A start-up of five ex-employees may invoke their former employer's references — but the contracting authority must actually verify those references
The Council of State annuls the award of an urban planning study contract to SEN5 — a company set up by five ex-colleagues of the applicant — not because they used each other's references, but because the City of Jodoigne accepted a reference list that did not meet the specifications' requirement that the amount per assignment be stated.
What happened?
In January 2018, the consultancy PLURIS — active in territorial development, urban planning and the environment — lost five employees in one go. Those five jointly founded the SRL SEN5 in July 2018. PLURIS reacted that same year with a formal notice for unfair competition and breach of honest trade practices. In 2019, the City of Jodoigne launched a negotiated procedure without prior publication for the development of a 'schéma d'orientation local' (S.O.L.) for the Bosquet site (specifications 2019-013). The specifications contained two selection criteria for technical and professional capacity, including the requirement to submit a list of at least three services worth more than EUR 50,000 carried out by the bidder over the past three years, with mention of the amount, date and recipient. On 21 June 2019, the city awarded the contract to SEN5. PLURIS — whose bid was ranked second — lodged an annulment appeal. Its single ground had two branches. In the first branch, PLURIS argued that a ten-month-old company could not possibly have three own references over EUR 50,000. According to PLURIS, SEN5 had referred to assignments that its founders had carried out while still working at PLURIS — which should not be allowed, because references must concern the bidder itself. In the alternative: if that experience could be counted, it was a reliance on a third party's capacity (article 73 of the Royal Decree on Procurement) and SEN5 should have provided formal evidence of this. The Council of State did not follow that first argument. For intellectual services, the capacity of a legal entity lies in the people working for it. As founders/managers of SEN5, the five ex-colleagues do not have 'third party' status — they are the organs through which SEN5 acts. It is normal that a legal entity sees partners leave or join, and the objective of article 68 of the Royal Decree on Procurement is for the contracting authority to ensure sufficient experience, staff and technical means to carry out the contract. Nothing precludes experience acquired within a previous legal entity from counting for the new one. Then came the second blow. In its rejoinder — after seeing page 10 of SEN5's bid document — PLURIS had formulated a new grievance: the list SEN5 had submitted was a simple table in which the amounts per assignment were missing. Yet the specifications required the amount to be mentioned. SEN5 only stated 'tous pour un montant supérieur à 50.000 € htva'. That new grievance was admissible because PLURIS only learned of page 10 during the proceedings. And substantively it was well founded. Article 66(1) of the Act of 17 June 2016 obliges the contracting authority to actually verify whether a bidder meets the selection criteria — not to settle for an incomplete list. The administrative file did not show that the City of Jodoigne had verified SEN5's references in any further detail, despite them being identical to those of PLURIS. And on top of that verification problem, accepting a list without amounts violated the specifications themselves. The second branch — on unfair competition and breach of copyright and trade secrets — was not heard. The Council of State has no jurisdiction over civil disputes between companies; that is a matter for the courts. And a simple use of references by an ex-employee is not in itself an 'act of a nature to distort the normal conditions of competition' within the meaning of article 5(2) of the Act. The award decision was annulled, and the debate on damages for PLURIS was reopened. The City of Jodoigne and intervening party SEN5 were ordered to pay costs.
Why does this matter?
For young companies and spin-offs, this is an important ruling: the experience your founders gained at a previous employer can be invoked as a reference for the new company, without you having to qualify it as reliance on a third party's capacity. That opens a real door for start-up consultancies and design firms that would otherwise hit an impossible condition at every tender. But — and this is the heart of the ruling — the contracting authority cannot hide behind a simple table without amounts. What the specifications require must also be delivered in detail, and the contracting authority must check effectively. So as a contracting authority, avoid imposing selection criteria you do not want or cannot verify, and as a bidder, avoid submitting incomplete references in the hope that they slip through.
The lesson
As a start-up with experienced founders: you may invoke their experience, even if it concerns assignments they carried out elsewhere. Their experience is your experience, because they are your company. But provide the data exactly as the specifications require — amount, date and recipient per assignment. As a contracting authority: do not just tick off the selection criteria formally, check them substantively, especially if the references of two bidders look suspiciously similar.
Ask yourself
Whenever your specifications ask for amount, date and recipient per reference assignment, did you actually fill in those three fields? Or is there a mention 'all greater than EUR X' that cannot be substantiated? And as a contracting authority: have you left a trail in your analysis report of an effective verification of those references — or does it just say 'meets the criteria'?
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 →