Auderghem excludes a contractor over a tax debt and awards the school extension to a competitor — the Council of State suspends: such a debt does not weigh automatically
The municipality of Auderghem excluded the contractor Moureau from the open tender for the extension of the ‘Les Marronniers’ school centre — awarded to M&M Sitty for 1,872,909.79 euros excluding VAT — solely because a tax-authority certificate showed a tax debt of more than 3,000 euros; the Council of State suspended that award under extreme urgency, because such a debt only leads to exclusion once the contracting authority has checked that the bidder has no strictly observed payment plan and no sufficiently certain claims to offset it.
What happened?
On 30 January 2014 the municipality of Auderghem approved the procurement method for the extension and renovation of the ‘Les Marronniers’ school centre on the chaussée de Wavre: a public works contract by open tender. The notice was published on 14 February 2014, the opening of bids took place on 31 March 2014. Four contractors bid: Moureau for 1,890,387.60 euros excluding VAT, M&M Sitty for 1,869,578.26 euros, De Graeve for 1,842,213.79 euros and In Advance for 1,823,058.58 euros. On 22 May 2014 the municipality electronically consulted the certificate of the Federal Public Service Finance, which showed a tax debt of more than 3,000 euros for Moureau. By decision of 16 June 2014 the college of mayor and aldermen did not select Moureau and awarded the contract to M&M Sitty for 1,872,909.79 euros excluding VAT (2,266,220.84 euros including VAT); the bids of De Graeve and In Advance were declared irregular. By letter of 30 July 2014 the municipality informed Moureau that it had been excluded because it had not produced a certificate of tax compliance and, after an express request, had not supplied it, while a search with the tax authority revealed a tax debt of more than 3,000 euros — above the threshold of article 63, §2 of the Royal Decree of 15 July 2011. On 14 August 2014 Moureau sought suspension under extreme urgency; M&M Sitty, the beneficiary, intervened. The municipality and the intervening party objected that Moureau lacked interest, since its bid would in any event be irregular owing to an inconsistency over a 5% discount between the bid form and the price schedule. The Council rejected that objection: because Moureau had not been selected, the municipality had never assessed its bid on the merits, so it could not be assumed that the bid would necessarily have been declared irregular; nor is it for the Council to substitute its own assessment for that of the contracting authority. On the merits, the Council held that the mere existence of a tax debt of more than 3,000 euros does not suffice to bar a bidder from access to the contract: that debt is a ground for exclusion only if the bidder has no strictly observed payment plan and no certain, due and unencumbered claims as referred to in article 63, third paragraph. The municipality had not carried out those checks — it excluded Moureau solely on the basis of the 22 May 2014 certificate — and thereby, after an examination under extreme urgency, committed a manifest error of assessment and disregarded the duty of care. The plea was found serious in its second branch. In the balancing of interests the Council rejected the municipality’s argument that a suspension would jeopardise a 639,092-euro loan from the Brussels Regional Refinancing Fund for Municipal Treasuries (FRBRTC) and block the school construction: that amount represented less than a quarter of the sum entered in the 2014 extraordinary budget, other means of financing were possible and the continuity of the school’s operation was not plausibly threatened. The Council admitted M&M Sitty’s intervention and suspended the execution of the award decision of 16 June 2014; the decision on costs was reserved.
Why does this matter?
The judgment sets a limit on a reflex that contracting authorities often have: a tax-authority certificate shows a tax debt above 3,000 euros, so the bidder is out. It is not that simple. The rules do not make that debt an automatic ground for exclusion, but a conditional one: it counts only if the bidder has no strictly observed payment plan for it and no sufficiently certain, due and unencumbered claims on the authority to offset it. Whoever excludes without checking those two things decides on incomplete grounds and commits a manifest error of assessment. For bidders with a temporary tax arrears this is a real defence: the exclusion can be suspended if the authority skipped the statutory nuance. The judgment also illustrates two recurring mechanisms. First, the interest of a non-selected bidder: because the authority never assessed its bid, it cannot, in the suspension proceedings, claim after the fact that the bid was irregular — the Council does not stand in for the contracting authority. Second, the strictness of the balancing of interests: an authority that wants to avert a suspension with a financial or continuity argument must establish it with elementary likelihood, not with a loose reference to a loan covering only a fraction of the budget.
The lesson
If you are excluded as a bidder because a certificate shows a tax debt of more than 3,000 euros, do not give up at once. Check whether the authority truly examined whether you had a strictly observed payment plan or sufficient certain claims on a public authority: without that verification the exclusion is vulnerable. If you are the contracting authority, the lesson is the reverse: do not automatically equate ‘debt above 3,000 euros’ with ‘exclusion’. First verify the payment arrangement and the counterclaims of article 63, third paragraph, and document this in your award report, or you risk a suspension for manifest error of assessment and breach of the duty of care. Bear in mind too that you cannot retroactively declare the bid of a non-selected bidder irregular to deny its interest, and that a financial or continuity argument only weighs in the balancing of interests if you support it with concrete, likely facts.
Ask yourself
Do you realise that a tax debt of more than 3,000 euros does not in itself suffice to exclude a bidder, and that the authority must first check whether there is no strictly observed payment plan or sufficient certain claims? Did you carry out and document that verification before deciding to exclude? Do you know that you cannot, after the fact, declare the bid of a bidder you did not select irregular in order to deny its interest in an action? And if you want to avert a suspension with a financial or continuity argument: can you prove it with elementary likelihood, or does it remain a presumption?
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 →