Borrowed capacity without proof of commitment: the Council suspends the award of the FOREM software contract to Velixis
The Council of State suspends the FOREM's award of lot 3 of an IT supplies contract to Velixis, because at the opening of the offers Velixis did not reach the required turnover of five million euros and relied on the capacity of its group (Micropole) without producing the mandatory commitment of that third party — so that those references had to be set aside as non-existent and Velixis should have been excluded.
What happened?
The FOREM placed a supplies contract, divided into lots per software family. Lot 3 concerned SAP Businessobjects: the maintenance, purchase and support of IT software (reference DMP1400554). For economic and financial capacity, the specifications (point 5.2.1) required that, per lot bid for, at least one of the turnover figures in the relevant field of activity over the available financial years be equal to or higher than a given amount — for lot 3 that was 5,000,000 euros excluding VAT. Point 5.2.3 of the specifications, applying article 74 of the Royal Decree of 15 July 2011, allowed a bidder to rely on the capacity of other entities, whatever the legal nature of the link, but only if it proved to the authority that it would have the necessary means at its disposal by producing the commitment of that entity to make those means available. On 14 November 2014 the FOREM awarded lot 3 to Velixis. The unsuccessful bidder SOA People sought, under extreme urgency, the suspension of that award decision and of the implicit decision not to award the contract to it. Against that second object, the FOREM and the intervening party Velixis raised a plea of inadmissibility. The Council qualified this: an unsuccessful bidder who also challenges the award to a competitor may in principle contest the implicit refusal, but only if it shows, convincingly and pertinently, that the contract should have been awarded to it. Since SOA People put forward no concrete element showing that the FOREM had no choice but to award it the contract, the action was inadmissible on that point. On the merits, the second ground succeeded. The contested decision itself showed that Velixis did not reach the required turnover at the opening of the offers: its own turnover figures for lot 3 did not reach the threshold of 5,000,000 euros excluding VAT. Velixis referred to the turnover of the Micropole group to which it belongs, but produced no commitment of that entity to make its means available — the FOREM noted this in its decision itself. Referring to article 74 of the Royal Decree of 15 July 2011 and to the Holst Italia judgment of the Court of Justice (C-176/98 of 2 December 1999), the Council recalled that a bidder may rely on a third party's references only on condition that it demonstrates that party's commitment; absent that commitment, the third party's references must be set aside and treated as non-existent at the time of submission of the offer. Velixis therefore did not have the required economic references and its offer should have been rejected. Producing a commitment afterwards is not a permitted completion or clarification within the meaning of article 59 of the Royal Decree of 15 July 2011, but the invocation of a new reference the bidder did not have when submitting its offer. The ground was serious. The Council admitted the intervention of Velixis, suspended the FOREM's award decision of 14 November 2014, rejected the action for the remainder (the implicit refusal) and ordered the immediate execution of the judgment; it did not yet rule on costs.
Why does this matter?
Relying on a third party's capacity — a sister company, a parent group or a subcontractor — is entirely permitted and often indispensable to meet strict selection thresholds. But it is never unconditional: the bidder must produce that party's commitment to make its means available, and that proof must exist at the time the offer is submitted. Without that commitment, the third party's figures simply do not count, even where the bidder belongs to the same group. Just as important: this defect cannot be put right afterwards. A clarification or completion of an incomplete application (article 59 of the Royal Decree of 15 July 2011) does not allow a reference to be supplied that one did not have at submission; that would amount to invoking a new reference and would distort equality between bidders. Finally, the arrest confirms that an unsuccessful bidder who challenges the implicit refusal to award it the contract must show that the contract should have gone to it — otherwise that part of its action remains inadmissible.
The lesson
If you rely on the capacity of another entity, attach to your offer an express, signed commitment from that entity to make the necessary means available for performing the contract — also (precisely) where it is a company of your own group. Do not count on being able to supply that document later: its absence at submission is fatal and not a clarifiable gap. Before submitting, check whether, with or without that borrowed capacity, you meet every selection threshold on the basis of documents you actually hold at that time. And if, as an unsuccessful bidder, you want to challenge not only the award to a competitor but also the implicit refusal towards you, substantiate concretely why the contract could only have been awarded to you.
Ask yourself
Suppose you rely, for a selection threshold (turnover, references, accreditation), on the figures of a sister or parent company. Did you attach to your offer a signed commitment from that entity engaging to make its means available for this contract? Did that document already exist at the time of submission, or could you only produce it afterwards? Do you, without that borrowed capacity, meet the threshold yourself — and if not, does the commitment cover exactly the required capacity? And if you challenge the implicit refusal to award you the contract: can you show concretely that the authority had no choice but to award the contract to you?
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 →