No staff list, the wrong VAT rate and a ‘we’ll take over the staff’: Delicatesse Catering loses the meals contract for the Vottem closed centre to the incumbent caterer
The Belgian State excluded Delicatesse Catering’s tender for the meals at the Vottem closed centre because of an accumulation of shortcomings — no list of the intended staff with qualifications and diplomas, an unjustified VAT rate of 6 % instead of 12 % on the meals, and the statement that it would take over the incumbent’s staff — and the Council of State dismissed the urgent application: the specifications had not been tailored to the incumbent caterer Horeservi, and the sum of the shortcomings could support the exclusion.
What happened?
On behalf of the Immigration Office, the Belgian State launched a general call for tenders for the daily delivery, preparation and serving of three meals and two afternoon snacks for the residents of the Vottem Closed Centre (specifications no. CIV/DVZ/Catering/02/2010). The notice appeared on 25 May 2010 in the Belgian Tenders Bulletin and, according to the State’s brief, on 21 May 2010 in the Official Journal of the EU; the estimated value was between 900,000 and 950,000 euros excluding VAT, for one year, tacitly renewable up to a maximum of four years. The specifications required, among other things, a list of the intended staff stating the number of hours per person with a given training, per meal and per year, and their qualifications and diplomas, and — as a selection criterion — a list identifying at least ten staff members able to perform the contract in French. The award criteria were quality, price and ‘certainty of performance’, the latter expressly referring to the staff deployed. At the opening on 23 July 2010 there were two tenders: those of Delicatesse Catering NV and of the incumbent, Horeservi Catering NV. On 20 September 2010 the authority asked both bidders to justify their VAT rate — 6 % for Delicatesse, 12 % for Horeservi — and to explain their wage costs and joint committee; Delicatesse was also asked what the impact would be if the current caterer’s staff had to be taken over. After the approval of the inspector-general of finance of 7 December 2010, the State Secretary for Migration and Asylum Policy awarded the contract to Horeservi on 22 February 2011. Delicatesse’s tender was declared ‘substantially irregular’: there was no staff list, only a company organisation chart; the required specification of hours and training was missing; qualifications and diplomas were not stated; Delicatesse ‘tries to impose its own conditions’, for instance by stating that it would take over Horeservi’s staff; and it applied 6 % VAT to the meals, whereas since 1 January 2010 the supply of meals is subject to 12 % (decision E.T. 117.557 of 23 December 2009), without producing any document justifying its rate. According to the authority, this ‘accumulation of shortcomings’ sufficed, citing judgment no. 156.427 of 15 March 2006. Delicatesse received the decision by registered letter of 11 March 2011 and sought suspension under extreme urgency on 25 March 2011; Horeservi intervened on 6 April and the case was heard on 12 April 2011. Because the contract was published after 24 February 2010, the Law of 23 December 2009 applied: no serious harm difficult to repair had to be shown, only a serious plea. The first plea — that the specifications were tailored to Horeservi, since only the incumbent could know in advance which staff would work in Vottem — failed. Delicatesse had raised no objections before submitting, the incumbent’s advantage does not in itself preclude fair competition, and a list of the proposed staff structure did not seem impossible: Delicatesse wrote in its own tender that it could deploy temporary staff from its central kitchen in Genk. The second plea, in five limbs, was not found serious either. Delicatesse did not dispute that the staff list was missing; its reference to the notice of 20 July 2010 that the twelve quarterly social-security returns (135 persons) were not required concerned selection, not article 11 of the specifications, and the list of ‘managers’ in annex 19.4 named contact persons, not the people who would prepare the meals. The Council assessed the ‘own conditions’ criticism only against the example stated in the decision itself; that example — the offer to the current cooks to continue working for Delicatesse under collective agreement no. 32bis — was not in itself shown to be an irregularity, since the authority did not explain why mentioning a statutory transfer obligation would depart from the specifications; but it coincided with the missing staff list and could not overturn the conclusion. On VAT the Council followed the authority: the contract was announced as a services contract, involved preparing, serving and clearing up in four kitchenettes, and Delicatesse’s own methodology described how its staff would finish sauces, bake chips and arrange cold cuts on platters on site. In its reply of 1 October 2010 it had itself acknowledged that catering services are normally subject to 12 %. The argument that the tenders remained comparable excluding VAT did not convince: the correct rate determines the authority’s final cost. The Council admitted Horeservi’s intervention, dismissed the application and ordered Delicatesse to pay the costs (175 euros); Horeservi bore the costs of its intervention (125 euros).
Why does this matter?
The judgment touches on three questions that recur whenever a running services contract changes hands. First: when are specifications ‘tailored’ to the incumbent? The Council sets a high bar. That the incumbent finds it easier to meet a staffing requirement is not enough; the applicant must show that no other bidder can meet it, and keeping silent before submission does not make that story more credible. Second: the relationship between the collective-agreement obligation to take over the previous provider’s staff and the requirement to provide a staff list in the tender itself. A transfer obligation does not relieve a bidder of the obligation to be able to perform the contract with its own staff if necessary, and thus not of the duty to describe that staff in advance either. ‘We will take over the existing team’ is no answer to a request for a staff list. Third: the VAT rate as an irregularity. Catering with on-site preparation and service is a service at 12 %, not a supply of meals at 6 %, and a wrong rate is not a bookkeeping detail for the authority to correct — it affects the real cost. In addition, the judgment confirms that an authority may treat several shortcomings that are each non-substantial as together amounting to a substantial irregularity, and that review of the statement of reasons is confined to what the decision itself says: examples that only surface in the brief do not count.
The lesson
If you are bidding against an incumbent, read the staffing requirements in the specifications as an assignment, not a formality. If you cannot yet give names, do give the concrete structure: how many people, which functions, how many hours per function and per year, which training and diplomas — and whom you will deploy if the transferred staff do not stay. If you consider that such a requirement only favours the incumbent, say so before submission, by a question or remark, and not only in an urgent application. Check the VAT rate too: whoever prepares, serves and clears up provides a service, and if the authority asks you to justify your rate, that is a signal you must not ignore. If you are a contracting authority, state every shortcoming you rely on in the award decision itself, because the Council disregards examples that only appear in your brief. An ‘accumulation’ of smaller defects may support an exclusion, but each defect must then be factually correct. And be careful with the criticism that a bidder ‘imposes its own conditions’ when it merely mentions a statutory transfer obligation: the authority could not justify that ground on its own.
Ask yourself
Does your tender contain a real list of the intended staff — functions, hours, training, qualifications — or only an organisation chart and a promise to provide names later? Do you have a plan B if the staff you take over from the previous provider under collective agreement no. 32bis do not stay or do not meet the requirements, and is it in your tender? Did you raise specification requirements you consider unachievable before submission? Have you checked whether your performance is a service (12 % VAT) or a supply of goods (6 % VAT), and can you justify your rate with a document? As an authority: are all the shortcomings supporting your exclusion expressly stated in the award decision itself? Can each defect you count as part of an ‘accumulation’ withstand factual scrutiny, even if one of them falls away?
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 →