A cleaning rate of EUR 20.49 per hour cannot be brushed away with 'we know that company from the previous contract'
Hogeschool PXL awarded a four-year cleaning contract to Köse Cleaning at 30 % below the average bid price without any documented price scrutiny — the Council of State annuls the award because in a fraud-sensitive sector like cleaning, the contracting authority must also verify whether the minimum wage is achievable.
What happened?
In March 2017, Hogeschool PXL launches an open call for tenders for the cleaning of all its campus buildings, a four-year contract estimated at EUR 3 million excl. VAT, or EUR 907,500 incl. VAT per year. The award criteria are price (50 points), total hours (30 points) and hourly rate for extra services (20 points). Four bidders are selected. The prices vary widely: Köse Cleaning offers EUR 823,243.78 per year (incl. VAT), ISS Facility Services offers EUR 1,044,405.78, a third bidder EUR 1,358,127.42 and a fourth EUR 1,525,775.04. The average is EUR 1,187,888. Köse therefore sits about 30 % below that average and is the only one below PXL's own estimate (90.72 % of the estimate, while ISS is already at 115 % and the other two at 150 % and 168 %). On 22 August 2017 PXL awards to Köse Cleaning. ISS complains in writing that no price scrutiny appears to have taken place and works out the maths: dividing EUR 823,243 by the 33,204 cleaning hours per year gives an hourly rate of EUR 24.78 incl. VAT, or EUR 20.49 excl. VAT. The minimum wage in Joint Committee 121 (Cleaning) on the bid submission date was EUR 12.5255 per hour. With the minimum and certain social charges of 70.99 % on top, you already reach EUR 21.42 per hour — more than the bid rate itself, before you even start counting materials, overheads or profit. PXL replies on 8 September 2017 that no price scrutiny was required 'because the bid was not to be rejected', that price differences in the sector are large, that Köse was the previous service provider 'without any problems' and that the bid is closest to PXL's own estimate. Before the Council of State, PXL still maintains that price scrutiny is 'primarily aimed at protecting the contracting authority', not at protecting the private sector. The Council of State refuses to follow that line. The award report contains no mention of price scrutiny under 'regularity'. The 'comparative table' (confidential exhibit 2) PXL points to is a mere listing of services, hours and unit rates — not an inquiry into the reasons behind the price differences. The estimate is not convincing either: it builds on a 2013 contract without price revision clause, while minimum wages have demonstrably risen since then. The decisive factor is the hourly rate: Köse's is more than EUR 3.50 below ISS's, while the other three bidders use comparable hourly rates among themselves. On the concrete calculation by ISS that the hourly rate does not even cover the minimum wage plus social charges, PXL fails to reply on the merits. The Council points emphatically to the Prime Minister's Circular of 22 July 2014, which classifies cleaning as a fraud-sensitive sector and identifies price scrutiny as the main preventive instrument against social dumping. Conclusion: PXL acted carelessly. The award decision is annulled, PXL pays EUR 200 in roll fees and EUR 700 in procedural indemnity to ISS.
Why does this matter?
Many contracting authorities still think price scrutiny only kicks in when they intend to reject a bid. This judgment makes clear it is the other way round: even when you want to keep an unusually low bid, your award report must concretely show that you examined what that price actually contains — especially in fraud-sensitive sectors. 'We know that company from the previous contract' is not price scrutiny. 'Price differences in the sector are large' is not price scrutiny. An estimate from a prior contract without price revision is not a benchmark. And once a competitor calculates that the minimum wage plus social charges exceeds the bid rate, the authority can no longer shrug — it owes a reasoned substantive answer.
The lesson
If as a contracting authority you want to keep a bid more than 15 % below the average or below your own estimate, write three things into the award report: (1) which aspect of the price you actually examined (hourly rate, unit prices per item, material cost), (2) why the deviation is explainable, and (3) for cleaning, security, transport or construction: whether the hourly rate covers the applicable minimum wage plus social charges. Do not refer to 'experience with the bidder' or 'large price diversity' without numbers. And if the other side calculates in a complaint that the minimum wage is not achievable: address that on the merits, otherwise your award is built on sand.
Ask yourself
Open the award report for the most recent contract you awarded: do you find a 'price scrutiny' paragraph with a concrete comparison of the winner's unit rate or hourly rate against the other bidders, with reasoning why the deviation is acceptable? For a cleaning, security or construction contract: does it also state that the hourly rate can carry the minimum wage and social charges?
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 →