Van Gansewinkel bids half the average and keeps the contract: the estimate saves the price
Vanheede saw the contract for the transport and processing of wood waste go to Van Gansewinkel at 500,480 euros — barely half the 998,156.2-euro average tender price — but the Council of State held that VERKO did not have to investigate that price further, precisely because it still exceeded the authority’s own estimate, and because Vanheede never concretely showed that either the estimate or the prices were unrealistic.
What happened?
VERKO, the intermunicipal association of the United Composting Companies, launched an open procedure in June 2013 under the name ‘CP Houtafval 2013’: a services contract for the transport and processing of type B wood waste from its container parks, including the rental of collection containers. On 13 June 2013 the board approved an estimate of 118,458 euros per year excluding VAT, or 473,833 euros over the full term — an estimate that, according to the decision itself, was ‘based on current conditions’, that is, on the running contract. The notice appeared on 14 June 2013 in the Belgian Bulletin of Tenders and on 18 June 2013 in the Official Journal of the European Union. At the opening on 8 August 2013 five tenders had come in, and the spread was striking: Van Gansewinkel offered 125,120 euros per year or 500,480 euros over four years; Vanheede Environmental Logistics came second-lowest at 236,398 euros per year or 945,592 euros; the three others sat at 1,009,388, 1,131,384 and 1,407,936 euros (all excluding VAT, over four years). On 12 September 2013 the board adopted the award decision: Containerdienst Mels was not selected, all remaining tenders were found regular, and the contract went to Van Gansewinkel for 500,480 euros for two years, twice renewable by one year — ‘an increase in cost of 6,661.75 euros excluding VAT per year’, as the decision put it. No separate award report was in the administrative file; the price tables and the examination of the tenders were included in the decision itself. Vanheede received the rejection by registered letter of 16 September 2013, with a standstill period of fifteen calendar days, and on 1 October 2013 sought suspension under extreme urgency. Its single plea turned on one reproach: VERKO had carried out no price investigation. Vanheede calculated that Van Gansewinkel’s total price amounted to only 50.14 % of the 998,156.2-euro average tender price, and even just 48.71 % of the 1,027,455-euro average calculated under article 110(4) of the Royal Decree of 8 January 1996 — a provision which, as it itself conceded, applies to works and not to services. The unit price for transport stood out too: at Van Gansewinkel only 38.24 % of the 161,191.96-euro average, whereas Containerdienst Mels, based in Hamme and thus in the middle of the operating area, asked more than double. Vanheede relied on judgment no. 219,751 of 14 June 2012 (Glanet), in which the Council had held that a diligent authority may not leave a substantial price difference unexamined, and argued that the estimate could not serve as a benchmark because it probably rested on four-year-old prices: the processing price had since risen by some 10 euros per tonne, worth 75,000 euros a year or 300,000 euros over four years. The Council of State did not follow. Article 110(3) requires a request for justification only where the authority intends to reject a tender for abnormal prices — which VERKO did not do — so that provision could not have been infringed. A duty of diligence to verify the regularity of tenders does remain, and the absence of abnormal prices forms part of that. But the decisive fact lay elsewhere: Van Gansewinkel’s price of 125,120 euros a year was higher than the 118,458-euro estimate. Van Gansewinkel was thus the only bidder to come close to the estimate. Such an estimate is in principle an acceptable and objective point of comparison, and Vanheede did not show prima facie that it was unrealistic. Its suspicion about outdated prices remained a suspicion: it produced no concrete evidence of the alleged 10-euro-per-tonne rise. Worse, the price tables turned the argument around: Van Gansewinkel’s processing unit price was above the estimate, while Vanheede’s own was below it — so Vanheede’s own price rather confirmed the estimate. At the hearing Vanheede itself called those processing prices ‘fairly normal’. Van Gansewinkel’s transport price likewise closely tracked the estimate; that Containerdienst Mels was nearer the operating area and yet more expensive does not prove the winner’s price was abnormally low, since distance to the processing point, mode of transport and business organisation matter just as much. The Council expressly distinguished Glanet: there, the authority had itself requested an explanation of the price and thus had doubts of its own. Finally, the Council drily noted that the gap between Van Gansewinkel and Vanheede was even slightly smaller than the gap between Vanheede and the most expensive bidder. The single plea was not serious; the action was dismissed and Vanheede was ordered to pay costs of 175 euros.
Why does this matter?
A tender at half the average looks like a textbook abnormally low price. This judgment shows why that intuition is not enough in law. The average of the tender prices is no statutory yardstick for services — the 15 % threshold of article 110(4) applies only to works — and an average pulled upwards by three high tenders says little about the market price. The authority’s estimate, by contrast, is an acceptable and objective point of comparison, and once the lowest bidder sits above that estimate, the appearance of abnormality all but disappears. Anyone still seeking to force a price investigation must attack not the winner’s price but the estimate — and do so concretely, with figures and documents. Vanheede did not: it suspected the estimate was four years old but produced no evidence, and its own processing price lay below the estimate, thereby confirming it. The judgment also sharpens a distinction that is often blurred. Article 110(3) requires a justification only where the authority intends to exclude a tender for abnormal prices. Alongside that, the duty of diligence imposes a broader obligation to verify the regularity of tenders — but there the authority enjoys wide discretion, and the Council’s review is marginal. Finally, the judgment qualifies the Glanet case law that rejected bidders like to invoke: there, the authority had itself asked for an explanation and thus doubted the price. An authority that does not doubt, and has an objective anchor for not doubting, need not investigate.
The lesson
As a rejected bidder suspecting that the winner bid abnormally low, compare its price first with the authority’s estimate, not with the average of the tender prices. If the winning price sits above the estimate, your case is uphill: you will have to show that the estimate itself is unrealistic, with concrete figures, invoices, market data or tariff trends — a suspicion that it is ‘probably four years old’ will not do. Check your own position too: if your unit prices lie below the estimate, you confirm it and undermine your own argument. If you rely on earlier case law such as Glanet, check whether the authority there had not itself asked for a price explanation — that is what makes the difference. As a contracting authority, this judgment confirms how valuable a well-founded and up-to-date estimate is: it is your best defence against the charge that you simply accepted a low price. Document what it rests on. And know that you need not request a price justification so long as you do not intend to exclude the tender for abnormal prices — but that you must still diligently verify the regularity of the tenders.
Ask yourself
Are you comparing the chosen bidder’s price with the authority’s estimate, or with an average distorted by a few high tenders? Does the winning price sit above the estimate — and do you realise that the appearance of abnormality then largely disappears? Do you have concrete evidence that the estimate is unrealistic, or only a suspicion about outdated tariffs? Might your own unit prices inadvertently confirm the estimate? Do you know that the 15 % threshold of article 110(4) of the Royal Decree of 8 January 1996 applies only to works and not to services? And as an authority: can you show what your estimate rests on and how recent it is, should a rejected bidder attack it?
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 →