Kone loses its extreme-urgency challenge to Infrabel’s ten-year lift contract: no price investigation required in a negotiated procedure in the utilities sectors
Kone Belgium challenged, under extreme urgency, the award to Schindler of Infrabel’s ten-year framework agreement for the maintenance of lifts, escalators and moving walkways in the Brussels stations (3,041,654.40 euros excl. VAT, more than a quarter below Kone’s price), but the Council of State rejected every plea: the board’s quorum was evidenced by the administrative file, the abnormal-price rules of Title VII do not apply to this procedure, and Schindler’s tender was still perfectly valid after a timely requested extension.
What happened?
In April 2010 Infrabel launched a negotiated procedure with publicity for a ten-year framework agreement: the ‘omnium’ maintenance contract for the lifts, escalators and moving walkways of the stations and service buildings in the Brussels zone (specifications no. 57/43/1/09/16). The contract comprised four lots — lifts of Brussels-North, escalators of Brussels-North, lifts of Brussels-South, and moving walkways and escalators of Brussels-South — with price as the sole award criterion and the possibility of discounts for combined lots. Kone Belgium submitted a tender on 10 June 2011, amended it on 12 January 2012 and delivered its best and final offer (BAFO) for the four lots on 25 April 2012, with a 5% discount for combining them. On 21 December 2012 Kone learned that Infrabel’s board of directors had, the day before, awarded all four lots to Schindler for a total of 3,041,654.40 euros excl. VAT — against 4,123,844.09 euros for Kone, which came second. On 7 January 2013 Kone applied to the Council of State under extreme urgency with three pleas. First plea: the extract from the minutes allegedly failed to show that the board’s attendance quorum had been reached — the columns ‘present’, ‘represented’ and ‘excused’ had been left blank. The copy in the administrative file, however, did record the presence of the chairwoman, the managing director and six directors, well above the statutory minimum of five: plea not serious. Second plea: Infrabel had allegedly never investigated or questioned Schindler’s strikingly lower prices — up to 51.02% and 56.72% below those of other bidders on lots 2 and 3, and 26.24% below Kone’s total price. The Council sided with Infrabel: article 98 of the Royal Decree of 10 January 1996 sits in Title VII, which applies only to adjudication and calls for tenders, not to the negotiated procedure in the utilities sectors, and there was no manifest error of assessment — Infrabel had followed the price evolution during the negotiations and judged that Schindler’s prices did not jeopardise proper performance. Third plea: Schindler’s BAFO had allegedly expired by the award date, the two-hundred-day validity period having run out on 1 December 2012. That plea failed on the facts: on 23 October 2012 Infrabel had asked Schindler in writing to extend its validity until 31 January 2013, and Schindler had returned that letter signed ‘for agreement’ on 29 October 2012. Moreover, the Council added, the expiry of the validity period merely means the bidder is no longer bound — not that the authority may no longer take the tender into consideration. Along the way a language issue had surfaced: the notification to Kone, litigating in French, had been made in Dutch only, which Infrabel corrected during the proceedings with a new, entirely French notification with retroactive effect of 5 February 2013. The application for suspension was rejected; Kone bears the costs of 175 euros and the four bidders’ tenders remain confidential at this stage.
Why does this matter?
The judgment sharply delineates what an unsuccessful bidder can and cannot contest in a negotiated procedure in the utilities sectors. The rules on abnormal prices — with the duty to investigate prices and question the bidder — sit in Title VII of the Royal Decree of 10 January 1996 and apply only to adjudication and calls for tenders. In a negotiated procedure, at most a marginal review remains: only a manifest error of assessment can be held against the authority, and hefty percentage gaps do not suffice as long as no one shows that performance itself is at risk. Noteworthy, though, is the Council’s pointed remark about the specifications: they declared a series of Title VII articles applicable (including art. 104 on the validity period), but Infrabel could not say on what legal basis that extension rested — in the classic sectors, article 122, fourth paragraph, of the Royal Decree of 8 January 1996 expressly allows it; in the utilities sectors no such provision exists. The second lasting lesson concerns tender validity: its expiry does not invalidate the tender, it merely releases the bidder. An authority that requests an extension in writing and in time, as Infrabel did here, simply cuts the plea off. Finally, the judgment shows how a sloppy extract of minutes — with blank attendance columns — nearly got an award into trouble: the full minutes in the administrative file saved the day, although the Council did not fail to deplore that the file had to be completed only after a question from the auditor.
The lesson
Anyone participating in a negotiated procedure in the utilities sectors must know that the classic protection against abnormally low prices does not automatically apply there. If you lose to a competitor more than a quarter cheaper, expressing that gap in percentages is not enough: you must make it plausible that the winner cannot properly perform the contract at that price, or that the authority’s assessment was manifestly unreasonable. Read the specifications closely too — if they expressly declare Title VII provisions applicable, that may offer a foothold; here article 98 escaped that extension. For contracting authorities the lessons are more practical: monitor the validity period of the tenders and request a written extension with the bidder’s express agreement before expiry, and make sure the extract of the award minutes records who attended, so the quorum is verifiable at first sight instead of having to be rescued with documents from the administrative file.
Ask yourself
Do you know that the abnormal-price rules (Title VII of the Royal Decree of 10 January 1996) do not apply to the negotiated procedure in the utilities sectors, unless the specifications declare them applicable — on a sound legal basis? Before building a price complaint, can you show that the lowest price jeopardises proper performance, and not merely that the gap is wide? As an authority, do you track the validity period of the tenders and request a timely, signed extension in writing? And does the extract of your award decision record who was present or represented, so the quorum is immediately verifiable?
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 →