Three man-days to award a contract and 70 euros an hour: Beliris was entitled to reject WDOG Architecten’s tender for the Papenvest site as abnormally low
WDOG Architecten tendered for client-assistance services in the renovation of the Papenvest site in Brussels at roughly a quarter of the 250,000-euro estimate, allotted three man-days to the award phase where the specification provided fifteen working days, and used an average hourly rate of 70 euros; Beliris requested a price justification, dissected it phase by phase and rejected the tender as abnormally low — and the Council of State, ruling under extreme urgency, found no serious plea against that, held that a contracting authority may apply article 110(3) in a negotiated procedure by way of the specification, and declared the challenge to the choice of that procedure inadmissible because it came more than eight months after publication.
What happened?
Under the Beliris cooperation agreement between the Belgian State and the Brussels-Capital Region, the Transport Infrastructure Directorate of the Federal Public Service Mobility and Transport was looking for a firm to assist the client in the renovation, densification and energy optimisation of the Papenvest site in Brussels: first mapping the context and defining the programme (fixed tranche, phases 1 and 2), then drafting the call for candidates, writing the specification, awarding the design contract and handling external communication (conditional tranche, phases 3 to 6). The contract was estimated at 250,000 euros including VAT and published in the Official Journal of the European Union on 6 May 2011 as a negotiated procedure with publication; in a reasoned decision of the same day the authority justified that choice under article 17(3)(4) of the Act of 24 December 1993: the services depended on the results of the research to be carried out during the contract itself, so the specifications could not be determined precisely enough for an open or restricted procedure. The specification asked for a global lump-sum price per phase, required a detailed price breakdown stating per phase the category of staff, the number of hours, the fee percentage and the overheads percentage, and expressly declared article 110 of the Royal Decree of 8 January 1996 applicable. The award criteria were methodology (40 points), urban-planning approach (20) and price (40). Three candidates were selected; two submitted tenders: WDOG Architecten (tenderer 52) and AT Osborne (tenderer 51). By registered letter and fax of 13 October 2011 the authority asked WDOG to justify its total price and its unit prices within twelve calendar days. WDOG replied on 25 October 2011 and on 28 October added brief CVs, an organisation chart and a table of hourly rates. It explained its price by the proximity of its office to Beliris and the site, its knowledge of the neighbourhood, a compact team and an average billing rate of 70 euros per hour, overheads and profit margin included. The authority analysed that justification in an annex to the award decision of 1 December 2011 following a fixed pattern per phase: the time allotted by the tenderer against the period in the specification, the realism of that time given the required services, the relevance of the specific and general justifications, and a conclusion. The figures spoke for themselves. For phase 1 WDOG counted 20 to 21 man-days where AT Osborne provided 50 and the specification 50 working days; for phase 3 six days against eight and 25; for phase 4 six days against 22 and 20; for phase 5 — awarding the design contract, including the jury secretariat, technical and budgetary analysis of the tenders, negotiations and a bilingual reasoned decision — three man-days against 25 and 15. The authority found the arguments about proximity and local knowledge irrelevant to phases 3, 4 and 5 and noted that the specification required the tenderer to work from the Directorate’s standard documents anyway, so its own templates saved little time. A comparison with the KVIV engineering-fee scales was decisive: WDOG charged 82 euros an hour for the project leader, where the scales already give 110 to 133 euros for staff with zero to five years’ experience. The prices for phases 1, 3, 4 and 5 were found abnormally low, the tender was declared substantially irregular and the contract was awarded to AT Osborne, whose total price was much closer to the estimate and in whose tender no apparently abnormal prices had been found. WDOG learned of its rejection on 9 January 2012, received the reasoned award decision on 19 January and on 24 January 2012 applied under extreme urgency for suspension of the rejection, of the award and of the specification itself insofar as it opted for the negotiated procedure. Chamber president Dierk Verbiest immediately declared that third object inadmissible: the choice of the negotiated procedure had been published since May 2011 and the fifteen-day limitation period of article 65/23 had long expired. As to the first plea, which in its ‘whereas/while’ formulation alone ran to twenty paragraphs and whose explanation covered fifteen pages — the Council announced that, given the urgency, it would examine it only insofar as it could be immediately grasped in its essence — the president held that article 122, fourth paragraph, of the Royal Decree of 8 January 1996 allows the authority to make provisions of the title on open and restricted procedures, including article 110(3), applicable to a negotiated procedure; the clause in the specification was therefore not unlawful and Beliris was entitled to conduct a price review. The request for justification was not careless: article 110(3) does not require the authority to say whether the prices appear too high or too low, and WDOG’s reply showed it had understood perfectly. The review itself rested not only on comparing man-days with execution periods but also on the estimate, four times higher than the price offered, on the competitor’s tender and on the realism of the time allotted; the authority was aware of the distinction between contractual periods in calendar weeks and man-days, and the 70-euro hourly rate came from WDOG’s own price justification. That the specification supposedly described the tasks vaguely did not prevent the authority from finding the stated periods unrealistic. The complaint of unequal treatment also failed: annex 1 showed that AT Osborne’s prices had been reviewed too, and that the two tenderers’ factual situations differed. AT Osborne’s exceeding of the periods in phase 5 — 25 working days against 15 — was explained by the difference between man-days and calendar weeks and by simultaneous work of several staff; the periods remained binding. The second plea, that the choice of the negotiated procedure had been justified with ‘hollow words’, was not serious either: these were intellectual services whose very object was to investigate the conditions for a later design contract, broad output specifications do not exclude that exception, and WDOG itself argued in its first plea that the contract had been described too vaguely. Moreover, the award decision showed that negotiations with AT Osborne had in fact taken place, and drawing up an estimate is not prohibited in a negotiated procedure. The application was dismissed, with costs of 175 euros for WDOG.
