Melin wins the annulment of a Defence award but receives nothing: at a 4.1 per cent price gap, the ‘lost chance’ remains speculation
After the Council of State annulled, in February 2024, the award of lot 2 ‘Florennes’ of a Defence framework agreement for road works because Defence had never checked the global prices, the unsuccessful bidder Melin claimed 105,942.80 euros in compensation; the Council rejects the claim in full, because only the illegality actually retained in the annulment judgment counts and a price gap of barely 4.1 per cent makes it implausible that a proper price check would have struck down the awardee’s tender rather than Melin’s own.
What happened?
On 19 June 2019 the head of the Public Procurement Division of Defence’s Directorate-General Material Resources awarded lot 2 ‘Florennes’ to Société Européenne de travaux. The contract was an open adjudication for one or more framework agreements for works on a schedule of prices — two lots, running until 31 December 2020 — covering maintenance, repair and limited adaptation works to the road infrastructure in Defence’s military quarters and domains. Melin, ranked second, challenged the award and won: by judgment no. 258.993 of 29 February 2024 the Council of State annulled the award decision on the third plea. The reason was a misreading by Defence. Its award decision stated that the unit prices had been examined and found acceptable, but that the global prices had not been analysed ‘given that the number of selected tenders < 4’. That reasoning, the Council held, confuses two things: article 36(4) of the royal decree of 18 April 2017 imposes a specific price investigation once at least four tenders have been taken into consideration and a tender falls at least fifteen per cent below the average, but that specific duty is additional to the general price verification under article 84 of the law of 17 June 2016 and articles 33 and 35 of the same decree — it does not dispense with it where it does not apply. Nor is the correction of material and arithmetical errors and omitted items (article 34 of the decree) a price check: it serves only to make tenders comparable. On 3 May 2024 Melin brought a claim for compensation under article 11bis of the coordinated laws. Principally it sought 105,942.80 euros — ten per cent of its tender amount of 1,059,428.02 euros — plus compensatory interest at the statutory rate from 1 January 2020. It relied on pleas the Council had not examined in the annulment judgment: the required accreditation class 1 category C was, in its view, not a valid selection criterion, and it was in any event disproportionately low, because Defence had relied on a ceiling of 135,000 euros of simultaneous orders while the contract ultimately generated more than one million euros in orders. With a proportionate criterion — class 2 category C — the awardee would have been excluded and lot 2 would automatically have gone to Melin. In the alternative it valued its lost chance at fifty per cent (52,971.40 euros), and further in the alternative at thirty-three per cent (35,314.26 euros). Defence replied that compensation can only cover the damage flowing from the illegality actually established, disputed any causal link, and argued in the alternative for a thirty-three per cent chance. It also opposed applying by analogy the ten per cent lump sum of article 16, third paragraph, of the law of 17 June 2013: that rate penalises failing to award to the lowest regular tender, which was not the case here. Moreover, the profit could be no more than 4.12 per cent, it argued, since Melin had itself claimed during the annulment proceedings that the awardee must be ‘selling at a loss’ given that gap. That brought Defence to a figure of (1,059,428.02 euros × 4.12 per cent) / 3, or 14,549.48 euros. It did not dispute that interest would run from 1 January 2020, the median date of performance. The Council of State sides with Defence. Article 11bis compensates only damage causally linked to the illegality established by the annulment judgment; the pleas Melin had raised but which the Council never examined do not count at this stage. The mere finding that the global prices were not checked does not mean Melin would necessarily have obtained the contract, so the principal claim falls. That leaves the lost chance. It can be compensated where it is real — not purely speculative — and definitively lost, and where the causal link is established; quantifying the chance goes to the amount, not to the certainty, unless the chance is so slight as to be practically non-existent. The burden of proof lies on the party claiming compensation. And that is precisely where Melin fails. First, the unit prices had been checked and found acceptable, and that assessment was not criticised in the annulment action; even though verifying unit prices and verifying the global price are not the same, the absence of apparent abnormality in the unit prices does not allow one to presume that a global check would have revealed an abnormality. Second, and above all, the gap between Melin’s global price (1,186,444.50 euros) and the awardee’s (1,137,618.92 euros) was about 4.1 per cent. In such a configuration it is unlikely that the awardee’s price would have been suspected of abnormality without the same finding applying to Melin’s own tender, and Melin offered nothing to show that the gap was significant enough here to treat the two tenders differently. Its claim to a one-in-two chance remained a bare assertion it did not attempt to prove in fact. The claim is therefore unfounded. Melin bears the costs: the roll fee of 200 euros and the contribution of 24 euros.
