Relying on sub-contractors? Deliver their tax and social security records too – or fail qualification
The Council of State rejects mask producer L.I. DECOR's appeal against exclusion by the French Community: a bidder relying on third-party capacity in a COVID mask procurement also had to prove those third parties had no social or tax debts.
What happened?
On 27 April 2020, at the height of the COVID-19 crisis, the French Community (Fédération Wallonie-Bruxelles) launches an 8-month framework agreement for 1.2 million fabric masks (rising to several million), using a negotiated procedure without prior publication based on imperative urgency. The procurement is run as a purchasing central, also covering ONE, CSA, RTBF and ARES. 42 companies are invited, 15 submit bids. The single selection criterion: demonstrate a weekly production capacity of 250,000 masks. Belgian bidder L.I. DECOR states: 7 machines, 7 employees in Belgium, plus sub-contractors in Albania (KRISTAL 2001 – 200 workers), and Poland (ELJOT and EURO PLUS – 100 workers combined). When asked to substantiate, L.I. DECOR provides those figures on 4 May 2020 – but no documents on exclusion grounds or tax/social debts for the sub-contractors. The 5 May 2020 award decision excludes L.I. DECOR with a cryptic line: "meets the criterion but verification not provided for tax and social debts and for the exclusion grounds of the entities on whose capacity it relies – not selected". The contract goes to S-PROMOTION (first ranked), then FRANSLATTE, TWEEDS&COTTON and J&JOY. L.I. DECOR challenges on two grounds: (1) inadequate motivation, alleging the administration never read its 4 May email, (2) preferential treatment for S-PROMOTION (active in real estate promotion, €3,667 in assets end-2018, between 1 and 4 employees per the employer registry versus claimed 120-300). The Council dismisses both. The 4 May information does appear in the annex to the award decision, proving it was read. The "not selected" conclusion refers not to a missing reply but to missing exclusion documentation for the sub-contractors. On the second ground: the tender specifications did not impose any financial capacity criterion, so the contracting authority could not verify S-PROMOTION's solvency afterwards. And as to employee numbers: S-PROMOTION answered it operated three factories with 120 to 300 staff each and a weekly capacity of 980,000 units – "nothing allows this figure to be considered manifestly unreasonable or doubtful", says the Council. Request rejected, L.I. DECOR pays €700 in procedural costs.
Why does this matter?
This ruling drives home a point bidders often overlook: if you rely on the capacity of third parties (sub-contractors, sister companies, partners), you must provide – with your bid, for each of those entities separately – the exclusion documentation (tax debts, social security debts, criminal record, conflict of interest). Article 78 of the 17 June 2016 law makes this explicit. In urgent procedures the temptation is to bundle the main company's documents and merely mention the sub-contractors – that is not enough. Second, the ruling confirms something important about financial capacity: if the tender does not set out a financial capacity criterion, the contracting authority cannot apply a solvency check retroactively to competitors. A third point concerns the role of annexes: even when the core decision reads cryptically, annexes form part of the formal motivation.
The lesson
If you rely on sub-contractors or other entities to meet selection criteria: deliver the full exclusion file for each of them with your bid (tax and social debts, criminal record, conflicts of interest). Do not just mention them – document them. Otherwise your bid will be excluded on that basis – even if you meet the substantive criterion.
Ask yourself
Take the last bid where you relied on a sub-contractor. Does the file contain VAT-debt extracts, social security attestations and criminal record extracts for that sub-contractor too? Or only for your own company?
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 →