An 'abnormally high' negative price is just as suspicious as an abnormally low one — IVAGO learned that the hard way
The Belgian Council of State suspends a textile collection contract because IVAGO accepted the winning bid of €1 million (in a contract where bidders pay the authority) without numerical substantiation, while that price was double what the same bidders had offered in comparable contracts.
What happened?
IVAGO, the intermunicipal waste management association for Ghent and Destelbergen, launched in early 2023 an open procedure for textile collection via containers on public domain and publicly accessible private land. The peculiarity: a contract with negative price. Bidders had to PAY IVAGO as a fixed monthly fee for the economic value of the textile to be collected. A zero or positive price was explicitly designated as substantially irregular in the tender. The tender mentioned an indicative annual quantity of 826 tonnes (2021 figure), 264,676 inhabitants in Ghent and 18,525 in Destelbergen. Three regular offers were submitted for lot 1. Ranking for lot 1: tm Belcotex €1,001,976; tm V.I.C.T. €1,000,000; non-selected fourth bidder €567,984; NV Curitas €396,000. IVAGO awarded to tm V.I.C.T. on 29 March 2023. Curitas immediately filed extreme urgency proceedings before the Council of State. Her argument was sharp: at the estimated 826 tonnes/year, tm V.I.C.T. and tm Belcotex offered €0.61 per kg of textile. In similar contracts Belcotex and V.I.C.T. themselves had bid between €0.22 and €0.31/kg, and all market players (including Curitas) moved between €0.21 and €0.34/kg. The winning bid was almost double the prevailing market price. tm Belcotex and tm V.I.C.T. submitted nearly identical prices — so close that Curitas suspected factual links between both groups (a suspicion the Council called 'plausible'). IVAGO and the intervening party defended themselves with an unexpected legal argument: a fee paid to the contracting authority is not a 'price' within the meaning of the price examination rules (art. 35 and 36 of the 2017 Royal Decree on placement). No price examination required, no negligence. The Council swept that aside: the Act makes no distinction between positive and negative prices, and the purpose of the regime — protection of the contracting authority against speculative bids AND protection of healthy competition against dumping — applies equally to negative prices. An abnormally high negative price carries the same risk: the winning bidder cannot perform profitably and will lean towards the cheapest (possibly non-compliant) execution method. The Council then examined the substance of IVAGO's price examination. The administrative file contained one document titled 'Price examination' which essentially said: the difference between offers is explained by 'the commercial and operational model' of the bidders — tm V.I.C.T. and tm Belcotex deploy a 'more ambitious model' (more locations, more containers, higher collection frequency, optimisation of textile volume per inhabitant, expected higher price from processors), Curitas deploys a 'more conservative model'. Conclusion: 'both models are realistic and properly substantiated', so no abnormal price. The Council ruled this insufficient. With a price difference of that order — almost doubling the market price — a careful contracting authority must produce a 'concrete, numerical analysis'. IVAGO had to verify whether the promised optimisation of textile volume per inhabitant was realistic and whether the expected processor price was sustainable. Nothing in the file shows such calculations. And if the offers themselves contained insufficient figures, IVAGO had to request price justification under art. 36 of the Royal Decree — which did not happen. Suspension of lot 1 granted on the third branch of the first ground.
Why does this matter?
For contracts with inverse economic logic — recycling of waste streams with economic value, exploitation of public space, telephone directories, advertising concessions — it is tempting to think 'highest bid wins, done'. This judgment closes that thinking. For contracting authorities: a bid price far above the market price is just as suspicious as one far below. The bidder who promises too much cannot keep his promise, and will look for shortcuts — fewer containers, lower collection frequency, less careful sorting, dumping of hard-to-sell textile. All mechanisms that undermine your social goal. For bidders in such 'inverse' contracts: keep numerical substantiation ready for your bids, even when commercially confident. And if you win a file where the second bid seems 'suspiciously low compared to the market', know that your competitor will go to the Council of State — and will win if the contracting authority has no numerical record.
The lesson
If you procure a contract with negative price (textile collection, glass collection, parking exploitation, advertising operation, insurance with return commissions, etc.) and you receive bids that are well above market price: ask for a price justification. Ask specifically for numerical substantiation of the optimisation the bidder promises (volume, frequency, resale price to third parties, margins). Two bidders submitting nearly identical prices, double their own historical prices — that is not a 'more ambitious commercial model', that is a red flag you must document in your administrative file.
Ask yourself
For a contract with variable performance (recycling, exploitation, concession-like services) where bidders pay you more: if the winning bid is more than 50% above prevailing market price or more than 30% above the next offer, do you have a numerical document in the administrative file showing why that difference is realistic? If no — request price justification.
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 →