Sint-Lazarushof: an authority that writes ‘on pain of exclusion’ in its specification cannot later say it was only an option — the Council suspends the 12.4-million-euro award to Gillion Construct
Beliris awarded the renovation of the Sint-Lazarushof social housing complex in Sint-Jans-Molenbeek to Gillion Construct although, unlike Strabag, it had not attached the maintenance-contract proposals required ‘compulsorily’ and ‘on pain of exclusion’ in the technical clauses and was allowed to supply them only after the opening at the authority’s request; the Council of State held prima facie that a sanction ‘on pain of exclusion’ makes the clause essential, that the optional nature of the maintenance changes nothing and that a substantially irregular tender cannot be regularised — and suspended the award under extreme urgency.
What happened?
Through the Federal Public Service Mobility and Transport, which implements the Beliris cooperation agreement, the Belgian State launched an open tender for the thorough conversion and renovation of the Sint-Lazarushof social housing complex in Sint-Jans-Molenbeek, a 1926 building by architect Diongre with 9,595 m² above ground, divided into two buildings around a courtyard. The works included heavy structural demolition, asbestos removal, new centralised building services on the roof, combined heat and power, lifts, insulation to the energy-performance rules and restoration of the decorated corner. The estimate was 12,216,045.11 euros incl. VAT; the notice appeared on 12 August 2011 in the Belgian tender bulletin and on 17 August in the Official Journal of the EU, followed by four corrigenda. The general administrative provisions of the specification listed, in article 90, § 2, the documents to be attached to the tender, without mentioning maintenance contracts. The technical clauses for HVAC, sanitary, electrical and lift installations — drawn up by an engineering firm — provided, by contrast, in articles 2.20 and 2.16 that the contractor ‘compulsorily’ and ‘on pain of exclusion’ attaches to its tender the detailed type, price and duration of the maintenance contract it proposes as an option, with two (for lifts three) contract types from which the client would later choose and the right not to conclude any maintenance contract. At the opening on 18 October 2011 there were five tenders: Strabag, ACH Construct, Les Entreprises Louis De Waele, Gillion Construct and the joint venture CFE – J. Delens. Only Strabag (and apparently CFE – Delens) attached the maintenance-contract proposals; Gillion Construct, ACH and De Waele did not. In the reasoned award decision the authority held all tenders formally regular: the maintenance contracts were not prescribed ‘on pain of nullity’, constituted an option for the client, played no part in the sole award criterion of price and could therefore be supplemented after the opening. After price correction the ranking was: Gillion Construct 12,833,788.80 euros, Strabag 12,994,350.31 euros, ACH 13,025,426.71 euros, CFE – Delens 14,178,463.21 euros, De Waele 15,242,860.22 euros. By letter of 17 November 2011 the authority asked Gillion Construct to supply the missing maintenance contracts, which it did on 29 November. On 7 December 2011 Deputy Prime Minister Onkelinx awarded the contract to Gillion Construct for a finally corrected amount of 12,449,865.91 euros incl. VAT. Strabag learned on 13 January 2012 that its tender was regular but not selected and applied for suspension under extreme urgency on 27 January 2012. Gillion Construct intervened; an additional ‘note with observations’ it filed on 21 February was excluded from the debate because the registry had set 13 February as the deadline. The chamber president recalled that article 65/15 of the Law of 24 December 1993 no longer requires proof of serious harm that is difficult to repair, so that only the seriousness of the plea had to be examined. He set out the distinction in article 110, § 2 of the Royal Decree of 8 January 1996: deviations from essential specification clauses render the tender void and leave the authority no discretion; for relative irregularities the authority may choose. When an authority expressly attaches the sanction of nullity to a clause, it itself indicates that it regards that clause as essential; by requiring the maintenance contract ‘compulsorily’ and ‘on pain of exclusion’, Beliris had itself confirmed that character. That it was an option changed nothing: bidders had to offer that option and appeared to commit to it if the client exercised it. That the option played no part in the price assessment did not make it any less a compulsory part of the offer, and a correlation between the content of the maintenance contract and the renovation prices could not be excluded. The argument that ‘on pain of exclusion’ meant something other than ‘on pain of nullity’ was not demonstrated. That the requirement appeared only in the technical clauses and that three of the five bidders overlooked it did not prove it was not essential: those clauses form part of the approved specification and a diligent bidder takes them into account. By allowing Gillion Construct to submit a proposal after the opening — possibly with knowledge of the other total prices and with more time than Strabag — the equality of bidders had been affected. The Council found the plea serious: Gillion Construct’s tender appeared to have been wrongly accepted, so that it was no longer established that the contract had been awarded to the lowest regular bidder and the duty to give substantive reasons had been breached. It suspended the award decision of 7 December 2011, but not the implicit decision not to award to Strabag, since only Gillion Construct’s tender had been fully examined and Strabag showed no additional benefit from that suspension. The intervening party was ordered to pay the costs of its intervention, set at 125 euros.
