An uninvited auditor may win the contract: HYDROBRU was entitled to accept Numibel’s spontaneous tender without special reasons
The audit firm B.M.A. challenged the award of the statutory-auditor mandate of the Brussels water utility HYDROBRU to the uninvited company Numibel, but the Council of State rejected every plea: because HYDROBRU operates in the water sector, the special-sectors regime applied rather than article 17 of the Law of 24 December 1993; accepting a spontaneous tender requires no special reasons; the contested valuation of Paul Lurkin’s hours did not change the ranking; and the price of 42,09 euros per hour, given Lurkin’s experience, was not manifestly unreasonably regarded as not abnormally low.
What happened?
After its statutory auditor resigned, the general meeting of HYDROBRU, the Brussels intercommunal water-distribution and -treatment company, decided on 14 June 2011 to launch a negotiated procedure without publication for a new statutory-auditor mandate: the legal audit of the annual accounts for 2011, 2012 and 2013, with 2010 as a special task. The main ground was that the contract fell below 135,000 euros, with the urgency of certifying the 2010 accounts as a supplementary ground. HYDROBRU invited tenders from nine audit firms, including the applicant B.M.A. and the firm Paul Lurkin & Co. The award criteria were: deployment of resources — the annual number of hours, valued under the model specifications of the Institute of Company Auditors (NHER) — for 50 points, price for 45 points and planning for 5 points. Five firms, including B.M.A., submitted a tender. In addition, the company Numibel — which had not been consulted — also submitted a tender: it had taken over the mandates of Paul Lurkin & Co, and Paul Lurkin now worked there as an accountant, no longer as an auditor (he had lost his company-auditor title on 31 August 2010, on reaching the age of seventy). HYDROBRU found Numibel’s average price — 42,09 euros per hour for the basic task, against 100 euros per hour for the additional tasks — apparently abnormally low and asked for justification; Numibel pointed to Lurkin’s years of familiarity with the file and to its lighter cost structure. On 19 July 2011 the general meeting awarded the contract to Numibel (88,69 out of 100), ahead of B.M.A. (80,12 out of 100). B.M.A. sought annulment, arguing that Numibel’s spontaneous tender should have been rejected, that Lurkin’s hours had been wrongly valued and that the price was abnormally low. The Council of State rejected the action and placed the costs, set at 175 euros, on B.M.A.
Why does this matter?
The judgment clarifies three recurring points of debate on the negotiated procedure without publication, and does so with clear principles. First, the special-versus-classic-sector classification: the Council confirms that it is not the object of the contract that matters, but the activity of the contracting authority. Because HYDROBRU operates in the water sector, even the appointment of a statutory auditor fell under the special-sectors regime, so the plea based on article 17 of the Law of 24 December 1993 was inadmissible. Second, the treatment of a spontaneous tender: the principle of the widest possible opening to competition means that a tender from an uninvited company may not simply be set aside. Rejecting a spontaneous tender requires special reasons, but accepting it does not — an important and counter-intuitive distinction. Third, the margin in valuing tenders and the price: even if Paul Lurkin’s hours had wrongly been counted as those of a ‘collaborating auditor’ (coefficient 0.8) rather than an ‘other collaborator’ (coefficient 0.5), Numibel still ranked first with 81.29 points, so the plea was inadmissible for want of interest; and the low hourly price could be justified on objective grounds, given Lurkin’s specific familiarity with the file and the fact that he had properly performed the mandate in 2007-2009 at a comparable price. Together these points show how much discretion a contracting authority enjoys in a negotiated procedure.
The lesson
If you are a contracting authority in a special sector, your activity — not the object of the contract — determines the applicable legal regime: a water utility appointing a statutory auditor falls under the special sectors. In a negotiated procedure without publication you may accept a spontaneous tender from an uninvited company without special reasons; if, on the other hand, you wish to reject it, give express reasons, because that departs from the principle of opening to competition. You need not reject an apparently abnormally low price if the tenderer justifies it on objective grounds, such as particular familiarity with the file or a lighter structure — your discretion here is wide. If you are a tenderer wishing to challenge an award, show that your complaint can actually tip the ranking: a valuation error that does not change the final standing yields no interest, and an irregularity is only substantial if it affects the comparability of the tenders or equality between tenderers.
Ask yourself
Do you know that, in the special sectors, the activity of the contracting authority — not the object of the contract — determines the applicable regime? Do you realise that rejecting a spontaneous tender requires special reasons, but accepting it does not? Can your complaint actually change the final ranking, or does it fall away for want of interest because the winner remains first even after correction? Is the alleged irregularity really substantial — that is, does it affect the comparability of the tenders or equality between tenderers? Does the tenderer justify its apparently abnormally low price on objective grounds, such as particular experience or a lighter cost structure?
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 →