Contributed By Allen & Overy LLP
In Belgium, public procurement is regulated by EU law and national (implementing) legislation. The EU Directives on public procurement and remedies are implemented into national legislation by:
The following Royal and Ministerial Decrees further implement this legislation:
The public procurement legislation applies to “contracting authorities”; these are mainly “public authorities”, such as the state, regional and local authorities and so-called bodies governed by public law.
Bodies governed by public law meet the following criteria:
The interpretation of these criteria is subject to dynamic and evolving jurisprudence by the CJEU and the Belgian State Council.
Certain (private) entities can also be subject to procurement regulation, when the contract’s estimated value exceeds the European threshold, and when the contract is subsidised more than 50% by a “public authority” and is concluded for works of a civil engineering nature or for services connected to the above-mentioned works (the so-called “subsidised contracts”). In addition to the contracting authorities mentioned above, in the utilities sector the rules regarding public procurement also apply to “public undertakings” – ie, any undertaking over which a contracting authority may exercise a dominant influence, directly or indirectly, and entities enjoying special or exclusive rights.
Procurement contracts are contracts of pecuniary interest concluded between one or more economic operators and one or more contracting authorities concerning works, supplies and/or services.
The rules regarding publication and in relation to which type of award procedure can be used depend on the estimated value of the contract. The European minimum value thresholds are relevant in this regard. The thresholds applicable to "standard" public procurement contracts (eg, not utilities, defence and security sector nor social or other specific services) are as follows:
National publication requirements may apply for public procurement contracts with a value below these thresholds. Public procurement contracts of so-called "limited value", estimated at EUR30,000, are subject to a less stringent regime.
In addition, the public procurement legislation excludes certain type of contracts from its scope of application – eg, services such as legal services, the acquisition of real estate, and certain financial services.
In Belgium, public procurement procedures are, in principle, open to any interested party from any jurisdiction. The legislation provides that, in principle, “every interested economic operator” is eligible to submit a tender offer or request for participation in a tender procedure.
The applicable legislation defines an economic operator as “any natural person or any private or public law legal entity, or any combination of these entities, including all temporary partnerships of companies that offer works, supplies or services to the market.”
Like the European public procurement legislation, Belgian public procurement law is based on four basic principles that should guide the contracting authorities:
At any stage of the tender process (and also before or after the tender process), the contracting authorities must ensure that they adhere to these principles. They may not in any way attempt to circumvent public procurement law or to distort competition, for example by favouring certain candidates/subscribers.
The above principles are clearly visible in the key obligations under Belgian public procurement legislation. These key obligations are divided into those that apply throughout the procurement process and those that provide an outline of the procurement process.
Key Obligations Throughout the Procurement Process
The contracting authority must take any measure necessary to avoid potential conflicts of interest during the procurement procedure.
All operators must ensure compliance with all applicable obligations under environmental, social and employment legislation.
In principle, the contractor will be remunerated by means of a lump sum price (subject to certain exceptions).
In principle, the contracting authority will only pay for works, supplies or services after they have been performed and accepted.
All procurement documents submitted by candidates (such as requests to participate and offers) are strictly confidential as long as the contracting authority has not yet made a decision in this regard.
As a matter of principle, all exchanges between the contracting authority and the operators must be made in electronic form. This contributes to the transparency of the procedure.
It is mandatory to estimate the value of each assignment.
Key Obligations that Outline the Procurement Process
The contracting authority must publish a contract notice in the Official Journal of the EU and the Public Procurements Bulletin if it reaches the thresholds for European publication, or only in the Public Procurements Bulletin if the value is lower than the thresholds for European publication. The notice describes the authorities’ requirements and the timeline for submitting a request to participate or an offer (depending on the applicable procedure).
Upon the receipt of requests to participate, the contracting authority must evaluate the candidates’ requests by applying the selection criteria it has previously disclosed, in order to assess whether the candidates have the required financial standing and technical capacity. The contracting authority must invite the selected candidates to submit an offer or to participate in negotiations or a dialogue (depending on the procedure).
The contracting authority is obliged to disclose its objective award criteria as well as its valuation method. For public procurement contracts that reach the thresholds for European publication, this in particular means disclosing the weight given to each award criterion.
The contracting authority must evaluate the offers upon the receipt thereof, on the basis of the previously disclosed award criteria. It must award the contract to the economically most advantageous offer (this is not necessarily the lowest price but can be based on a value-for-money approach).
Once it has selected the economically most advantageous offer, the contracting authority must notify all subscribers of its decision, and it must apply a standstill period of 15 days as of this notification before signing the contract with the winning contractor.
After signing the contract, the authority must publish a contract award notice.
Public procurement contracts for which the estimated value exceeds the European thresholds should be published in the OJEU and the National Bulletin of Tenders. In principle, the announcement cannot be published in the Bulletin of Tenders before it has been published in the OJEU.
The contract should be advertised using a Uniform European Procurement Form. The announcement should contain the information specified below, as well as the information in Annex 4 to the Royal Decree of 18 April 2017:
The announcement should consist of a tender announcement, an announcement when the tender will be placed and, if applicable, a preliminary announcement.