Why does this matter?
The judgment lays down a principle that still hurts contracting authorities today: an authority that couples a sanction of exclusion or nullity to a requirement in its own specification thereby declares that requirement essential and loses the freedom to deal with it flexibly when assessing regularity. Beliris tried to escape that trap with four arguments that recur frequently in practice: it is an option, it does not count in the award criterion, ‘exclusion’ is not the same as ‘nullity’, and the requirement appeared only in the technical clauses that three of the five bidders ignored. The Council sweeps all four off the table, and that is the real value of the judgment. A compulsory option is a compulsory part of the offer, even if the client may never exercise it. That an element does not count in the price does not make it unimportant — there may even be a link between what a contractor asks for maintenance and how it sets its renovation prices. The technical clauses of an engineering firm are no less part of the specification than the administrative provisions. And that most bidders overlook a requirement says something about the bidders, not about the requirement. The second point is regularisation. Beliris chose an apparently reasonable solution — letting the lowest bidder complete its tender — but the Council points out what that meant in practice: Gillion Construct could draw up its maintenance proposal after the prices were known and with weeks more time than Strabag. A substantially irregular tender does not exist in law and therefore cannot be repaired. Finally, the judgment illustrates the new remedies rules of 2010: no more need for harm that is difficult to repair, only a serious plea, and that sufficed here to suspend a 12.4-million-euro contract. The flip side for Strabag: the Council did not suspend the decision not to award to it, because its tender had not yet been fully examined — a suspension is not an award to the runner-up.
The lesson
For contracting authorities: read your own specification — every part, including the technical clauses drawn up by your engineering consultants — before publishing it, and ask yourself at every ‘on pain of nullity’ or ‘on pain of exclusion’ whether you really want that sanction. If you only want information about maintenance options without commitment, write it that way, without a sanction. Once the sanction is there, you are bound by it: a tender without the sanctioned document is substantially irregular, and you may not let it be supplemented after the opening, however little the element weighs in the price. If you still want to solve the problem because most of the market missed the requirement, consider halting and redoing the procedure rather than regularising. For bidders: go through the specification in full, including the annexes per lot or discipline; a requirement stated there ‘on pain of exclusion’ is as hard as one in the administrative provisions. If you are the only one who complied, that is a strong plea against competitors who did not — but expect no more from a suspension than that the award is blocked; the authority must still fully examine your own tender afterwards.
Ask yourself
Do you know which clauses in your specification are prescribed ‘on pain of nullity’ or ‘on pain of exclusion’, including in the technical clauses drawn up by a consultant? Do you realise that you cannot relativise that sanction when assessing regularity, not even for an option that does not count in the price? Have you ever let a bidder supply a missing document after the opening, and how would you justify that it gained no advantage? As a bidder: before submitting, do you systematically check every annex per lot for documents that must be attached, and do you use competitors’ mistakes as a plea when you yourself were complete?
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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 →