On 21 October 2026, the Government Commercial Function published new guidance on how contracting authorities can deal with abnormally low tenders under the Procurement Act 2023 (the Act).

A low price alone does not mean a tender should be rejected. This insight breaks down the guidance and looks at when a tender may be considered abnormally low, the process contracting authorities should follow and the practical steps they can take when assessing bids.

What is an abnormally low tender?

The guidance describes an abnormally low tender as one with a price that appears abnormally low for performance of the contract. This could be where the price appears unsustainable or unrealistic without compromising deliverability, quality and/or contractual compliance.

Factors that may indicate an abnormally low price include comparisons with the contracting authority’s requirements, typical market prices, other benchmark data, a “should cost model” or business case, and other tenders. There is a requirement in the Sourcing Playbook to refer any abnormally low bid that is more than 10% lower than either the average of all bids or the “should cost model” estimate to the Cabinet Office.

However, a low price should not automatically lead to a tender being disregarded. There may be legitimate reasons for it, including:

• efficiencies or innovative solutions;
• advantageous supply chain agreements;
• a strong understanding of the authority’s requirements; or
• a supplier seeking to enter a new market.

What does the Procurement Act 2023 say?

Section 19(3)(c) of the Act provides that a contracting authority “may disregard any tender that offers a price that the contracting authority considers to be abnormally low for performance of the contract.” Importantly, the Act permits rather than requires the authority to disregard the tender.

Before doing so, the authority must notify the supplier and give it a reasonable opportunity to demonstrate that it can perform the contract at the price offered. If the supplier demonstrates this to the authority’s satisfaction, the tender must not be disregarded as abnormally low. If it does not, the authority may disregard it.

What process should contracting authorities follow?

The guidance sets out four steps:

1. Identify whether any tenders appear abnormally low. Potential indicators include clear price outliers, incomplete price breakdowns, inconsistencies between resourcing and delivery proposals, pricing schedules which do not add up, and low supply chain costs without supporting evidence. Authorities must treat suppliers equally, applying the same test to tenders unless a difference between suppliers justifies different treatment.
2. Request the supplier to demonstrate that the tender is not abnormally low. Under the Act, contracting authorities must notify the supplier that it considers the price to be abnormally low and give the supplier a reasonable chance to demonstrate the contract is deliverable for the price offered before it can disregard the tender for being abnormally low. The guidance states it would be good practice to explain why the price is considered abnormally low, the evidence or explanation required, the deadline for the response and the consequences of not responding. The deadline should give the supplier a reasonable opportunity to respond. The onus is on the supplier to demonstrate that it can deliver the contract for the price offered.
3. Assess the supplier’s response. The contracting authority should consider whether the explanation demonstrates to its satisfaction that the contract can be performed for the price offered.
4. Advise the supplier of the decision. This should be done in writing, including whether, how and why the authority concluded that the tender was abnormally low and that it was not satisfied the contract could be performed for the price offered.

Keep a clear record

Record-keeping is also important. Under section 98 of the Act, contracting authorities must keep records they consider appropriate to explain material decisions, including a decision to disregard a tender under s.19(3)(c) for being abnormally low.

The guidance suggests this record might cover:

• why the tender appeared abnormally low
• the evidence requested and received
• how and by whom it was assessed
• why the tender was accepted or disregarded
• any further actions and a chronology of events

Capsticks’ view

The guidance provides contracting authorities with a useful framework for approaching unusually low bids. A low price is not, by itself, enough to disregard a tender. Contracting authorities need to identify why the tendered price raises concerns and give the supplier a reasonable opportunity to demonstrate that it can deliver the contract for the price offered.

Authorities should therefore think about price and deliverability from the outset of the procurement. Business cases and procurement plans should have appropriate benchmark information available, and tender documents should identify what pricing information suppliers should provide. Contracting authorities should also maintain clear records of any abnormally low tender assessment and its decision-making process. These steps will help authorities apply their processes consistently and transparently.

How Capsticks can help

If you have any queries about abnormally low tenders under the Procurement Act 2023, or need support with your procurement processes, please speak to Principal Associate Ciaran Wells, Associate Rima Legah or another of our procurement specialists to find out more about how Capsticks can help.