'Cheap Indian subcontractor' isn't a price justification — especially when the buyer checks your sample and finds it full of errors
CICADE bid less than a quarter of the estimate and about a third of winner Pixelius's price for digitising Wallonia's landscape features, and justified it with one sentence about an Indian subcontractor at "just a few dollars per hour" — the Council of State upholds the exclusion for abnormally low price because the justification wasn't quantified, gave no hourly rate, and didn't include correction time after quality control.
What happened?
The Walloon Region tendered in 2014-2015, via open call with EU-wide publicity, the digitisation of structuring landscape elements based on the 2014 orthophotographic coverage — across all Wallonia except forest zones. On 9 April 2015 the Walloon Minister declared CICADE's bid irregular as abnormally low and awarded to PIXELIUS FRANCE. CICADE's price was wildly out of line: barely a quarter of the estimate, about a third of Pixelius, less than half of the runner-up. Four bidders had been asked to justify — three apparently low, one apparently high. CICADE's reply ran to one paragraph: "To build our price we estimated work hours per surface unit from the sample we made on your test data. We got a total number of hours for Wallonia, which we multiplied by our subcontractor's hourly rate. Our subcontractor, officially declared in our candidacy file, is a company established in India where labour cost is only a few dollars per hour. We've done many projects with them." No hours listed, no hourly rate stated, no correction time after quality control included. The Walloon Region declared the bid irregular on grounds that CICADE "did not account for the time needed for correction of lots (as provided in article B.7 of the specifications) after verification by the contracting authority". In extreme urgency CICADE pushed three sub-arguments: (1) correction time WAS included in the sample-hours; (2) corrections are marginal because of pilot and internal QC; (3) other bidders were accepted on similar reasoning. The Council of State rejects all three. A price justification must "detail the different elements that concretely support the price structure" — especially for a global price. The invitation letter had explicitly asked not to refer just to subcontractor price plus margin but to justify the subcontractor price itself. CICADE didn't — no figures on hours or hourly rate. The Region could reasonably conclude correction time wasn't included. Moreover, the Minister demonstrated that CICADE's sample — supposedly in the upper-middle quality range — contained many errors which would have justified rejection. The specifications' thresholds aren't easy to meet, and correction time is far from negligible. On the third branch: Pixelius (winner) gave concrete figures — subcontractor price, headcount in France and Morocco, budget breakdown — and sat close to the estimate. CICADE didn't. Suspension dismissed, 700 EUR legal costs plus 200 EUR.
Why does this matter?
For bid managers using low-cost subcontractors (offshore or nearshore), this is the scenario you want to avoid: aggressive bid, price justification request, and you send back a paragraph about "we work with partner X in country Y, it's cheaper there". That isn't a justification, it's an excuse. The Council of State reads a justification as a detailed, quantified build-up — hours × rate, with a separate line for every relevant cost element from the specifications (here: the B.7 post-QC corrections). What's not in your justification doesn't count, even if it's elsewhere in your bid.
The lesson
Treat a price justification as a mini business case. Express the price as a formula, quantify every parameter (hours, hourly rate, materials, overhead, margin), explicitly name every cost element from the specifications (corrections, QC, mobilisation, possible extras) and explain how you priced each. If you use a subcontractor: justify the subcontractor's price itself — not just the fact that you have a cheap one. And if the buyer's letter explicitly says "also justify the subcontractor price": don't ignore that, or your bid almost certainly falls.
Ask yourself
Pull your last price justification. Is there a formula or table showing (a) hours per cost item, (b) hourly rate, (c) materials, (d) overhead, (e) margin? Did you price every verification or correction phase from the specifications separately? With a subcontractor — is its price quantified, not just "cheaper than Belgium"?
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 →