Class 1 was enough, because the law looks at the amount of your bid: Herentals loses the household-sewage contract for keeping Gepex out of selection on the wrong ground
The town of Herentals required contractor accreditation of class 2 for the purchase of individual sewage-treatment units and excluded Gepex because its class 1 was ‘too low’, whereas the law ties the required class to the amount of the bid — and at 130,657 euros excluding VAT that amount fell below the 135,000-euro threshold; the Council of State also rejected the ‘simulation’ by which the town sought to show after the fact that Gepex would only have come fourth, and annulled the award.
What happened?
On 6 October 2009 the municipal council of Herentals decided to launch an open call for tenders for the supply, installation, commissioning and maintenance of individual sewage-treatment units — IBAs. The zoning plan ultimately provided for 545, but this first phase concerned ‘some 16’. The 2009 budget set aside 150,000 euros; the council estimated the contract at 120,691.45 euros including VAT. The notice appeared on 13 October 2009 in the Bulletin of Awards and required, as a minimum technical-capacity condition, accreditation in categories C and V, class 2 or higher, or in category V with certain sub-categories, likewise class 2 or higher. The specifications repeated that requirement and listed twelve award criteria. At the opening on 19 November 2009 ten bids had been submitted. Gepex bid 158,094.97 euros including VAT, which amounts to 130,657.00 euros excluding VAT. The award report of 17 December 2009 — which by then estimated the contract at 128,706.49 euros including VAT — excluded Gepex in a single line: ‘Accreditation in the right category but the accreditation class is too low’. The joint venture De Peuter/Welec Elektro Techniek came first with 86.03 points and a price of 116,961.41 euros including VAT, and the report noted that the available investment budget allowed the contract to be extended by five units. On 28 December 2009 the college of mayor and aldermen decided not to select Well Milieuadvies and Gepex for insufficient accreditation, to extend the contract by three units to eighteen IBAs, and to award it to De Peuter/Welec for 143,424.46 euros including VAT. Gepex learned of this on 5 January 2010 and received a copy of the decision and the report on 12 January; on 26 February 2010 it brought an action for annulment. The town first defended on interest: on 6 May 2010 — well after the award decision — it had made a ‘simulation’ in which Gepex’s bid was after all scored against the award criteria, and this showed that Gepex would have ranked only fourth, so that annulment would gain it nothing. The Council of State did not follow. Gepex had been excluded at the selection stage, so only its suitability and not the merits of its bid had been examined. If it shows that it did meet the selection criteria, it thereby shows that the entire award procedure is vitiated, because the comparison of bids then wrongly left out a regular bidder; it need not additionally prove that it was entitled to the contract. And the simulation, in substance an examination of its bid after the fact, could not usefully be relied on: in principle only the examination of bids that preceded the award decision counts. On the merits everything turned on two provisions. Article 7 of the Law of 20 March 1991 classifies works according to the amount of the bid, and article 3(2) of the Royal Decree of 26 September 1991 sets a maximum of 135,000 euros excluding VAT for class 1; paragraph 4 specifies that the required class is the one corresponding to the amount of the bid to be approved. Gepex had bid 130,657.00 euros excluding VAT — below the threshold, as the town itself acknowledged. Class 1 therefore sufficed. The town countered that the contract had to be viewed as a whole: with the three additional IBAs, Gepex’s bid would according to the simulation come to 159,206.52 euros, for which class 1 did not suffice. The Council rejected that argument on two grounds. First, the examination after the fact does not count. Second, the reasoning did not hold factually either: the extension was determined by the available budgetary room of 150,000 euros set against the winning bidder’s price for the original sixteen IBAs. Both the council decision and the specifications spoke of sixteen IBAs while the award was made for eighteen, so the extension in reality concerned only two. Had Gepex’s bid emerged as the most economically advantageous, such an extension would not even have been possible: its bid including VAT already exceeded the budgetary limit. Gepex was therefore wrongly not selected on the ground stated in the contested decision, and that finding affects the lawfulness of the entire award procedure. The Council of State annulled the decision of 28 December 2009 and ordered the town of Herentals to pay the costs, set at 175 euros.
Why does this matter?
In practice the accreditation regime is often read as an attribute of the contractor: you are class 1 or class 2, and with class 1 you may not compete for a contract requiring class 2. This judgment corrects that reading. Article 3(4) of the Royal Decree of 26 September 1991 ties the required class not to the authority’s estimate or ambition, but to the amount of the bid to be approved. A bidder who stays within the threshold of his class qualifies — even where the notice announces a higher class. An authority that puts a class requirement in its notice and then mechanically strikes out every bidder with a lower class is looking at the wrong figure. Equally usable is what the judgment says about budgetary extensions. Herentals had extended the contract by three IBAs because the credit allowed it once the winner’s cheap bid was in, and then reasoned backwards: with that extension Gepex would have exceeded its class threshold. That is the wrong order. The size of an extension depends on the price of the bidder to whom the award is made; with a more expensive bidder there would have been less room, or none. One therefore cannot derive an accreditation requirement from an extension that exists only thanks to another bidder’s price. The third point is the sharpest procedurally, and it remains an everyday one. An authority that, once an action is brought, produces a ‘simulation’ scoring the excluded bid and thereby shows that the applicant would not have won in any event, comes too late. Only the examination carried out before the award decision counts. And a bidder excluded at the selection stage need not prove that he would have secured the contract: it suffices to show that he was wrongly kept out of the comparison, because the comparison itself is then vitiated. That is a considerably lighter burden than the one authorities usually aim at in their objections.
The lesson
As a contracting authority, do not write an accreditation class into your notice as if it were an entry ticket. The class follows from the amount of the bid you wish to approve, not from your estimate or from what you may later want to order in addition. So check accreditation only once you know the price, and bidder by bidder. If you want the option of extending the contract within your budget, write that option expressly into the specifications with a clear maximum — Herentals had mentioned the extension nowhere in the contract documents and could not invoke it afterwards as an accreditation requirement. And build your file before the decision: a comparison made months later to defend your exclusion carries no weight with the Council of State. As a bidder excluded because your accreditation class is ‘too low’, first check your own bid amount excluding VAT against the threshold of your class. If you are below it, you have a plea, whatever the notice required. Nor should you be deterred by the objection that you would not have won anyway: if you were excluded at the selection stage, it is enough to show that the exclusion was wrong — the whole comparison of bids then falls with it. Finally, always ask for the award report, because it often contains, as here, the exact sentence on which your exclusion rests.
Ask yourself
Do you test the required accreditation class against the amount of the bid you wish to approve, or against your estimate and your plans? Have you expressly provided for a possible extension of the contract in the specifications, with a clear maximum — and do you appreciate that the room for such an extension depends on the winner’s price and so cannot be held against another bidder? Does your exclusion decision rest on an examination carried out before the award, or on a reconstruction after the fact? And as a bidder: does your bid amount excluding VAT fall below the threshold of your own accreditation class, and have you requested the award report to see which sentence carries your exclusion?
About this database
The Council of State (Raad van State / Conseil d'État) is Belgium's supreme administrative court. In disputes over public procurement — from contract awards to tenderer exclusions — the Council of State is the final arbiter. The rulings in this database are summarised by TenderWolf in plain language, with practical lessons for tenderers and contracting authorities. View all rulings →