Abnormality of Pricing for Public Contracts Bovis, Christopher; Soloveičik, Deividas
European procurement & public private partnership law review,
18/7, Letnik:
18, Številka:
2
Journal Article
Traditionally and through the evolution of the Public Procurement acquis, works contracts subsidised directly by more than 50% by Member States could fall within the scope of the Works Directive.1 ...Works that were not subsidised directly, or for less than 50%, fell outside of this anti-circumvention provision. Not all subsidised works fall within the scope of public procurement regulation: only civil engineering works, such as the construction of roads, bridges and railways, as well as building work for hospitals; facilities intended for sports, recreation and leisure; and university buildings and buildings used for administrative purposes are referred to as ‘subsidised works contracts’.2 That list was exhaustive. The Works Directive did not apply to works contracts which are declared secret or the execution of which must be accompanied by special security measures3 in accordance with the laws, regulations or administrative provisions in force in the Member State concerned; nor does the Directive apply to works contracts when the protection of the basic interests of the Member States’ security so required. Finally, the Works Directive did not apply to public works contracts awarded in pursuance of certain international agreements;4 nor did the Directive apply to public works contracts awarded pursuant to the particular procedure of an international organisation5 such as NATO, which has their own rules on the awarding of public works contracts. The new codified Public Sector Directive has introduced a series of new concepts that are the product of jurisprudential inferences and policy refining of the previous legal regimes. They intend to modernise public purchasing, aligning the procurement of government and its agencies with those of utilities that operate in more commercially-oriented environments. Keywords: abnormally low tender; predatory pricing; subsidies
Abnormally Low Price and State Aid Hartung, Wojciech; Zielenkiewicz, Tomasz
European procurement & public private partnership law review,
2023, Letnik:
18, Številka:
2
Journal Article
One of the elements explicitly indicated in Article 69 of Directive 2014/24/EU that should be taken into account by the contracting authority when assessing the credibility/reliability of a tender is ...the question of State aid received by a contractor and its impact on the price the contractor offers (Article 69(2)(f) of Directive 2014/24/EU). Keywords: public procurement; abnormally low tender; State aid; economic advantage
Abnormally Low Tenders Simovart, Mari Ann; Tugendreich, Bettina; Azud, Ján ...
European procurement & public private partnership law review,
18/7, Letnik:
18, Številka:
2
Journal Article
This article discusses Article 69 of Directive 2014/24/EU, analysing basic concepts like abnormally low tender, indicating how an abnormally low tender should be identified by the contracting ...authority and the steps necessary to reach a balanced conclusion on a low-priced tender’s (ir-)regularity. This article explains the meaning of abnormally low tenders from the EU law perspective, providing a basis for the following articles in this special edition of the journal. Keywords: abnormally low tender; Directive 2014/24/EU; Public Sector Directive; Article 69
We study optimal procurement in the presence of default risk. Contractors differ in the penalty they suffer in case of default, which is private information. If the loss to the procurer from ...non-completion is high relative to the cost of completion, the optimal mechanism is to assign the project by a fair lottery. The procurer pays the winner enough so that the project is always completed and extracts contractors' surplus by charging them participation fees. When the loss to the procurer from non-completion is low relative to the cost of completion, the project is assigned to the contractor with the highest probability of default; that is, the one with the lowest defaulting penalty. The optimal probability of default is inefficiently low: projects that would be first-best efficient not to complete are completed.
This study was performed in order to reveal factors affecting abnormally low tenders (ALTs) and to minimize negative effects of them. A thorough literature review was carried out to observe past ...research about the reasons of and possible solutions to ALTs. A questionnaire was prepared and submitted to construction professionals to capture negative impacts of ALTs based on the interviews with experts and past literature. 430 companies responded to the questionnaire. The data analysis was carried out by the multinomial logistic regression statistical tool. Having quality control systems and restricted procedure with prequalification procurement systems were main significant factors to reduce ALTs. Based on all significant factors, recommendations were made to construction professionals and companies to reduce adverse effects of ALTs.
