Dredging works on the Ghent Ring Canal: Boskalis bids 17% below average, justifies every item in four rounds — and Ghent Dredging does not get to see the price breakdown
The Council of State refuses to suspend, under the extreme urgency procedure, the award by Waterwegen en Zeekanaal of the dredging works on the northern section of the Ghent Ring Canal to Boskalis: after an extensive price investigation supervised by the ATO technical support department, the decision and the award report adequately explained why the 17% lower price was not abnormal, and the contracting authority did not have to disclose Boskalis’s confidential price breakdown to the second-lowest bidder.
What happened?
Waterwegen en Zeekanaal NV, Upper Scheldt division, launched a public tender for ‘Seine-Scheldt. Ghent Ring Canal. Northern section. Dredging works’ (specifications 16EGGE/09/07): widening the northern section to a box profile for class Vb vessels, transporting reusable dredged material to the ’t Vliegveld site in Lochristi, and bed protection along certain quay walls. The estimate was 6,495,400 euros excluding VAT; the contract notice was published on 29 October 2010. Eight bids were opened on 2 December 2010. Boskalis BV was lowest at 4,837,800 euros, the temporary association Ghent Dredging – Baggerbedrijf De Boer second at 5,297,730 euros. Boskalis’s bid was 17.18% below the average of 5,841,564.79 euros calculated under Article 110(4) of the Royal Decree of 8 January 1996, and thus below the threshold of 4,965,330.07 euros. Waterwegen en Zeekanaal requested a price justification on 3 December 2010. Boskalis pointed to the residual scrap value of the extracted steel sheet piles (item 1.2.1), the reuse of removed riprap on another site in Westkapelle (item 1.2.3) and its dredging method (item 1.3.5). Because the bid was more than 15% below average and exceeded 250,000 euros, the file was referred under circular OW 2000/3 to the General Technical Support department (ATO). ATO first found the justification too limited and insufficiently detailed, and asked for dredging to be assessed together with transport and storage in Lochristi (item 1.3.6). After two further rounds — including an explanation of ‘dry’ versus ‘wet’ dredging, a detailed budget with weekly vessel costs, sailing distances and subcontractor quotes, and a 5% mark-up for overheads and profit — ATO gave a favourable opinion on 23 December 2010. The contract was awarded to Boskalis the same day. When Ghent Dredging and De Boer sought suspension on 19 January 2011, Waterwegen en Zeekanaal withdrew that decision on 1 February 2011. ATO meanwhile confirmed that items 1.3.5 and 1.3.6 together accounted for 55.8% of the bid and ‘undeniably formed the core of the contract’. To remove any doubt, the authority requested justification for the 28 remaining items on 29 March 2011. This was accepted except for item 1.3.9 (transport and disposal of non-reusable material), on which Boskalis provided further figures after a request of 10 May 2011. ATO confirmed on 25 May 2011 that the presumption of abnormality had been rebutted. On 8 June 2011 Waterwegen en Zeekanaal again awarded the contract to Boskalis, on the basis of a new award report of 1 June 2011 describing the entire price investigation. The price advantage calculated by Boskalis was redacted in the version communicated. Ghent Dredging and De Boer again sought suspension on 4 July 2011, arguing that the decision referred to undisclosed opinions, relied on ‘meaningless boilerplate’ such as ‘realistic’ and ‘acceptable’, and did not show which objective factors explained the price gap; that the material recovery accounted for too small a share of the price; and that Boskalis had wrongly offered the same unit price for items 1.3.7 and 1.3.8. State Councillor Geert Van Haegendoren, presiding the 12th vacation chamber, followed the concurring opinion of first auditor Luc Vermeire and rejected the application. The decision and the award report explained at length why the price justification was accepted. The authority did not have to disclose further the content of the justifications and the item-by-item price build-up: Article 65/10 of the Law of 24 December 1993 protects confidential commercial information, the applicants had themselves submitted their bid as confidential, and lifting confidentiality in proceedings without in-depth examination could have irreversible consequences. There had been no departure from the ATO opinion. For specialists such as the applicants, the elements mentioned sufficed to assess whether a lower price could be explained — all the more so since they had themselves offered negative prices for some of those items. According to the file, the price difference of 459,930 euros between the two bids could be explained by the price advantage on items 1.2.1, 1.2.3 and 1.3.5 alone. The complaint about identical prices for items 1.3.7 and 1.3.8 relied on a soil survey the applicants did not produce; moreover Herbosch-Kiere and Besix-Westconstruct had also priced those items identically. The applicants bear the costs of 350 euros in equal shares; Boskalis bears the 125 euro cost of its intervention.
Why does this matter?
The judgment shows two sides of the same price investigation. From the authority’s side, it illustrates what a thorough examination of an apparently abnormal price looks like: request justification, take a critical external opinion (ATO) seriously, keep asking until the core items are backed by figures and supporting documents, and describe that process in the award report. Waterwegen en Zeekanaal also withdrew a first award once it was challenged and extended the investigation to all items before awarding again. Such a file is hard to attack. From the tenderer’s side, the judgment shows the limits of the duty to give reasons. A rejected bidder is entitled to adequate reasons, but not to its competitor’s detailed budget: the item-by-item price build-up is covered by the confidentiality of Article 65/10, and in extreme urgency the Council will not lift it. The Council applies a yardstick that matters in practice: a specialist tenderer can be expected to infer from the elements mentioned — dry and wet dredging, residual value of sheet piles, reuse of riprap — whether a lower price is plausible. A bidder who itself offers negative prices for the same items can hardly claim the competitor’s residual value is a mystery. And a technical complaint must be backed by evidence: a soil survey one relies on must be produced.
The lesson
For tenderers: by all means request access, but do not expect to see the competitor’s price justification. Focus your challenge on what the reasoning does state, and show concretely — with figures and the documents you rely on — why those elements cannot explain the price gap. Watch out for contradictions with your own bid: if you yourself offered a negative price for extracting sheet piles, you cannot simply call the residual value claimed by someone else implausible. Also check whether the gap between your bid and the winner’s is already explained by the items the authority examined. For contracting authorities: this file is a template. Request justification, allow a critical technical opinion, keep asking until the core items (here together 55.8% of the bid) are backed by detailed budgets and supporting documents, and summarise the investigation in the award report without revealing confidential price data. In doubt after a challenge? Withdrawing a first award and completing the investigation is a defensible path.
Ask yourself
Do you know that the 15% threshold of Article 110(4) of the Royal Decree of 8 January 1996 (now Article 36 of the 2017 Royal Decree on Award) triggers a price investigation, but that the authority has broad discretion to accept the justification? As a rejected bidder, can you show concretely why the elements in the reasoning do not explain the price gap, rather than dismissing the reasoning as boilerplate? Have you checked that your own unit prices do not undermine your arguments? Do you produce the technical documents your complaint relies on, such as a soil survey or calculations? As a contracting authority: does your award report describe the full price investigation, including opinions and follow-up questions, without revealing confidential price build-ups? As a contracting authority: have you had the core items justified, and can you show their share of the bid?
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 →