The Anzegem tower clock: a managing director who restores the bells himself counts as ‘own qualified staff’, and a price justification without purchase invoices may suffice
Clock-O-Matic challenged under extreme urgency the award of the restoration of the bells and tower clock of St John’s church in Anzegem to the one-man company Michiels, whose bid of 65,340 euros undercut it by more than 30,000 euros; the Council of State held the application against the July 2011 selection decision out of time, accepted that Michiels’s managing director could himself count as ‘own qualified staff’, and ruled that the municipality could accept the price justification — materials, 862.5 hours at 40 euros and a lump sum for margins and travel — without requiring purchase invoices.
What happened?
On 5 May 2009 the municipal council of Anzegem decided to launch a public contract for the restoration of the facades and roofs of the St John the Baptist and St Eligius church. Lot 1 covered the architectural restoration, lot 2 the restoration of the bells and the tower clock, estimated at 117,007 euros including VAT and to be awarded by restricted tendering. By ministerial decree of 22 March 2011 the Flemish Region granted a restoration subsidy and authorised the tender. After publication on 7 May 2011, five candidates applied. The selection report of 29 June 2011 proposed selecting Meridiaan, Beiaarden en Torenuurwerken Michiels and Clock-O-Matic; the executive followed suit on 6 July 2011 and the selected candidates were invited by letter of 28 July 2011 to submit bids. For technical capacity the notice required a list of references with certificates, a statement of the technicians or technical services available to the contractor, and stipulated that the work on bells and tower clock had to be carried out ‘entirely with the bidder’s own qualified staff’. None of the three candidates enclosed a separate list of technicians; the selection report inferred ‘implicitly’ from their references that they had the necessary technical services. At the opening of bids the prices were far apart: Michiels 65,340 euros, Clock-O-Matic 96,003 euros, Meridiaan 104,619 euros (excluding VAT). Given that gap, on 12 September 2011 the municipality asked Michiels for a price justification for three items, with a ‘complete breakdown’ into materials, wages and profit. Michiels replied on 19 September 2011. For the temporary sealing of building openings (item 01.03.22) it had entered 0 euros, because the old clock faces would only be removed when the new ones were mounted, so no openings would arise. For replacing the clock faces (item 04.29.31) it listed 9,100 euros of materials and 242.5 hours at 40 euros, totalling 18,800 euros, ‘including margins and travel of 6,237.50 euros’. For the restoration and automation of the tower clock (item 04.29.32) it listed 8,200 euros of materials and 620 hours at 40 euros, totalling 33,000 euros, with 11,643 euros of margins and travel included. The tender report of 29 September 2011 accepted that justification: although it was ‘not immediately clear’ how much profit margin was included on materials and how many hours were travel, both the material costs and the number of hours appeared realistic. Clock-O-Matic protested by letter of 14 October 2011 and requested the selection decision; the municipality provided it on 10 November 2011. On 18 November 2011 the executive awarded the contract to Michiels. On 27 February 2012 the head of the Immovable Heritage division approved the bid and granted the definitive restoration subsidy. Only on 14 March 2012 did Clock-O-Matic receive notification that its bid had not been chosen; on 29 March 2012 it applied for suspension under extreme urgency of the selection decision, the award decision and the Region’s approval. The Council of State first examined whether the application was timely. Against the selection decision of 6 July 2011 it was not: Clock-O-Matic had known since 28 July 2011 that it (and therefore the others) had been selected and had received the full selection decision on 10 November 2011, well beyond the fifteen-day time limit of article 65/23 of the Act of 24 December 1993. The Council immediately added, however, that irregularities in the selection may still be admissibly raised against the later award decision. The unclear designation of the Region’s approval decision (‘of unknown date’) was no problem: everyone understood it meant the decision of 27 February 2012, and both defendants had included it in their file. On the merits the Council dismissed both pleas. As to selection, the ‘implicit’ reasoning in the selection report was sufficient — Clock-O-Matic had after all been able to contest it extensively in its application — and the municipality could infer from Michiels’s references, which specifically cited the professional experience of managing director Luc Michiels, that the company could complete the work. The argument that Michiels was not registered with the social security office and therefore had no staff of its own did not convince: given the nature of the contract, performance by the managing director himself may count as performance ‘with own qualified staff’. Whether the references concerned own contracts or subcontracting was irrelevant. As to the price justification, the Council reiterated that the authority has broad discretion whether to conduct a price investigation, and that querying is not mandatory if the bid is not rejected. Here the municipality had conducted an optional investigation on its own initiative; Michiels’s justification matched the requested breakdown; and Clock-O-Matic did not show why the material costs and hours could not be deemed realistic. The hourly rate of 40 euros was even above the 30 to 35 euros Clock-O-Matic itself cited as the real wage cost of a skilled worker, and the comparison with a worker’s wage did not simply hold in any event, since the managing director would carry out the work himself. That the justification should also have included purchase invoices, as Clock-O-Matic argued, was nowhere apparent. The application was dismissed; Clock-O-Matic bore the costs of 175 euros and Michiels the 125 euros of its intervention.
Why does this matter?
The judgment is a useful counterweight to the idea that a much lower price is suspect in itself. The municipality of Anzegem did what a careful authority should do: it saw a price difference of more than 30,000 euros on a contract of barely 100,000 euros, requested a justification for the three decisive items, and explained in the tender report why it accepted it — including an honest note of what was not entirely clear in the justification. Precisely that transparency made the decision resistant to criticism. The Council confirms three things. First, that a price justification need not be perfect: a breakdown into materials, hours and a lump sum for margins and travel suffices if it matches what the authority asked for and if the figures appear realistic; purchase invoices are not a legal requirement. Second, that the bidder’s context matters: a one-man company whose managing director does the craft work himself has a different cost structure from a company with employees, and the requirement of ‘own qualified staff’ may, in light of the nature of the contract — restoring a historic tower clock is craftsmanship — also refer to the managing director himself. Third, the judgment recalls the strict time-limit rule for selection decisions: whoever wants to challenge a competitor’s selection has fifteen days from the moment of becoming aware of it, and waiting until the award is too late for a direct attack — although selection defects remain invocable against the award. Finally, the file illustrates the delay a subsidised contract entails: award in November 2011, approval by the Region at the end of February 2012, notification to the loser only in mid-March 2012.
The lesson
For contracting authorities: if you conduct a price investigation, ask specifically for what you want to see (materials, hours, profit, travel), test the answer against the reality of the sector and write your assessment down in the award report, including the points you found less convincing. A reasoned acceptance of a low price holds up; a silent one does not. For bidders wanting to challenge a low price: it is not enough to say the price is below market or that the competitor has no staff on the payroll. You must show that the authority could not reasonably accept the justification — and beware: an hourly rate above your own wage-cost estimate does not help you. For small craft businesses: a managing director who performs the work himself can suffice as ‘own qualified staff’, provided you make that clear in your application with your personal references and experience. For everyone: count the fifteen-day period from the moment you became aware of a decision, not from the notification of the next step.
Ask yourself
Did you request a price justification when faced with a striking price difference, and does your report state why you accept it? Does your request for justification clearly state what the bidder must break down? If you challenge a low price: can you concretely show that material costs or hours are unrealistic, or are you relying on general assertions about market prices? As a small business: does your application make clear that the managing director is himself the qualified performer? And have you kept an eye on the fifteen-day period against the selection decision, or are you waiting for the award?
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 →