Here's a number that should bother anyone who cares about how public money gets spent: 73% of procurement contracts in Latvia between 2021 and 2023 were awarded on lowest price alone.
Not "most economically advantageous tender" (MEAT). Not best value. Lowest price.
I keep coming back to this stat because of what it implies. In nearly three out of four cases, the decision came down to who bid less. Not who offered the best technical solution, the strongest team, the most realistic timeline, or the lowest total cost over the contract's lifetime. Just the number at the bottom of the financial proposal.
Why this happens (and it's not what you think)
The easy explanation is that procurement teams are lazy or don't care about quality. The real explanation is the opposite: evaluating quality is hard, time-consuming, and opens you up to legal challenges.
When you award on lowest price, the decision is nearly bulletproof. Number A is smaller than Number B. Done. Nobody appeals a math comparison.
When you evaluate quality, you need criteria. You need weightings. You need documented justifications for every score. You need evaluators with domain expertise. And you need time — time to read, compare, score, and defend your decisions.
For a procurement team processing dozens of tenders per quarter with limited staff, the choice between a clean, fast, defensible price comparison and a complex, time-consuming quality evaluation isn't really a choice at all. They pick the one they can actually complete.
The EU's own Directive 2014/24/EU was designed to push procurement toward MEAT criteria — quality, lifecycle cost, environmental and social factors alongside price. Over a decade later, the cheapest bid still wins most of the time.
What the race to the bottom actually looks like
We've seen the downstream effects in procurement documents we analyze. They follow a pattern.
Round one: a contract gets awarded on lowest price. The supplier delivers, but cuts corners on staffing, uses cheaper subcontractors, or skips the non-essential parts of the spec. The service technically meets the minimum requirements. Barely.
Round two: the same procurement comes up again. The procuring authority writes tighter specifications to prevent the corner-cutting they experienced. The specs become more rigid, more prescriptive. This discourages innovative suppliers who would approach the problem differently.
Round three: fewer bidders participate because the specs are so narrow. Competition drops. In many cases, only one or two companies bid. The single-bidder rate in the EU has been climbing and hit its highest level in a decade in 2022.
The procurement got cheaper on paper. Everything else got worse.
Lifecycle cost: the thing almost nobody calculates
Here's a specific example that illustrates the problem. A municipality procures an IT system. Bidder A offers it for EUR 200,000. Bidder B offers it for EUR 280,000.
Lowest price wins. Bidder A gets the contract.
Over the next five years: Bidder A's system requires EUR 50,000/year in custom maintenance because the architecture doesn't support standard updates. Bidder B's system would have cost EUR 15,000/year in maintenance and included a migration path that Bidder A's system lacks.
Total five-year cost: Bidder A = EUR 450,000. Bidder B would have been EUR 355,000.
This isn't hypothetical. Studies show that only 6% of public authorities predominantly use lifecycle costing or total cost of ownership in their procurement evaluations. 64% still use purchase cost as the primary criterion. The remaining 30% use some mix.
The directive allows lifecycle costing. It even encourages it. But doing it properly requires analyzing technical proposals in depth — understanding maintenance implications, scalability, integration costs, end-of-life disposal. That takes expertise and time that lowest-price evaluation doesn't require.
What quality evaluation actually requires
Genuine quality evaluation means reading proposals. Not scanning them for keywords. Reading them.
Does the bidder's proposed methodology actually address the problem? Is their team qualified for this specific type of work, or are they padding the roster with CVs? Do their timelines account for known dependencies, or are they optimistic to the point of fiction? Is the pricing realistic given what they're promising, or is there a gap that will turn into change orders later?
These questions can't be answered by comparing prices. They require judgment — informed by thorough document review.
And this is where the circle closes. Procurement teams don't do quality evaluation often enough because it takes too long. It takes too long because reading and comparing 200+ pages per bidder against 40+ criteria is genuinely impossible in the time available. So they default to price.
It's not a character flaw. It's a capacity problem.
Breaking the cycle
The way out isn't telling procurement teams to "evaluate quality more." They know they should. They just can't, given the volume and the deadlines.
The way out is making quality evaluation feasible. Reducing the time it takes to read, compare, and document findings without reducing the thoroughness.
That's what we built our AI agent to do. Not to score bids — that's the procurement team's call. But to read everything, compare everything, and present findings with evidence so the team can make informed quality judgments in a reasonable timeframe.
When quality evaluation stops being a luxury that only high-value procurements can afford, the lowest-price trap starts to break. Procuring authorities can justify MEAT criteria because they can actually evaluate them. Suppliers can compete on quality because they know it'll be assessed. Lifecycle cost becomes part of the conversation because someone (or something) actually reads the technical details that reveal true cost.
73% lowest price isn't a policy choice. It's a symptom of a system that can't handle anything more complex. Fix the capacity problem, and the policy follows.