Subsidising authority says no — award withdrawn — and the motivation 'in view of the letter from the subsidising authority' is enough
The Council of State rejects Genetec's extreme-urgency action against the withdrawal of the Marche-en-Famenne LED-bike-path-lighting award: a conflict with the Walloon subsidising authority over the specifications is in itself a valid reason for the city to abandon the contract, and the municipal decision need not repeat the subsidising authority's reasons — a reference to the letter is sufficient as 'motifs des motifs'.
What happened?
On 19 July 2019 the Walloon Minister of Mobility grants the city of Marche-en-Famenne a subsidy of €141,750 for installing LED lighting on the cycle link between Marche and Marloie. The subsidy decision provides for two intermediate approvals: the 'project' file before the procedure is launched, and the 'attribution' file before the award is formalised. The subsidy is paid out in three tranches. On 5 July 2021 the municipal council approves the principle, opts for an open procedure with price as the sole award criterion, and adopts the specifications. The first specifications expressly state: 'free variants are forbidden' and 'no required or authorised variant is provided'. On 29 November 2021 the SPW as subsidising authority approves the project file, with some remarks. On 3 October 2022 the College approves a corrected version (without changes on variants) and publishes the notice. On 14 November 2022 a site visit is organised. There the supplier of several potential bidders suggests that a technical alternative would be simpler and cheaper than what is in the specifications. The city reacts quickly — too quickly, as it will turn out. On 15 November 2022 the administration emails Genetec and the other site-visit participants: deadline postponed to 1 December 2022, specifications amended 'authorising free variants', and bidders may submit 'an offer different from the items in the recapitulative metric'. A new notice is published. The specifications now read: 'The bidder may, on his own initiative, propose free variants: To meet the objective of optimally lighting the link via photovoltaic panels, the candidate may propose a free variant supported by a study.' Eight bids are submitted by five bidders (four base + four variants). Genetec submits both. On 19 December 2022 the College awards to Genetec for its variant — €148,524.40 net, roughly half the original estimate of €178,910. On 20 February 2023 the Walloon subsidising authority sends a sobering letter. Three problems: one, the specifications classified the contract as 'supplies' but it is materially a works contract (installing public lighting falls under Annex I of the Act, with its own CPV code) — therefore a P2 accreditation requirement was wrongly imposed, restricting competition. Two, the authorisation of free variants was added a posteriori without respecting the procedure: not returned to the municipal council, while it is not a non-substantial change (almost all items were affected and the contract amount halved). Three, what was presented as a 'free variant' is materially an 'authorised variant' (it was clearly indicated what the variant should consist of), which requires minimum requirements and specific modalities not in the specifications. SPW concludes: no agreement, a new procedure must be launched with adjusted specifications, and the contract should preferably be requalified as works. On 27 February 2023 the College withdraws its award and decides to submit a new specifications draft to the council 'taking into account the variant proposed during the first procedure'. On 10 March Genetec is informed. The motivation expressly refers to 'the letter of Mr [S. D.], Director at SPW MI, Subsidised Public Spaces Department, refusing the award of 19 December 2022 and requesting that a new procedure be launched'. On 24 March 2023 Genetec turns to the Council of State in extreme urgency. Their core argument: article 85 of the 2016 Procurement Act gives a discretionary power, but it must rest on real and legally admissible grounds expressed in a formal motivation. The city's motivation is 'particularly thin': it does not say what type of variant must be integrated, does not justify why the award decision itself is withdrawn (rather than just not concluding the contract), and does not adopt the subsidising authority's reasons. Genetec also cites Council case law that does NOT accept as valid grounds: minor specification changes, intent to benefit other bidders with a colleague's variant, and intent to circumvent the lowest regular bid under cover of a subsidy issue. The Council rejects the plea. Article 85 does grant discretionary power exercised in expediency, but the decision must rest on exact, pertinent and admissible grounds, set out in a formal motivation. That motivation must demonstrate the existence