The fixed 10% coefficient Postalia was not allowed to drop: how its own price-revision formula sank its bid
For a European framework agreement covering the Federal Police’s postal services, Postalia proposed its own price-revision formulas that omitted the fixed 10% coefficient the tender documents had expressly labelled substantial; its bid was declared void, the contract went to IPEX, and the Council of State held that this single omission sufficed and rejected the suspension under extreme urgency.
What happened?
On 20 May 2022 the Federal Police published a European framework agreement for the cosourcing of its postal services (special specifications no. procurement 2023 R3 018), based on the Public Procurement Act of 17 June 2016 for the classic sectors. For the part of the services falling outside the universal postal service (collection and processing), the specifications gave bidders three options: a fixed price for the whole term, the price-revision formula set out in the specifications, or a self-proposed alternative formula. Any alternative formula had to comply, ‘on pain of irregularity’, with Annex E, point 4.2.2, which imposed two binding conditions: the fixed 10% factor must be retained, and only the parameters and weightings could change, provided they reflect the real cost structure and are objective and verifiable. Postalia submitted two of its own formulas — one for collection costs, one for processing costs — and omitted the fixed 10% coefficient in both; the second relied on the consumer price index. The contracting authority therefore declared the bid substantially irregular and void under article 76 of the Royal Decree of 18 April 2017, and awarded the contract to IPEX. Postalia sought, under extreme urgency, the suspension of both the voiding decision and the award. It raised four pleas: that there was no legal basis to reject its bid (it sufficed to disregard the alternatives and ‘keep’ the specifications’ formula); that the 10% requirement was discriminatory because the universal-service provider is not bound by it; that IPEX lacked the required ISO 27001 certification; and that Annex E, section 3, breached the right to property and the freedom to conduct a business by excluding certain costs from the price. The Council first put the Federal Police out of the case for lack of separate legal personality, and held the claim inadmissible in so far as it targeted the implicit decision not to award to Postalia itself. On the merits, it found that the specifications had expressly designated the Annex E requirements as substantial, that Postalia did not dispute that its formulas omitted the fixed 10% factor, and that this decisive ground sufficed on its own to reject the bid — the other pleas no longer needed to be examined. A bidder proposing an alternative formula thereby rejects both the fixed price and the specifications’ formula, so in an open procedure the authority could not unilaterally ‘keep’ the latter without unlawfully altering the bid. The 10% factor applied equally to every contractor, universal-service provider or not, so there was no unequal treatment. ISO 27001 turned out to be a technical specification, not a selection criterion, and IPEX did hold it; the objection about a subcontractor, raised for the first time at the hearing, was out of time. The fourth plea disclosed no interest. The Council rejected the suspension under extreme urgency, ordered the judgment’s immediate execution, and ordered Postalia to pay the costs: a 200-euro roll fee, a 24-euro contribution and a 770-euro procedural indemnity to the Belgian State.
Why does this matter?
The judgment shows starkly how heavily a single omission in a price-revision formula can weigh. Once a tender expressly imposes a condition ‘on pain of irregularity’ and designates it substantial, disregarding it suffices to have a bid declared void — the authority need not weigh whether the flaw concretely distorted the comparison of bids, and the bidder cannot save itself by arguing that it could still opt for fixed prices during performance. Just as important is the finding that proposing one’s own formula is not a harmless add-on: it counts as a rejection of both the fixed price and the specifications’ formula, so in an open procedure the authority may not simply substitute the latter — that would amount to altering the bid, which is forbidden. The Council also recalls why this strictness is not formalism: price revision is a departure from the lump-sum principle, and an index that does not reflect the real cost structure lets prices evolve unpredictably during performance, opens the door to speculation at the expense of public funds and can discreetly distort competition. Finally, the judgment clears up a classic misunderstanding: a certificate such as ISO 27001 requested as a technical specification is not a selection criterion, so its absence at most renders the bid irregular and does not lead to non-selection.
The lesson
Treat every condition a tender describes as ‘on pain of irregularity’ or as ‘substantial’ as a make-or-break point: a single breach suffices to have your bid rejected, however strong your price. If you want to propose your own price-revision formula, reproduce every binding element to the letter — here the fixed 10% factor — and rely on an index that reflects the real cost structure and is objectively verifiable; the consumer price index will not automatically do. Realise that an alternative formula is not an extra but a choice: you thereby reject both the fixed price and the specifications’ formula, so the authority can no longer ‘keep’ the latter for you without unlawfully altering your bid. If you want to challenge an award because the beneficiary lacks a required certificate, first check whether it is a selection criterion or a technical specification, and raise your factual objections in time — what you raise only at the hearing is usually too late. As an authority, this judgment confirms that you may not ‘repair’ irregular alternative formulas by imposing the specifications’ formula: you reject the bid, and you are well advised to state clearly in the specifications which requirements are substantial.
Ask yourself
Have you checked which tender conditions are expressly imposed ‘on pain of irregularity’ or as substantial, and have you complied with all of them to the letter? Does your alternative price-revision formula contain every binding element, including any mandatory fixed coefficient, and does it rest on an index that reflects the real cost structure? Do you realise that proposing your own formula counts as a rejection of both the fixed price and the specifications’ formula, so the authority may not substitute the latter? Do you know that a certificate requested as a technical specification is not a selection criterion, and that an objection raised only at the hearing is probably out of time? And as an authority: do your specifications state unambiguously which requirements are substantial, and do you realise you may not unilaterally ‘correct’ an irregular alternative formula?
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 →