A 116-euro gap on a 118,000-euro bid, rejected anyway: OVAM may exclude abnormally low hourly rates even when the total price difference is tiny
Terra Engineering & Consulting lost the soil-investigation contract from Flemish waste agency OVAM after its price justification failed to rebut its too-low hourly rates and an underestimated travel cost, and the Council of State confirmed that a contracting authority may exclude a bid on that ground even where the total price gap with the winning bid is barely 116 euros.
What happened?
OVAM (the Flemish public waste agency) tendered a mixed services contract for around ten official descriptive soil investigations in the eastern part of Flanders (the provinces of Antwerp, Limburg and Flemish Brabant), awarded through open tendering (specifications BN 130304). Nine bids were opened on 13 May 2013, including one from Terra Engineering & Consulting (TEC), based in Zelzate and Lessines. After comparing unit prices across all bidders, OVAM suspected abnormally low prices from three bidders, including TEC and the eventual winner, Envirosoil. By letter of 29 May 2013, citing article 110, § 4 of the Royal Decree of 8 January 1996, OVAM asked TEC to justify its prices for three specific items: mobilising fieldwork through the on-site project leader (item 6.2), and taking composite samples at ground level and from trench or borehole samples (items 8.2 and 8.3). TEC replied on 7 June 2013, explaining its hourly rates and travel costs. In its award report of 8 July 2013, OVAM found that this justification did not rebut the abnormality: according to a survey by the Association of Certified Soil Remediation Experts, TEC's hourly rates were not market-conforming and too low, and for its travel from Zelzate or Lessines to the eastern working area it had budgeted only 60 km per project (round trip) — an estimate OVAM considered too low given the actual distances involved. On 12 July 2013 the contract was awarded to Envirosoil, the lowest compliant bidder, for 153,817.10 euros excluding VAT. TEC sought suspension under extreme urgency, raising three sub-pleas: that the request for price justification had been too vague to know exactly which components were considered problematic; that OVAM was applying double standards, since TEC used the same hourly rates for undisputed items too; and that the total price difference with Envirosoil was barely 116 euros on a bid of over 118,000 euros, which TEC argued showed there could be no question of distorted competition. The Council of State rejected all three sub-pleas. The request for price justification had in fact identified three concrete items, and TEC had answered without reservation, never once complaining of vagueness — that criticism surfaced only before the Council, too late and unconvincingly. That TEC used the same (too-low) hourly rates for undisputed items as well did not prove OVAM's assessment unreasonable: OVAM had only requested justification for the three identified items and could only base its decision on those. And the small difference in total price did nothing to change the finding that the unit prices themselves were abnormally low — the law allows an authority to exclude a bid for abnormal unit prices regardless of how small a share those items represent in the total price. TEC's argument that, given its more distant premises, it was forced to charge a low travel cost to stand any chance at all, backfired: the Council of State noted that price justification exists precisely to guarantee that a bid contains realistic prices, in the interest of the contracting authority and of fair competition — and that a bidder may not offset its geographic competitive disadvantage through unrealistic prices. The claim was dismissed in full.
Why does this matter?
This judgment is a clear illustration of how strictly the Council of State reviews the abnormal-price justification procedure, and of how little a bidder can achieve against a procedure that was properly conducted. Three lessons stand out. First, a contracting authority may confine itself to a targeted question about specific items and is not obliged to give a second chance if the answer proves inadequate. Second, the fact that a tiny total price difference (here 116 euros on more than 118,000) suggests there is no real market distortion changes nothing about the legality of a rejection for abnormal unit prices — the law looks at the price itself, not its effect on the ranking. Finally, and perhaps most important for bidders at a geographic disadvantage: wanting to stay competitive against locally based rivals is not a valid justification for a price that does not cover the actual cost. The price-justification procedure exists precisely to guard against that temptation.
The lesson
If, as a bidder, you receive a request for price justification, respond with concrete, substantiated figures for exactly the items requested, and flag it immediately if the question seems too vague to answer meaningfully — waiting until proceedings before the Council of State is not a valid strategy. Calculate your travel and hourly costs realistically, even when your premises are further from the project site than your competitors' — the temptation to still stand a chance through an underestimate is exactly what abnormal-price review is meant to stop. And do not underestimate that an authority can exclude a bid for abnormal unit prices even when that barely affects the final ranking — the law tests the price itself, not its effect on the ranking.
Ask yourself
When you receive a request for price justification, do you respond with concrete figures for exactly the items identified, or do you stay vague? Are your hourly rates and travel costs market-conforming, or do you deliberately price low to stay competitive against closer-based rivals? Do you realise that a small difference in total price does not protect you against rejection for abnormal unit prices? And do you know, as a contracting authority, that you are not obliged to request a second price justification when the first proves inadequate?
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 →