[markus92]

I got no source for this, but I've heard about this happening before on European construction projects (lowest 2 bidders being excluded for being too low).

[Someone]

Blindly dismissing the lowest bid would get you in court and lose in no time.

Dismissing a very low bid must be dismissed, giving good arguments that the bid is not realistic is something completely else.

[ComradeTaco]

Generally bid that is not "technically complete" .i.e. does not demonstrate a real ability to undertake and complete the project can be rejected. There is some engineering discretion to this.

[markus92]

The argument given was that it was an unrealistic bid as it was too cheap to be able to be completed. It all depends on how you set up the tender.