Lowest Price

Lowest price is an award criteria approach in public procurement where the contract is awarded to the tenderer offering the lowest price, without consideration of quality or other non-price factors. While permitted under Article 67(1) of Directive 2014/24/EU as one method of identifying the most economically advantageous tender, lowest price is increasingly discouraged by EU policy in favor of the broader MEAT (Most Economically Advantageous Tender) approach that balances price with quality, innovation, and sustainability considerations.

How It Works

In a lowest-price procurement, the contracting authority defines the technical requirements and quality standards in the procurement documents, and all tenders that meet these minimum requirements are ranked solely by price. The tender offering the lowest compliant price wins the contract.

The process follows a clear sequence:

Specification phase. The contracting authority defines detailed technical specifications that describe exactly what it needs. These specifications must be precise and comprehensive because, in a lowest-price evaluation, the specifications are the only mechanism to ensure quality. There is no opportunity to award points for exceeding the minimum requirements.
Compliance check. Each submitted tender is first assessed for compliance with the mandatory technical requirements. Tenders that do not meet all specified requirements are rejected. This pass/fail assessment is critical because it is the sole quality control mechanism.
Price comparison. All compliant tenders are ranked by price. The tender with the lowest total price (or unit price, depending on the evaluation method) is ranked first.
Abnormally low tender check. Under Article 69 of Directive 2014/24/EU, if a tender appears abnormally low in relation to the works, supplies, or services offered, the contracting authority must request an explanation from the tenderer before it may reject the tender. This provision is particularly important in lowest-price procurements, where aggressive pricing strategies are common.
Award. The contract is awarded to the lowest-priced compliant tenderer, subject to verification that the tenderer meets the selection criteria and is not subject to exclusion grounds.

Lowest price is appropriate when several conditions are met: the product or service is standardized and clearly definable; quality differences between compliant offerings are negligible or non-existent; the contracting authority can specify all quality requirements in advance; and there is no benefit to receiving offers that exceed the minimum specification.

Common use cases include procurement of standard office supplies (paper, toner, stationery), commodity fuels (diesel, natural gas), basic maintenance services with detailed service level specifications, standard construction materials (concrete, steel of defined grades), and simple courier or transport services.

Conversely, lowest price is inappropriate for complex services where quality variation is significant (consulting, IT development, healthcare), works where design and execution quality affect durability and safety (major construction projects), and procurements where innovation, sustainability, or social value are policy objectives.

Legal Framework

Article 67(1) of Directive 2014/24/EU permits contracting authorities to base the award on the tender with the lowest price, but places this option within the broader MEAT framework. The directive treats lowest price as one way of identifying the most economically advantageous tender, not as a separate and equal method.

Article 67(2) further establishes that the most economically advantageous tender "shall be identified on the basis of the price or cost, using a cost-effectiveness approach, such as life-cycle costing" and "may include the best price-quality ratio." The placement of price-only award alongside life-cycle costing and best price-quality ratio signals the directive's preference for approaches that consider value beyond purchase price.

Recital 89 of the directive is particularly significant. It states that contracting authorities should be "encouraged to choose award criteria that allow them to obtain high-quality works, supplies and services that are optimally suited to their needs." It adds that "Member States should be able to provide that contracting authorities may not use price only or cost only as the sole award criterion." Several Member States have used this power.

National restrictions on lowest price. A number of EU Member States have imposed legislative restrictions on the use of lowest price:

France: The Code de la commande publique (Article L2152-7) prohibits the use of lowest price as the sole criterion for procurement of intellectual services. In practice, French authorities predominantly use multi-criteria evaluation.
Italy: The Codice dei contratti pubblici strongly discourages lowest price for complex works and services, requiring authorities to justify its use.
Netherlands: The Aanbestedingswet 2012 and the Gids Proportionaliteit discourage lowest price and promote "best price-quality ratio" (EMVI) as the default methodology.
Germany: The VgV permits lowest price but requires that it be justified when the procurement involves services where quality is material.

Article 69 (Abnormally low tenders) provides an important safeguard specific to lowest-price procurements. If a tender is significantly below the prices of other tenders or the contracting authority's estimate, the authority must request an explanation covering the economics of the manufacturing process or services, technical solutions or favorable conditions available to the tenderer, compliance with environmental, social, and labor law, and potential state aid. The authority may only reject the tender if the explanation is unsatisfactory, particularly if it reveals non-compliance with labor or environmental law.

Practical Examples

Example 1: Office Paper Supply. A government agency procures 50,000 reams of A4 80gsm white copy paper for one year. The specification is detailed (exact weight, brightness, moisture content, packaging requirements) and the product is a commodity with no meaningful quality variation between compliant offerings. The agency uses lowest price: 12 suppliers submit compliant bids, and the contract is awarded to the supplier offering the lowest unit price per ream. This is a textbook appropriate use of lowest price.

