An interim director is not a corporate body, and a mandate after the fact saves nothing: Arista loses the Flemish government’s prevention contract over one signature
The non-profit Arista had its tender for affiliating the Flemish government with an external prevention and protection service signed by its interim director, could not show that he was empowered to bind the association at that moment, and tried to fix this a month after the opening with a ratification by its board — the Council of State accepted that the Agency for Government Personnel declared the tender substantially non-compliant and awarded both lots to Idewe.
What happened?
In the Bulletin der Aanbestedingen of 6 September 2006 the Agency for Government Personnel of the Flemish government announced a general call for tenders for services: affiliation of the Flemish government with an external service for prevention and protection at work, divided into two lots. At the opening on 9 October 2006 there were four tenders, from the non-profits Idewe, Arista, Encare Prevent and IKMO. Arista’s tender for lot 1 was signed by ‘Dr. Ralph Corbey Interim General Director AristA vzw’. On 26 October 2006 the agency pointed out that the tender was signed but that the document authorising the signatory was missing. The next day Arista sent an extract from the annexes to the Belgian Official Gazette of 28 August 2006, which stated, under a decision of the extraordinary general meeting of 23 June 2006, that the board had ended the mandate of the previous general director and appointed Ralph Corbey as interim director. On 3 November 2006 the agency replied that this showed only the appointment, not that Corbey was authorised to enter into commitments on behalf of the association, and asked for further documents such as the articles of association. Arista then produced a board decision of 7 November 2006: Corbey had signed the tender on 6 October 2006, the board confirmed that he ‘could validly represent’ the association and ratified ‘to the extent necessary’ all his acts relating to the tender. The evaluation report of 7 December 2006 found that the authorisation to sign was missing for three of the four bidders: Encare, IKMO and Arista. After repeated requests, Encare and IKMO were able to show that their signatory had been empowered; Arista was not. According to the evaluation committee a mandate could not be granted retroactively, so Arista’s tender was rejected. On 8 December 2006 the agency’s administrator-general declared that tender non-compliant and awarded both lots to Idewe. Arista first sought suspension under extreme urgency, which was dismissed by judgment no. 167.027 of 23 January 2007, after which judgment no. 169.983 of 12 April 2007 recorded the withdrawal of that case. The action for annulment, lodged on 5 February 2007, was pursued. Arista raised three pleas. The first attacked the reasoning: no precise legal basis, a contradictory classification as both a formal and a substantial irregularity, and a notification that mentioned only the extreme-urgency procedure and not the ordinary action for annulment. The Council dismissed it. Arista clearly knew the applicable provision, since it relied on it in its other pleas, so it had no interest in complaining that the legal basis was not stated. It did not dispute that signature by an authorised person is a substantial formal requirement, because it determines whether the commitments in the tender can be attributed to the bidder. And a party that brings an action for annulment in time has no interest in an incomplete statement of the available remedies. The second plea argued that the documents produced sufficiently established Corbey’s authority, and that article 94 of the Royal Decree of 8 January 1996 on agents did not apply to someone acting as a corporate body. But an interim director is not a body of the association, the Council held, agreeing with the respondents and the auditor. Absent organic representation, the decision of 7 November 2006 could only count as a mandate, and article 94 did apply. The third plea relied on articles 17 and 18 of the Royal Decree of 27 March 1998 on external prevention services, which allegedly empowered the director to represent the association, at least in what Arista called the ‘preparatory phase’. That failed too. A tender is not a preparatory act but the offer on which the contract is formed once the award is notified. And the 1998 decree governs who manages and bears final responsibility within the external service, not who may sign a tender for a public contract. The ratification of 7 November 2006 came after the opening of tenders and could not be accepted, because at the time of submission there was then no commitment by the bidder at all. A tacit mandate based on the ‘constant practice’ of the director always signing earlier public contracts alone did not help either: article 94 requires a deed or a reference to the Official Gazette, and the authority did not have to take tacit mandates into account. The action was dismissed; Arista bore the costs of 175 euros.
Why does this matter?
The judgment lays down two rules that apply to every tender submitted by a legal person. First: whoever signs must be empowered at the time of submission. A later ratification — here a month after the opening — cannot cure the defect, because at the decisive moment there was no tender binding the bidder. The authority was entitled to treat this as a substantial irregularity, since valid signature determines whether the commitments in the tender can be attributed to the bidder. Second: a title is not a power of representation. ‘Interim general director’ sounds like someone who can bind the organisation, but a person who is not a corporate body can sign only under a mandate, and that mandate must exist and be provable by a deed or a reference to the Official Gazette. An internal habit — ‘the director always signed’ — does not count. Arista’s reliance on the decree on external prevention services makes the judgment all the more instructive: sector rules on who runs a service do not thereby govern who binds the legal person externally. The role of procedural silence is also striking. Each time the respondents put forward a strong defence and the auditor endorsed it, Arista left it unanswered in its reply, and the Council adopted those positions every time. The judgment was given under the Royal Decree of 8 January 1996, but the rule that a tender must be signed by someone able to bind the bidder at that moment, with proof of any mandate, still applies under the current award rules. The Council of State continued along this line, for instance in judgment no. 225.859 of 2013.
The lesson
For bidders: before every submission, check who can bind your organisation under its articles and the publications in the Official Gazette. If the signatory is not a statutory body — a director, even a general director, even an interim one — make sure there is a written mandate dated before submission, and attach it or refer to the Gazette publication. A change at the top is a classic trap: the new management has been appointed, but its power of representation has not yet been arranged or published. A later ratification by the board comes too late. And respond in your pleadings to every strong argument and to the auditor’s report; whatever you leave unanswered, the Council readily adopts. For contracting authorities: when in doubt, expressly ask for proof of authority, treat all bidders equally — here Encare and IKMO got the same opportunity as Arista — and assess authority as at the time of submission, not on the basis of what the bidder arranges afterwards. Give concrete reasons for an exclusion; a reference to ‘public procurement legislation’ without an article number survived here only because the bidder knew the provision itself.
Ask yourself
Do you know who can currently bind your organisation under its articles and the Official Gazette, and is that who signs your tenders? Is the signatory a statutory body, or does he sign under a mandate granted before submission that you can produce? After a change of management, have you checked whether the new management’s power of representation has been arranged and published? As a contracting authority: do you assess the signatory’s authority as at the time of submission, and do you give all bidders the same opportunity to produce missing evidence? Did you respond in your reply to every argument of the opposing party and of the auditor?
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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 →