Legal Updates

Not every unprofitable bid in a tender justifies its disqualification

May 31, 2022

A bidder in a tender for the provision of debt collection services to a local authority sought to disqualify the winning bid, inter alia, due the fact that the bid was relatively low priced compare to the tender estimation and due to the concern that it is a deficit and tactical proposal.

The Court dismissed the petition and held that a cheap bid does not necessarily indicate a deficit or tactical bid. The purpose of the tender estimation is to set a standard for the reasonableness of the bids submitted in the tender. Deficit bids that deviate from the tender estimate raise an inherent concern that the bidder will not be able to fulfill its obligations and comply with the provisions of the agreement between it and the authority or that the service provided to the authority will be of a poor standard. However, not every nonprofitable bid is to be disqualified and this is at the discretion of the Tenders Committee. Here, the winning bidder is a long-standing company that provides collection services nationwide. Although the bid was relatively law priced, and seems to have low profit margins, the Tenders Committee was convinced that this is not a deficit or tactical bid and the winning bidder is well capable to provide the service without compromising their quality. Therefore, this is not an unreasonable decision that justifies disqualification of the bid.