Twenty per cent below the second-lowest bid: why De Scheepvaart nonetheless did not have to investigate Ecorem’s price
Bova Environmental Consulting sought suspension under extreme urgency of the award to Ecorem of a framework agreement for environmental soil investigations, arguing that De Scheepvaart had carried out no price investigation even though the winning price of 501,840.75 euros lay more than 20 per cent below the second-lowest bid — but the Council of State dismissed the action: Ecorem’s price was in fact the closest to the contracting authority’s own estimate, and wide price spreads turn out to be the norm in this sector.
What happened?
De Scheepvaart, a public-law company, launched an open call for tenders in June 2013 for a framework agreement covering environmental investigations under the Flemish VLAREBO and VLAREMA rules — soil investigation, examination of dredged and excavated material, remediation projects, environmental permit applications and stability studies. Special specifications no. FAC-D-MHO-13-26 estimated the contract at 439,238.44 euros excluding VAT and set three award criteria: technical value of the bid (40 points), price (40 points) and quality of the proposed project team (20 points). Seven bids were opened on 19 August 2013. In the award report of 3 September 2013, Ecorem scored 89 points, Bova 83, Tractebel Engineering 80, Talboom 73, Bouwen en Milieu 65, Envirosoil 61 and Adviesbureau Bodemonderzoek 60. Bova was technically second-best (54 out of 60) but lost on price: its bid of 694,591.22 euros earned only 29 of the 40 price points, against the maximum 40 for Ecorem at 501,840.75 euros. The managing director approved the report and awarded the contract to Ecorem — in a decision dated ‘2 September 2013’, that is, the day before the report it referred to. On 19 September 2013 Bova brought an annulment action and an application for suspension under extreme urgency, on a single plea: Ecorem’s price was manifestly abnormally low — 20.33 per cent below the second-lowest bidder, 27.75 per cent below its own price, 41.87 per cent below the highest bid and almost 34 per cent below the average of the six other bidders — and De Scheepvaart could not possibly have accepted it without any investigation or reasoning. The Council of State disagreed. The date of 2 September was treated as a clerical error. What weighed decisively was this: Ecorem’s price (414,744.42 euros excluding VAT) was of all the bids the closest to De Scheepvaart’s own estimate (439,238.44 euros excluding VAT), and the estimate is in principle an acceptable and objective point of comparison. A counter-expert report in which Bova challenged that estimate was excluded from the debates because it was filed only on the afternoon before the hearing, while the file had been at the registry for over a week. Moreover, a comparable 2009 contract showed that Ecorem had likewise submitted the lowest price then (534,717.80 euros including VAT) while the other bids ranged from 666,524.55 to 1,025,671.96 euros — wide price differences are thus the rule rather than the exception in this sector. The comparison with judgment no. 217.836 of 9 February 2012 (CWS-Boco Benelux) did not hold: there the winning price amounted to only about 4 per cent of the estimate. Since De Scheepvaart had no intention of rejecting Ecorem’s bid for abnormal pricing, the questioning procedure of article 110, § 3 of the Royal Decree of 8 January 1996 was not required and the award report needed no special observations on the point. The single plea was not serious; the action was dismissed and Ecorem paid the 125 euros in costs of its intervention.
Why does this matter?
The argument that ‘the winning price is spectacularly below the other bids, so the authority should have investigated it’ is often raised and rarely won. This judgment explains why. The contracting authority has broad discretion in deciding whether to open a price investigation. It must diligently verify that a bid is regular — and therefore contains no abnormal prices — but as long as it does not wish to reject the bid, the formal questioning procedure of article 110, § 3 is not mandatory and its silence on price need not be extensively reasoned. The benchmark the Council applies, moreover, is not the gap between the bids but the authority’s own estimate: a price close to the estimate is by definition hard to call abnormal, however low it may look next to expensive competitors. A bidder who wants to attack that benchmark must dismantle the estimate itself, and that requires timely, well-substantiated counter-evidence. Bova had such evidence but filed it too late and saw it excluded — in an extreme-urgency procedure, where the pace is high, that is a fatal procedural error. The contrast with CWS-Boco Benelux, where the winning price was 4 per cent of the estimate, shows where the line runs: only at grotesquely low prices does a duty to investigate arise prima facie.
The lesson
As an unsuccessful bidder it is not enough to show that the winning price is far below yours or below the average. Compare it first with the estimate in the specifications: if the winning price sits close to it, your abnormal-price plea is all but hopeless, however wide the spread between the bids. If you want to contest the estimate itself, do so with a technically substantiated document filed in good time — a counter-expert report arriving the day before the hearing will be excluded from the debates and will not help you. Request the award report immediately upon notification and check whether your sector historically shows wide price swings, because the authority will use that argument. For contracting authorities the lesson is reassuring but not carefree: you need not investigate prices or question a bidder as long as you do not wish to reject the bid, but you must be able to show that you assessed regularity. So make sure your estimate is defensible, keep comparative data on earlier similar contracts, and date your award decision correctly — the clerical error De Scheepvaart made was tolerated here, but it needlessly offers a line of attack.
Ask yourself
Have you compared the winning price with the estimate in the specifications, and not merely with the other bids? Do you know that the authority is only required to question a bidder when it wants to reject the bid for abnormal pricing, not when it accepts it? Can you show that the price spread in your sector is abnormal, or is that spread historically the rule? Is your counter-expert report at the registry in good time, or does it arrive so late that it will be excluded? And as a contracting authority: is your estimate realistic and defensible, and do you hold comparative data on earlier similar contracts to support your assessment?
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 →