Procurement Case Note (ROI) : Landmark decision of Irish High Court provides welcome guidance

This is the first decision of its kind in the Republic of Ireland and provides welcome guidance on how contracting authorities should recognise and manage low-priced bids.     

The High Court ruled that the Council failed to identify that the winning bid (for public lighting services) was abnormally low and failed to require the winning bidder to explain its costs in accordance with applicable procurement law. In doing so, the Court clarified the following:

1. A contracting authority has an obligation to identify suspect tenders.
2. An authority must ask itself an initial question as to whether tenders appear (or “arouse a suspicion” of being) abnormally low.
   1. a bid which is below the range of what might legitimately be considered normal in the context of the procurement would satisfy this test.
   2. a bid which is considerably below that of other tenders or the normal market price might also be abnormally low.
3. An authority’s obligation to investigate pricing and seek an explanation only arises when a tender appears abnormally low.
4. An authority may only reject an abnormally low tender after it has sought and assessed an explanation from the tenderer, consulted with that tenderer and determined that the evidence supplied does not satisfactorily account for the low pricing.
5. There is no general duty on an authority to reject an abnormally low tender (unless it breaches particular laws, such as labour laws).
6. There is no general obligation on an authority to adopt or express a reasoned decision that there are no abnormally low tenders, but where an unsuccessful tenderer requests reasons why another tender was not determined to be abnormally low the authority is required to provide a detailed response.
7. If there is a formal investigation into a suspect tender, the authority must adopt a reasoned decision on whether to accept or reject that tender.

Whether you are a bidder faced with low pricing from competitors or a contracting authority managing low bids from one or more tenderers, feel free to contact our Public Procurement team for more information and expert advice.

*White Mountain Quarries Limited t/a Breedon v Mayo County Council [2024] IEHC 259