and accuracy of the grounds and allow the addressee to understand the authority's reasoning. Here the city bases its decision essentially on the sentence: 'In view of the letter of Mr [S. D.], Director at SPW MI, Subsidised Public Spaces Department, refusing the award of 19 December 2022 and requesting that a new procedure be launched.' Read together with the accompanying letter of 10 March 2023 ('reason for the stop: refusal of the award by the subsidising authority'), it is sufficiently clear that the city relies on an 'incident relating to the granting or use of the subsidy intended to contribute to the financing of the project to which the contract relates'. This ground is EXACT — confirmed by the administrative file (subsidy decision of 19 July 2019, project-phase agreement of 29 November 2021, attribution-phase refusal of 20 February 2023). The ground is also PERTINENT and ADMISSIBLE: 'An incident relating to the granting or use of a subsidy intended to finance, in whole or in part, the performance of a public contract, such as the one confirmed here by the administrative file, is a pertinent and admissible ground to justify the decision to abandon concluding that contract.' The formal motivation, though brief, is in these circumstances sufficient. Genetec moreover understood the ground itself, as appears from its own application: 'the decision seems to adopt the decision of the subsidising authority'. The reasons why the Walloon authority refuses (the three technical problems in its letter of 20 February) are 'motifs des motifs' of the contested decision and therefore need not appear in its instrumentum — the city relies on the FACT that the subsidising authority refuses, not on the content of that refusal. Application for suspension rejected. Immediate execution ordered. Certain documents (Genetec's bid + all bids in the administrative file) remain confidential. Costs reserved.
Why does this matter?
Anyone bidding on a contract financed in whole or in part by a higher authority (Flemish, Walloon, Brussels subsidies, federal grants, EU funds) must realise that the subsidising authority is in effect a second approval gate. Even after the contracting authority has awarded, the loss of subsidy approval — or a formal objection to the award — can lead to withdrawal. The motivation for that withdrawal need NOT repeat the subsidising authority's substantive arguments: a mere reference to the subsidising authority's letter is enough as 'motifs des motifs'. For winners suddenly losing their award through such a subsidy incident: this judgment teaches that attacking the brevity of the motivation is pointless. The real angle is showing that the ground is INACCURATE (the subsidising authority did not really refuse) or that the contracting authority engineered the subsidising authority's stance to circumvent the award artificially. But if the administrative file confirms the subsidy conflict (as here with three dated SPW letters), the plea is hopeless. For contracting authorities: document the subsidy incident neatly, attach the subsidising authority's letter to the file, and refer to it in your withdrawal decision. No extensive motivation needed.
The lesson
For bidders seeing their award withdrawn due to a subsidy incident: immediately request the full administrative file and check whether (1) the subsidising authority really formally refused (does the letter exist, is it correctly dated, does it identify concrete objections?), and (2) whether the chronology adds up (could the contracting authority have engineered the subsidy incident by deliberately organising a formal deviation?). Attacking only the brevity of the motivation leads nowhere — the ground 'in view of the letter from the subsidising authority' is recognised by the Council of State as self-supporting, even without restating the subsidising authority's reasons. For contracting authorities working with subsidies: ensure your file contains the three key items — subsidy grant, project-phase agreement, attribution-phase refusal — and that your withdrawal decision refers to them. Keep your decision short and businesslike; the substantive arguments of the subsidising authority are 'motifs des motifs' and need not appear in your instrumentum.
Ask yourself
Does your contracting authority work with subsidies from a higher authority? Check before each notice whether the subsidy decision requires a second agreement on the 'attribution' file (as here for SPW Wallonia). If so, request that agreement BEFORE you formalise your award decision — not after. Otherwise you risk a withdrawal with all the legal hassle that entails. For bidders: when in doubt, ask whether a subsidy underlies the contract, and how far the subsidising authority went in the file before the procedure was launched.
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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 →