Bolting bicycles onto a bus-shelter contract: the City of Brussels called Cyclocity a supplement to its street furniture, the Council of State called it a new contract
In 2006 the City of Brussels used an amendment to its running street-furniture contract to add a complete bicycle-sharing system — 250 bicycles, 300 docking posts and 20 management terminals from J.C. Decaux for 240,000 euros a year — and the Council of State annuls that decision because operating a public bicycle-hire service is a new contract with a different subject matter, which had to be opened to competition.
What happened?
On 14 October 1999 the college of the mayor and aldermen of the City of Brussels awarded J.C. Decaux Belgium Publicité a public supply contract for the manufacture, supply, installation, commissioning, upkeep and maintenance of street furniture for information, bus shelters and display supports, part of which could be used for advertising. The contract, governed by special specifications no. TV/98/47, had already been amended once in 2004. On 23 March 2006 the college decided to amend it again, this time relying on article 236 of the New Municipal Act: Decaux would henceforth also make available 250 bicycles, 300 bicycle docking posts and 20 management terminals, maintaining the whole service and integrating it into shelters and display supports the City would acquire as street furniture. The agreement was signed on 27 April 2006. It provided that the City pays an annual lump-sum fee of 240,000 euros in twelve equal monthly instalments, deducted from the rents Decaux pays for the advertising faces it exploits. The number of docking posts could be raised by mutual agreement to 375 and the management terminals to 25 without any change to the fee. Decaux would collect the bicycle rental income, but the tariff was set by the City: one euro flat for the first hour and a half, one euro for each additional hour, every hour begun payable in full. Clear Channel Belgium, a competitor in advertising supports and bicycle-sharing systems, sought annulment of the college decision on 23 June 2006. Decaux intervened on 13 November 2006; its intervention was provisionally admitted by order of 21 November 2006. The case was not heard until 19 October 2011. The City and Decaux raised four objections, all four of which the Council rejected. The first concerned the validity of the decision to litigate: the minutes of Clear Channel’s board of 22 May 2006 were signed by the representatives of two corporate directors, and the name of one of them did not match the designation in the act renewing the mandates. The Council held that the certified extract produced shows that the required attendance and voting quorums were met, that neither party had challenged that document as forged, and that the company concerned had changed legal form by a deed of 30 June 2003 published in the Belgian Official Gazette of 26 August 2003 — a material error without consequence. The second objection was that Clear Channel could never have concluded the amendment anyway, because Decaux held exclusivity for advertising supports on the City’s territory and the project was viable only with advertising funding. The Council reversed that reasoning: the City could not exclude the opening to competition on the pretext that it wished to remunerate its contractor partly through advertising on furniture over which Decaux held an exclusive right. On the contrary, it could not choose that form of remuneration precisely because it was incompatible with the duty to open to competition to which the City was bound; it merely had to find another form of remuneration to respect both the exclusivity clause and that duty. The third objection, from Decaux, contested the legitimacy of the interest: Clear Channel had had pre-contractual contacts with the City about a bicycle-sharing project and would therefore have been excluded under article 11 of the Law of 24 December 1993 and article 78 of the Royal Decree of 8 January 1996. The Council answered that Clear Channel had not been entrusted with research, experimentation, study or development of such a service and so did not fall under article 78, and that presenting and promoting an existing product to a contracting authority — Clear Channel pointed to its system running in Rennes among other places — is not an abnormal step and does not in itself amount to an act, agreement or arrangement distorting normal conditions of competition. The Council added that such contacts would have been open to criticism had they led to a contract without competition or to a sham competition; here they had not favoured Clear Channel over its main competitor. The fourth objection was that the action had become devoid of purpose: after Decaux concluded a similar contract with the Brussels-Capital Region, the disputed agreement was terminated on 28 February 2009. The Council rejected that too: termination does not retroactively remove the contested act, or the effects it produced, from the legal order, and even though the City can no longer award that contract, Clear Channel retains a moral interest in the annulment of an act adopted without competition that deprived it of the possibility of submitting a tender. On the merits, the first limb of the second plea was decisive. The Council laid down that the amendments the college may make to a running contract under article 236 of the New Municipal Act may not have a scope that entails concluding a new contract without observing the rules governing it. Here the City did not merely acquire additional street furniture covered by the 1999 agreement; it also entrusted Decaux with installing and operating a bicycle-hire facility. Entrusting that public bicycle-hire service amounts to concluding a new contract with a subject matter different from that of 1999, which had to be preceded by an opening to competition. The City could therefore not lawfully rely on article 236. The remaining limbs and pleas were not examined, since they could lead to no wider annulment. Decaux’s intervention was admitted, the college decision of 23 March 2006 annulled, and the costs of 300 euros divided: 175 euros for the City and 125 euros for the intervening party.
