A social enterprise is not yet a sheltered-work company: IGEAN was entitled to exclude the Vazi-Mensenzorg partnership from its reserved textile contract
The partnership of Vazi (a social-purpose private limited company) and the non-profit Mensenzorg was denied access to IGEAN’s framework agreement for textile collection, reserved for the social economy, because recognition as a ‘social enterprise’ and a statutory aim of helping people in need do not suffice to qualify as a sheltered-work company or an equivalent undertaking; the Council of State found no plea serious and dismissed the application for suspension under extreme urgency, with a procedural indemnity of 770 euros borne by the applicants.
What happened?
IGEAN Milieu & Veiligheid, the intermunicipal association of a group of Antwerp municipalities, launched an open procedure in May 2022 for a framework agreement for the collection, reuse and processing of textiles. The contract was divided into twelve lots: for each region, one lot for door-to-door collection, one for containers at recycling parks and one for containers at designated locations. Relying on article 15 of the Public Procurement Act, IGEAN reserved the contract for the social economy. The specifications imposed two cumulative conditions: the tenderer had to be a sheltered workshop or an undertaking whose aim is the social and professional integration of disabled or disadvantaged persons — the specifications referring to the Flemish ‘maatwerkbedrijven’ (sheltered-work companies) and to similar undertakings meeting equivalent conditions — and at least 30 % of its staff had to be disabled or disadvantaged workers. Before the opening of tenders on 16 June 2022, Vazi asked for clarification of those access conditions; IGEAN replied that a tenderer must either be a social-economy enterprise under Flemish law, such as a sheltered-work company, or demonstrate that it meets equivalent conditions. Six tenderers submitted offers. The temporary partnership Vazi-Mensenzorg tendered for all lots. In the evaluation report of 14 September 2022 it was denied access. Since a partnership has no legal personality, IGEAN assessed each partner separately. Vazi does appear on the list of companies presumed to be recognised as a ‘social enterprise’ within the meaning of article 8:5 of the Companies and Associations Code, but according to IGEAN that is something different from a sheltered-work company: the Flemish decree requires, among other things, tailored work and guidance for target-group workers as the main activity and a workforce consisting of 65 % of that target group. IGEAN also called the recognition ‘precarious’, since the presumption lapses at the end of 2023 for companies that do not convert into a cooperative. For the non-profit Mensenzorg, the statutory aim — supporting people in need and reducing waste — was equally insufficient. Neither partner produced documents demonstrating equivalence with the sheltered-work conditions. For the sake of completeness IGEAN also examined the 30 % condition: the fact that Vazi’s six employees hold no diploma does not make them ‘disadvantaged’, and certificates from the VDAB or another public authority were missing. The same day the board awarded lots 1, 5, 9 and 10 to De Kringwinkel Antwerpen and lots 2 and 6 to De Enter; the remaining lots were not awarded for lack of a regular tenderer. On 17 October 2022 Vazi and Mensenzorg applied for suspension under extreme urgency. Their first plea argued principally that it is the partnership as ‘tenderer’, not each partner separately, that must meet the conditions, and in the alternative that an ‘undertaking with an integration aim’ need only demonstrate that aim and may not be tested against the sheltered-work conditions, relying on the Court of Justice’s Conacee judgment. The second plea challenged the assessment of the 30 % condition. Chamber president Paul Lemmens did not follow that reasoning. Conacee shows precisely that Member States may impose additional conditions on who is admitted to a reserved contract, provided equal treatment and proportionality are respected; article 15, third paragraph, of the Belgian Act allows the contracting authority to refer to decree-based types such as the sheltered-work company, provided it accepts equivalent undertakings. Recognition as a social enterprise only proves a ‘positive social impact’ in general, not that the undertaking has the integration of disabled or disadvantaged persons as its main aim, let alone that it provides tailored work and guidance. A non-profit helping a broad group of people in need says nothing about employment aimed at integration. Consulting the social-economy database was merely a first step, and the ‘precarious’ nature of the recognition was ultimately irrelevant. The argument about the partnership as a whole failed for lack of interest: the applicants had explained neither in their tender nor in their application what a joint assessment would yield, and if neither partner qualifies, it is hard to see what the combination would add. The second plea on the 30 % condition was without interest, as the first condition was already unmet. The Council of State dismissed the application and ordered the applicants to pay the roll fee of 400 euros (half each), a contribution of 24 euros and a procedural indemnity of 770 euros to IGEAN.
Why does this matter?
Reserved contracts are a policy instrument: the legislature deliberately accepts that regular undertakings are excluded in order to give organisations that employ disadvantaged and disabled people a fair chance. The flip side is that the entrance gate must be strictly guarded, otherwise the instrument undermines itself. This judgment is one of the first Dutch-language applications of the Court of Justice’s Conacee judgment to article 15 of the Belgian Act, and the Council of State draws a clear line from it. First: a contracting authority may give concrete content to the access conditions by referring to a decree-based status such as the sheltered-work company, and that content applies to both categories in the Act — sheltered workshops as well as ‘undertakings with an integration aim’. Whoever relies on the second category therefore does not escape the equivalence test. Second: labels that exist in company law, such as recognition as a social enterprise under the Companies and Associations Code, are no free pass. A positive social impact is something other than the employment and guidance of target-group workers. Third, the judgment confirms a procedural lesson reaching far beyond the social economy: whoever tenders as a consortium must explain in the tender itself how the consortium meets the access conditions. Raising that only before the Council of State, without showing what it would yield, means having no interest in the plea.
The lesson
If you want to compete for a reserved contract as a social-economy undertaking, read the access conditions in the specifications as a selection criterion for which you must provide the evidence yourself. If you are not a recognised sheltered-work company, attach to your tender the documents showing that you meet equivalent conditions: what share of your staff are target-group workers, how you guide them and which certificates from the VDAB or another competent authority substantiate their status. Recognition as a social enterprise, a social statutory aim or the absence of a diploma among your workers is not enough. If you tender as a partnership or temporary association, explain in the tender itself how the combination as a whole meets the conditions, not just each partner separately — otherwise you will not be able to usefully raise that argument later. As a contracting authority you may tie access to a reserved contract to the sheltered-work decree or another decree-based framework, but you must expressly admit equivalent domestic and foreign undertakings and do so consistently for all lots; draft that clause carefully, because here the Council read in the specifications a restriction to lots 1 and 2 that IGEAN probably did not intend.
Ask yourself
Are you recognised as a sheltered-work company, or can you show with official documents that you meet equivalent conditions, and are those documents in your tender? Do you realise that recognition as a social enterprise under the Companies Code or a social statutory aim does not in itself prove that your main aim is the integration of disadvantaged or disabled persons? Can you demonstrate, with certificates from a competent public authority rather than your own declaration, that at least 30 % of your workers are disadvantaged or disabled? If you tender as a consortium: have you set out in the tender how the consortium as a whole meets the access conditions? And as a contracting authority: does your specification refer to current decree-based statuses, does it expressly accept equivalent undertakings, and is that clause worded consistently for all lots?
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 →