Is Zero a Public Procurement Number? Rašić, Mario
European procurement & public private partnership law review,
16/9, Letnik:
16, Številka:
3
Journal Article
The purpose of this article is to provide a concise analysis of the rules applicable to the rejection of abnormally low and non-compliant tenders in the European Union. The paper will deal with a ...case decided by the European Court of Justice which deals with violations of rights or fundamental freedoms regarding the (potential) irregularities of tenders. The study is exploratory and interpretative in nature. Data used for this research is secondary data: the author analyses prior research, regulations and decisions of the European Court of Justice and national authorities. The first section of this paper will examine the history and development of the institute of abnormally low tenders within the European Union and Slovenian positive law. The main research part of the paper is the analysis of the most relevant cases stemming from the European Court of Justice. Finally, the main scientific contribution of this paper, in addition to the analysis, is the de lege ferenda observations, which may contribute to resolving challenges related to abnormally low tenders in the EU. Keywords: abnormally low tenders, Directive 2014/24/EU, award criteria
This paper analyses the problem of abnormally low tenders in the procurement process. Limited liability causes firms in a bad financial situation to bid more aggressively than financially healthy ...firms in the procurement auction. Therefore, it is likely that the winning firm is a firm in financial difficulties with a high risk of bankruptcy. The paper focuses on the regulatory practice of surety bonds to face this problem. We show that the use of surety bonds reduces and sometimes eliminates the problem of abnormally low tenders. We provide a characterization of the optimal surety bond and show that the U.S. practice of requiring that surety bonds cover over 100% of the contract price can be excessive, implying overinsurance to the problem of abnormally low tenders. PUBLICATION ABSTRACT
Abnormally Low Tenders of Public Providers Biancardi, Benedetta
European procurement & public private partnership law review,
19/12, Letnik:
13, Številka:
4
Journal Article
This article analyses whether the European public procurement legal framework provides adequate mechanisms to prevent the violation of State aid rules when public undertakings take part in ...procurement procedures as economic operators. It is argued that one of the main risks when public undertakings bid in a tendering procedure is the cross-subsidisation of their activities. Thus, the paper first analyses the measures provided under State aid law to prevent cross-subsidisation of activities, in particular the Transparency Directive. Then, it focuses on Article 69(4) of Directive 2014/24/EU, which regulates the exclusion of abnormally low tenders tainted by State aid. Specific attention is given to the ratio of the provision, to the type of incompatible aids covered by it, as well as to the relationship between the duties and powers of the contracting authorities and the controlling role of the European Commission. The last section investigates the transposition and application of such provision at national level, in Italy. This article reaches the conclusion that Article 69(4) of the Directive, as currently formulated and applied, is not useful to detect the cross-subsidisation between competitive and reserved activities of public undertakings and make some proposals to improve the overall effectiveness of the system and to guarantee competition on a level playing field between public and private operators.
This paper analyzes the problem of abnormally low tenders in the procurement process. Limited liability causes firms in a bad financial situation to bid more aggressively than good firms in the ...procurement auction. Therefore, it is more likely that the winning firm is a firm in financial difficulties with a high risk of bankruptcy. The paper analyzes the different regulatory practices to face this problem with a special emphasis on surety bonds used e.g. in the US. We characterize the optimal surety bond and show that it does not coincide with the current US regulation. In particular we show that under a natural assumption the US regulation is too expensive and provides overinsurance to the problem of abnormally low tenders.
Abnormally low tender problem in public works Gunduz, M.; Karacan, V.
2008 International Conference on Management Science and Engineering 15th Annual Conference Proceedings,
2008-Sept.
Conference Proceeding
The purpose of this paper is to determine the problems due to abnormally low tenders (ALTs) and to develop some methods for reducing the negative effects of ALTs. In this paper, the reasons of ALTs, ...recommendations to eliminate ALTs were investigated. According to this investigation, it was observed that results change due to different social structures of countries. In addition to this investigation, ALT evaluation questionnaire was prepared to determine reasons of ALTs. The ALT evaluation questionnaire reached to 400 companies. 18 questions were asked to the companies. Qualitative statistical methods were used to analyze correlation between variables. Comprehensive analysis was applied to the questionnaire and reasons behind ALTs were determined. Finally, some recommendations are proposed to professionals.
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