Why does this matter?
This judgment is one of the clearest Belgian applications of a rule now codified in article 38/1 and following of the Royal Decree on performance, but derived here directly from the logic of procurement law: an amendment may adapt a contract, not replace it. The test the Council uses is simple and remains usable — does the subject matter change? The street-furniture contract concerned manufacturing, supplying and maintaining shelters and display supports. Operating a bicycle-sharing system, with a tariff structure the City itself sets and rental income the operator collects, is a service to the public. That the bicycles were physically integrated into the shelters and that the contractor remained the same does not turn the whole into a supplementary supply. Equally instructive is what the Council does with the exclusivity argument. The City reasoned: only Decaux may place advertising, advertising must fund the system, therefore only Decaux could do it. The Council turns that around — choosing a form of remuneration that makes competition impossible does not prove that competition was impossible, but that the wrong form of remuneration was chosen. That argument reaches beyond advertising: whenever an existing exclusive right is invoked to award a new contract directly, the question is not whether the right exists but whether the authority could not have structured the contract differently. Third, the judgment confirms that an operator who, for want of competition, never had the chance to bid retains an interest in annulment even after the contract has been terminated. That makes the annulment more than a symbolic act: it is the basis for a liability claim before the civil courts — and proceedings were already pending before the Brussels Court of Appeal. Finally, the judgment shows what it meant that the Council of State then took five years over such a case. The 2011 annulment came well after the practical outcome: the contract had already been terminated in 2009 because the Brussels Region had meanwhile contracted out its own bicycle-sharing system. The practical result of the proceedings is therefore not the restoration of competition, but the finding — five years later — that there should have been some.
The lesson
If you are a contracting authority considering extending a running contract, ask one question before all others: does the subject matter stay the same? Additional units of what was already ordered, technical adjustments or administrative changes serving the proper performance of the original contract can be done by amendment. A new performance with its own economics — a service to the public, its own revenue stream, its own tariff structure — is a new contract, even where it is built into existing furniture, networks or systems and even where you continue with the same party. Do not then invoke an existing exclusive right as a reason not to compete: the Council will examine whether you could have structured the contract differently, and the answer to that is rarely no. If you are the operator left outside, two things are worth remembering. Pre-contractual contacts with an administration about an existing product are not in themselves prohibited and do not cost you your interest — you are presenting something you already have, not developing anything to order. And keep litigating even if the contract has meanwhile been terminated or performed: termination does not erase the contested decision, and your moral interest in establishing that you never had the chance to compete is enough — that is precisely what supports a later damages claim. Finally, watch a mundane point that nearly proved fatal here: make sure the decision to litigate is demonstrably taken by the competent organ and that the names in your corporate documents are correct. Two objections concerned nothing else.
Ask yourself
Does the extension you are considering change the subject matter of the contract, or does it merely add more of the same? Does the new performance bring its own revenue stream, its own public or its own tariff structure — features pointing to a service rather than a supplementary supply? Are you invoking an existing exclusive right to avoid competition, and if so, have you examined whether a different form of remuneration or a different delineation would make competition possible after all? If you are the operator left outside: do you realise that termination or full performance of the contract does not deprive your action of purpose where you never had the chance to submit a tender? And do you have to hand the proof that the competent organ of your company validly took the decision to litigate?
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 →