Why does this matter?
Between an annulment judgment and a cheque lies a distance many bidders underestimate. This judgment measures it precisely, on two mutually reinforcing points. The first is procedural: in a claim under article 11bis, only the illegality the annulment judgment actually retained counts. Melin had also argued in its annulment action that the selection criterion was invalid and far too low — pleas which, had they been upheld, would have led directly to the awardee’s exclusion and hence to the award to Melin itself. But the Council had already upheld the action on a different, narrower plea and never examined those selection pleas. In the compensation phase they are therefore worthless. Which plea carries the annulment thus co-determines what you can still claim afterwards — a consequence that makes itself felt during the annulment proceedings, not only after them. The second point concerns evidence. A lost chance must be real, and real here means: made plausible in fact. Naming a percentage is not enough. Melin put fifty per cent on the table without explaining why it would have been the awardee’s tender, and not its own, that failed the price test. The judgment shows why that is so hard where a price check was omitted: an abnormality test looks at all selected tenders at once, and a bidder barely 4.1 per cent more expensive than the winner sits in the same price zone. The instrument with which you hope to strike your competitor points just as readily at you. There is also a less obvious lesson about litigation strategy. During the annulment phase Melin argued that, with a gap of 4.12 per cent, the awardee must be selling at a loss. Years later Defence produced that argument to contend that Melin’s own profit margin could therefore be no higher than 4.12 per cent either. The Council did not need to reach the point, but it shows how an argument that sounds good in the first proceedings can be turned against you in the second. Finally, for contracting authorities the judgment confirms something the case law has long said and which practice keeps getting wrong: fewer than four tenders does not release you from the general price verification. Article 36(4) is an additional obligation, not an exemption regime. The reassuring part is that an omitted price check does not automatically translate into liability — but that is no reason to skip it, because the annulment itself did follow.
The lesson
If you are a bidder and you secure an annulment, start building at once the causal chain you will need in the compensation phase. Ask yourself which illegality carries the annulment and what it would concretely have changed: an omitted price check yields damages only if you make it plausible that a proper check would have eliminated the winning tender without touching yours. Support that with figures — an item-by-item price analysis, a comparison with estimates or earlier contracts, indications of underpricing — not with a percentage you find reasonable. If your own price sits close to the winner’s, as here at 4.1 per cent, be realistic: that argument works against you. Bear in mind too that pleas the Council did not examine in the annulment judgment no longer count in the compensation phase; if you hold a strong selection plea, you have an interest in that plea carrying the annulment. And be careful with assertions about a competitor’s margin: what you say in the first proceedings about ‘selling at a loss’ can be used by the authority in the second to depress your own expected profit. Finally, do not count on the ten per cent lump sum from the remedies act: it does not apply automatically under article 11bis. If you are a contracting authority, remember that the general price verification under article 84 of the law of 17 June 2016 and articles 33 and 35 of the royal decree of 18 April 2017 always applies. The specific investigation under article 36(4) comes on top of it once at least four tenders have been taken into consideration; below that number only the additional duty falls away, not the ordinary one. So do not write in your award report that a global price analysis was omitted because there were too few tenders, and do not confuse correcting arithmetical and material errors with a price check.
Ask yourself
Do you know exactly which illegality carries your annulment judgment, and what that illegality can yield in the compensation phase? Can you show with figures that a proper price check would have eliminated the winner’s tender without also touching yours — or is your price so close that the same test would hit you both? Do you realise that pleas the Council did not examine cannot be revived later to support a damages claim? Have you checked whether your own positions from the annulment proceedings — about a competitor’s margin or loss-making price, for instance — can be turned against you in the compensation phase? And as a contracting authority: do you verify the global prices of all selected tenders, including where there are fewer than four tenders and article 36(4) of the royal decree of 18 April 2017 therefore does not apply?
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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 →