Why does this matter?
This judgment shows what a well-constructed price review looks like — and why it survives before the Council of State. Beliris did not do what contracting authorities are often accused of: copying the justification and calling it ‘unconvincing’. It placed three reference points side by side for each phase (its own estimate, the competitor’s tender and the periods in the specification), tested the stated man-days against the services actually to be delivered, assessed the relevance of each of the tenderer’s arguments separately and benchmarked the hourly rates against an external source, the KVIV fee scales. Against such a layered analysis a tenderer can hardly prevail in an extreme-urgency procedure, certainly not with a fifteen-page plea that the president expressly examines only ‘in its essence’. Legally, the judgment clarifies two points. First: under the 1996 Royal Decree the price review of article 110(3) did not automatically apply to negotiated procedures, but the authority could make it applicable through the specification under article 122, fourth paragraph — and having done so, must then carry it out. Second: a tenderer that itself states an average hourly rate of 70 euros cannot later reproach the authority for calculating with it. The judgment is also a lesson in timing. The criticism of the choice of a negotiated procedure — not absurd on the merits, since the authority had an extensive specification and an estimate and hardly negotiated — came more than eight months after publication and foundered on the fifteen-day time limit before the Council even looked at it substantively. Finally, the case reveals a structural risk for intellectual services: with lump-sum prices per phase, a low price inevitably translates into few man-days, and few man-days for tasks such as a jury secretariat or a bilingual award decision read as a misjudgement of the assignment. One’s own efficiency and templates do not outweigh that when the specification imposes the authority’s standard documents.
The lesson
If you receive a request for price justification in a services contract with lump-sum prices per phase, first do the reverse calculation yourself: how many man-days does your price imply at your hourly rate, and does that hold up against the services the specification lists per phase? Justify phase by phase and task by task, not with general assets such as proximity or local knowledge that make no difference for most phases. Be careful with an average hourly rate: it becomes the authority’s unit of calculation, and a project leader at 82 euros an hour will be set against external fee scales. Do not rely on your own templates when the specification obliges you to work from the authority’s standard documents. If you consider the choice of a negotiated procedure unlawful, challenge it within fifteen days of publication, not after the award. And keep an extreme-urgency plea short: what cannot be immediately grasped in its essence will not be examined. If you are a contracting authority, state expressly in the specification which price-review provisions you apply to the negotiated procedure, request the justification formally and with a deadline, and document your analysis per phase with several reference points — estimate, competing tender, specification periods and an external benchmark. Review the winner’s prices too and record why you did not ask it for a justification; that refutes the charge of unequal treatment.
Ask yourself
Have you converted your lump-sum price per phase into man-days and tested it against the periods and services in the specification, before submitting and certainly before writing a price justification? Does your justification address each phase separately with arguments relevant to that phase? Do you know that the hourly rate you state yourself becomes the basis of the authority’s analysis, and that it will be compared with external fee scales? Are you watching the fifteen-day limitation period after publication if you want to contest the choice of procedure? As a contracting authority: does your specification expressly make article 110(3) (or its current equivalent) applicable, and can you show per phase that you examined the justification substantively, including that of the successful tenderer?
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 →