Example 2: Road Resurfacing with Quality Concerns. A local authority procures road resurfacing for a busy urban street using lowest price. Four contractors bid. The lowest bidder proposes thin overlay asphalt and minimal traffic management. Within two years, the surface deteriorates, requiring premature re-resurfacing. The authority would have achieved better value by using MEAT criteria incorporating asphalt quality, warranty period, traffic management quality, and environmental performance alongside price — illustrating why lowest price is poorly suited to works where execution quality varies significantly.

Example 3: Cleaning Services. A public building manager procures office cleaning services. The specification details frequency, standards, and materials. Ten companies submit tenders. The lowest-priced tender is 40% below the average. Under Article 69, the authority requests an explanation and discovers the tenderer's pricing does not account for the national minimum wage. The tender is rejected as abnormally low. The second-lowest tender is awarded the contract.

Key Considerations for Suppliers

In lowest-price procurements, compliance is everything. Since there is no opportunity to score points for exceeding minimum requirements, focus your effort on meeting every specification requirement precisely and efficiently. Providing a superior product or service beyond the specification may increase your costs without any evaluation benefit.

Price aggressively but sustainably. Lowest-price procurement is a zero-sum game: the cheapest compliant tender wins. However, pricing below your cost floor to win the contract creates unsustainable commercial pressure that may lead to quality deterioration, contract disputes, or losses. Calculate your true cost of delivery (including all labor, materials, transport, overheads, and contingencies) and set your price at a margin that sustains your business.

Watch for abnormally low tender challenges. If your price is significantly below the average, expect the contracting authority to request a justification under Article 69. Prepare documentation showing your cost structure, any efficiency advantages or economies of scale that explain your pricing, and your compliance with labor and environmental law. A well-prepared justification can turn a potential disqualification into a confirmation of competitiveness.

Assess whether the market is moving away from lowest price. Across the EU, the trend is clearly away from lowest price and toward quality-based evaluation. Suppliers that invest in differentiation — sustainability credentials, innovation capacity, service quality, social value — are better positioned for the growing proportion of MEAT procurements. Building a business model optimized solely for lowest-price tenders may limit your market as more authorities adopt multi-criteria evaluation.

Examine the specification for hidden quality requirements. Even in lowest-price procurements, the technical specification may contain requirements that effectively function as quality differentiators: warranty periods, response times, environmental certifications, quality management certifications (ISO 9001), and personnel qualifications. Meeting these requirements has a cost; ensure your pricing accounts for all specification requirements, not just the headline product or service.

MEAT (Most Economically Advantageous Tender) — The broader evaluation approach that considers quality alongside price, increasingly preferred over lowest price.
Award Criteria — The general concept of criteria used to evaluate tenders; lowest price is the simplest form of award criterion.
Award — The decision to select the winning tender, based on the applied award criteria.
Selection Criteria — The pass/fail criteria assessing tenderer capacity, applied before the lowest-price evaluation.
Estimated Value — The contracting authority's estimate of the contract's worth, used as a benchmark for detecting abnormally low tenders.

Frequently Asked Questions

Is lowest price being phased out in EU procurement?

Lowest price is not being formally abolished at EU level, but its use is declining significantly. Directive 2014/24/EU explicitly permits Member States to restrict or prohibit the use of lowest price as the sole award criterion, and several Member States have done so for specific categories of procurement. The European Commission's policy direction consistently encourages multi-criteria evaluation, particularly for complex contracts and procurements where strategic objectives (sustainability, innovation, social inclusion) are at stake. In practice, data from TED shows that the proportion of above-threshold procurements using multi-criteria evaluation has steadily increased, with lowest price accounting for less than 30% of procedures in most Member States.

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What is the difference between lowest price and life-cycle costing?

Lowest price considers only the purchase price at the point of award. Life-cycle costing, as defined by Article 68 of Directive 2014/24/EU, considers all costs over the product or service lifetime: acquisition, use (energy, water, consumables), maintenance and repair, and end-of-life costs (decommissioning, recycling, disposal). Additionally, life-cycle costing may include the cost of environmental externalities (such as greenhouse gas emissions) if they can be monetized and verified objectively. A product with a higher purchase price may have a lower life-cycle cost due to greater energy efficiency, durability, or lower maintenance requirements.

Can a contracting authority use lowest price for a high-value contract?

There is no legal prohibition based on contract value alone. A contracting authority may, in principle, use lowest price for any contract regardless of value, provided it can be justified. However, for high-value and complex contracts, using lowest price alone is more likely to result in challenges, quality problems, and poor value for money. Audit and review bodies increasingly scrutinize the use of lowest price for high-value contracts, particularly where quality, safety, or sustainability are material considerations. Best practice recommends reserving lowest price for commodity procurements where the authority can comprehensively specify all quality requirements in advance.