90 X_ABC

In any case, it is considered disproportionately low if the percentage exceeds 25 units of the PBL.

When you have four or more bidders, the procedure for calculating frivolous bids is as follows:

1. The arithmetic mean of all bids is calculated (X_T). Bids exceeding X_T by 10 percentage units are rejected.
2. The arithmetic mean of the remaining bids (X_R) is calculated.
3. Any offer (n) that is lower than X_R by 10 percentage units is considered reckless. The offer "n" is reckless if it holds that n < 0.90 X_R. However, the arithmetic mean of X_R is calculated by reference to at least three offers of lesser value.

The contracting authority may reduce the rates by one third. Where there are companies in the same group, only the lowest bid will be taken for assessment. If favorable reports are required, the Contracting Authority may award the execution of the work to low bidders with exceptionally low bids. In such cases, the final amount of the deposit is 20% of the budget tender basis.