A turnover requirement of fifty times the contract value is striking — but if one valid exclusion ground holds, the appeal does not fly
The Council of State rejects VR Conteneur's extreme-urgency action against Intradel: even if the requirement of €10 million annual turnover for a contract worth €200,000 is debatable, the non-selection also rests on the absence of a welding robot — a requirement Intradel was entitled to set — and the awardee ANG could rely on its Polish subsidiary's consolidated turnover under article 74 RD 15/07/2011.
What happened?
On 3 October 2016 the Liège waste intermunicipal Intradel publishes in the Bulletin of Tenders a direct negotiated procedure with prior publication for the manufacture and delivery of open metal containers for its recycling parks: 32 containers of 30 m³ and 10 of 10 m³. Special tender specifications no. 16/22/INT set two selection thresholds. For financial and economic capacity (article 67): minimum €10,000,000 global annual turnover. For technical capacity (article 71): at least 3 contracts for at least 30 large containers in the past three years, plus a minimum equipment list including 'sand-blasting cabin, paint cabin, semi-automatic welding station, welding robot, bender, cutter (min 7 m), folder (min 7 m), shears, press, band saw, overhead crane and forklift'. Intradel reserves the right to visit the production site before awarding. VR Conteneur submits a bid of €197,964 HTVA. Its global turnover is €4,527,491 over the past three years — about 22 times the contract value, but less than half the threshold of €30 million (€10 million × 3 years). On 1 December 2016 Intradel's Management Committee does not select its offer, on two grounds: turnover 'largely below the threshold' and 'does not own a welding robot'. The contract is awarded to NV ANG. VR Conteneur files an extreme-urgency action on 19 December 2016 with four grounds. First ground — disproportionate turnover requirement. VR Conteneur argues that demanding €10 million per year for a €200,000 contract is 50 times the contract value and prevents real competition. It cites C.E. no. 213.343 (5x the contract value still acceptable), French case law (Tribunal administratif Nantes 1995, Cour administrative d'appel Nantes 1999) where 5 to 10 times had already been judged disproportionate, the C-218/11 Edukövizig and Hochtief Solutions ruling of the European Court of Justice (18 October 2012), and a 2015 legislative proposal capping the requirement at twice the estimated contract value. The Council does not address this branch: even if it were serious, the non-selection on the welding robot ground is enough on its own. Second ground — the welding robot is not indispensable. VR Conteneur argues it has produced containers manually for 25 years and that requiring a specific production technique limits competition. Intradel responds: the specifications require 'continuous welds, minimum 5 mm thick, including for bottom stiffeners' — a uniformity and quality level reliably achieved only with a welding robot. The Council follows: VR Conteneur is free not to use a robot, but Intradel is equally free — absent manifest error of assessment — to require one for uniform continuous welds. No manifest error shown. Third ground — incompetence of the Management Committee. Under Intradel's statutes the Board normally decides on awards. VR Conteneur disputes that the decision falls under 'day-to-day management'. The Council: a Board decision published in the annexes to the Belgian Official Journal of 20 June 2012 delegates all sub-European-threshold contracts to the Management Committee. The €200,000 contract falls well below the threshold for mandatory European publication, and the Council does not see why awarding such a contract would not fall under day-to-day management. Not serious. Fourth ground (new, after inspection of the administrative file) — the awardee ANG itself does not meet the requirements. (a) ANG's turnover for 2013-2014 was €4,400,983 and for 2014-2015 €4,815,408 — as modest as VR Conteneur's. (b) ANG allegedly does not possess a 7m folder, shears or welding robot, subcontracting the welding to its Polish subsidiary SA Ligna. The Council: in its sworn declaration ANG provided three turnover figures — its own ANG-containers turnover (about €4.5 million) AND the consolidated ANG group turnover including the 100% Polish subsidiary (€10,300,571 to €11,867,411 per year). At Intradel's request of 10 November 2016 (under article 59,1° RD 15/07/2011), ANG submitted on 15 November 2016 a commitment by its subsidiary to make its capacity available — exactly what article 74 RD 15/07/2011 allows: 'a candidate or bidder may, for a given contract, rely on the capacities of other entities, regardless of the legal nature of the links existing between him and those entities'. As regards equipment: ANG made a sworn declaration explicitly mentioning that it owns a 'Panasonic TL 2000 welding robot' and stated that a production-site visit could be organised on simple request. Intradel was entitled to rely on this — no manifest error. Not serious. The Council concludes: no ground is serious. Application rejected. Costs reserved for the annulment proceedings. Confidentiality of the offers maintained.
Why does this matter?
Three important lessons in one judgment. (1) A turnover requirement of fifty times the contract value is itself open to a proportionality challenge — but if the non-selection also rests on another valid ground (here: the absence of a specific machine), the proportionality question becomes academic. For bidders this means you must rebut all exclusion grounds simultaneously, not just the weakest. (2) A contracting authority may require a specific production tool — like a welding robot — if the quality requirements in the specifications (e.g. continuous 5mm welds) objectively justify it. The fact that a traditional player can produce the output manually is not a manifest error of assessment by the authority. (3) A bidder lacking its own turnover or equipment can rely under article 74 RD 15/07/2011 (now art. 78 RD 18/04/2017) on the capacity of parent, subsidiary or sister companies — provided it can produce a formal commitment to make capacity available. Consolidated group turnover is accepted, provided the structure is transparent and verifiable.
The lesson
As a bidder: don't tackle one issue but address all exclusion grounds simultaneously. A strong proportionality complaint about the turnover requirement evaporates as soon as the authority also invokes another valid non-selection ground. As a contracting authority: justify a specific equipment requirement (a type of welder, a specific machine tolerance) by referring to concrete quality requirements elsewhere in the specifications (weld thickness, uniformity tolerances). As a group with multiple companies: use article 78 RD 18/04/2017 (former art. 74) to demonstrate consolidated capacity, and submit from the bid a commitment to make capacity available from the assisting entity.
Ask yourself
Am I not selected on multiple grounds at once? Then tackle each separately, because one valid ground suffices to support the non-selection. Does the authority base a specific equipment requirement on a quality description in the specifications (e.g. continuous welds of a certain thickness)? Then a 'manual alternative technique' is not a full argument without proof of equivalent output.
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 →