Whoever does not follow the tender’s price structure submits a substantially irregular bid — however attractive the year-end rebate may look
Deli XL Flanders lost the provincial framework agreement for the supply of food products (2014-2018, estimated at 1,390,000 euros) to Java and saw its extreme-urgency action dismissed, because its bid did not respect the price structure required by the tender documents — gross price, fixed discount percentage and net price per item — and instead proposed a year-end rebate settled on total turnover, which the Council of State regarded as a substantial irregularity.
What happened?
The Province of East Flanders launched a general call for tenders for a supply contract with as its object a ‘Framework contract for the supply of food products: 2014-2018’ for the kitchens of the provincial services and schools. Purchases were to be made on call, and the contract — estimated at 1,390,000 euros excluding VAT, or 1,473,000 euros including, with an annual turnover of about 278,000 euros — was announced in the Bulletin of Awards of 21 June 2013 and in the Official Journal of the EU of 26 June 2013. The special tender documents ‘voeding 2014-2018’ applied to the contract, concluded on a price schedule. In those documents (provisions I.5, I.9 and II.3) the price statement was set out in three parts: the gross price, the discount percentage and the net price, so that the authority would gain insight, over the whole term of the contract and across price revisions, into the discount actually granted. By a decision of 7 November 2013 the province awarded the contract to the BVBA Java. Deli XL Flanders’s bid had been declared irregular for two reasons: on the one hand because essential price components — the gross prices and the fixed discount percentages — were missing from the price-list catalogue and a year-end rebate had been granted contrary to the tender documents; on the other because the questions asked under the ‘service’ award criterion had not been answered. Deli XL sought suspension under extreme urgency and, in two branches of its plea, contested both grounds. The Council of State found that each of the two grounds sufficed on its own to support the rejection, so that Deli XL had an interest in its plea only if it could show both grounds to be unlawful. On the first branch, the Council held that a departure from the tender provisions on the statement of prices is, in view of articles 89 and 110, § 2, of the Royal Decree of 8 January 1996, in principle a departure from an essential tender provision and therefore a substantial irregularity. Deli XL had indeed stated a unit price, a year-end rebate and a net price each time, but that was not the required price structure: its gross prices already contained a discount adjusted to the contract and the client — which it admitted and which a comparison with its web prices confirmed — and the ‘year-end rebate’ was not a discount percentage per item, fixed across price revisions, but a discount settled on total turnover and made available only in February of the following year, and thus not immediately per invoice or order. The Council noted that Deli XL had never asked questions or made observations about unclear passages in the tender documents. The first branch was therefore not serious. Since the first ground held up prima facie, Deli XL no longer had an interest in its criticism of the second, then superfluous, ground on the ‘service’ criterion. The suspension action was dismissed. Java’s intervention was admitted; Deli XL was ordered to pay the costs of the action (175 euros) and Java the costs of its intervention (125 euros).
Why does this matter?
In a price-schedule contract the way the price is stated is not an administrative side issue but the key to a fair comparison. The province’s tender documents required a three-layer price structure — gross price, fixed discount percentage, net price — precisely to see what discount a bidder really grants over the full term and across price revisions. Whoever proposes instead a global year-end rebate on total turnover, settled only months later and not per item, breaks that comparison model: its prices are no longer built on the same basis as the others’. The Council confirms that such a departure from the price statement is an essential, and thus substantial, irregularity that supports rejecting the bid — regardless of whether the offered discount looks attractive at first sight. Equally practical is the additional finding that Deli XL had never used the possibility to ask questions about unclear passages: whoever thinks the tender documents are ambiguous must raise it in time and cannot afterwards usefully rely on that ambiguity. Finally, the judgment illustrates the logic of multiple grounds: if one independent ground supports the rejection and cannot be seriously challenged, the interest in criticising the others falls away.
The lesson
As a bidder, follow the tender’s price structure exactly. If the documents ask for a gross price, a fixed discount percentage and a net price per item, state them that way — do not replace them with a global year-end rebate on turnover, however advantageous it looks, because a departure from the price statement counts as a substantial irregularity that has your bid rejected. If you think a tender provision is unclear, ask the authority a question in time; whoever stays silent cannot afterwards successfully rely on that ambiguity. As an authority, this judgment confirms that you may enforce a required, well-defined price structure to make bids mutually comparable, and that a departure from it can support the rejection of a bid. Remember, too, the procedural economy: if your rejection rests on several independent grounds, it is enough that one of them holds up.
Ask yourself
Does your bid state the price exactly as the tender documents require — gross price, fixed discount percentage and net price per item — or do you replace that with a construction of your own? Is your discount a percentage per item, fixed across the term and price revisions, or a global rebate on turnover settled only later? Did you ask questions in time about passages in the tender documents you find unclear? Do you realise that, where a rejection rests on several independent grounds, one surviving ground suffices to deprive your action of its interest?
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 →