In principle, tenders that do not exceed the European thresholds should be published in the National Bulletin of Tenders. The announcement should contain the information specified above.
In line with EU legislation, the Belgian public procurement legislation allows a contracting authority to carry out a preliminary market consultation. This consultation has a double purpose:
However, this consultation may not result in preliminary negotiations with certain enterprises or distorting competition, nor can it result in a violation of the principles of non-discrimination and transparency.
There are different procedures under Belgian public procurement legislation, some of which allow for negotiations between the economic operators and the contracting authority. In the case of negotiations, the contracting authority is always obliged to guarantee the main principles of public procurement, such as the equal treatment of all subscribers.
The open procedure and the restricted procedure are the two default procedures, whose use does not need to be justified by the authority. Whenever the authority decides to use any of the other procedures, it must justify this decision in the procurement documents.
Open Procedure
The open procedure entails the publication of a contract notice inviting any interested operator to submit an offer. The subscribers need to submit their offers together with the information needed to assess the fulfilment of the selection criteria. The authority will assess both selection and award in the same phase.
Restricted Procedure
The restricted procedure entails the publication of a contract notice inviting any interested operator to submit a request to participate. At this first phase, the economic operator must submit the information needed to assess fulfilment of the selection criteria. Subsequently, the contracting authority will circulate invitations to tender to the selected candidates. In a second phase, the candidates will need to submit their offer.
Competitive Procedure with Negotiation
The competitive procedure with negotiation can only be used in specific circumstances listed in the legislation. Generally, these circumstances relate to the technical complexity of the assignment. Like the restricted procedure, it consists of a pre-selection phase (for any interested operator) and an offer phase (for the invited candidates). The contracting authority then negotiates with the subscribers on the basis of their initial offer (and potentially subsequent offers). If the authority has included this possibility in the procurement documents, it may award the contract without conducting any negotiations. There can be no negotiation with regard to the minimum requirements or the award criteria.
There can be no negotiation regarding the final offer.
Competitive Dialogue
The competitive dialogue may be used in similar circumstances as a competitive procedure with negotiation. After a pre-selection phase, only the candidates that are invited by the authority may participate in the dialogue phase. A dialogue is conducted between the candidates and the authority to determine the best solutions for the very specific needs of the authority. Any aspect of the contract and assignment may be discussed during this phase.
The dialogue itself can be organised in several phases if the authority has indicated this in the contract notice or the bidding guidelines. After closure of the dialogue, the participants are invited to submit their final offer on the basis of the discussed solutions. The authority may request further clarification of the offers, but such clarification may not cause a modification of the essential elements of an offer or the assignment if such would lead to the disruption of fair competition or to discrimination.
Further negotiations can be conducted with the bidder that submitted the offer with the most value for money. The negotiations may not lead to a modification of essential elements nor to disruption of fair competition nor to discrimination. This procedure is often used in the context of public-private partnerships.
Innovation Partnership
The innovation partnership is tailored for the situation where the authority is looking for certain products, services or works that are not yet available on the market. It entails a pre-selection phase after which only the candidates that are invited can participate in the procedure. The authority can select one or multiple partners. The award of the contract is based only on the criterion of the best value for money.
Both the development of the relevant products, services or works and the final purchase thereof form the subject of the procedure. Therefore, the procedure is structured in phases that align with the development process. The phases will be linked to specific goals. The procedure can be stopped or certain participants can be excluded on the basis of (non-achievement of) such goals. The authority will negotiate with the participants regarding their offers, except for the final offer. There can be no negotiation with regard to the minimum requirements or the award criteria.
Simplified Negotiation Procedure with Prior Publication
The simplified negotiation procedure with prior publication can only be used for purchases of goods and services for which the estimated cost is lower than the thresholds for European publication or for works for which the estimated cost is lower than EUR750,000. Any interested operator can submit an offer, which should also contain the relevant information for the pre-selection. The authority may negotiate with the subscribers regarding all offers except for the final offer. There can be no negotiation with regard to the minimum requirements or the award criteria. The negotiations may be conducted in a phased manner if the authority indicates this in the publication or another procurement document. After the negotiations, the authority will invite the remaining subscribers to submit their final offers.
Competitive Procedure without Prior Publication
The competitive procedure without prior publication may only be used in exceptional circumstances, and does not require the prior publication of a contract notice. The specific conditions are listed in the public procurement legislation and mainly relate to low value, extreme urgency, technical specificity, an unsuccessful prior procedure, repeated assignments in the framework of a base project and unusually beneficial terms upon cessation of activities of the contractor.
The authority may negotiate with the subscribers regarding all offers. The award criteria are not negotiable. If the estimated value of the assignment reaches the thresholds for European publication or if the authority has mentioned it in the procurement documents, there will also be no negotiation on the minimum requirements.
If either of the two standard procedures (the open procedure or the restricted procedure) is used, the choice is at the discretion of the awarding authority. The other procedures can only be used in the specific circumstances listed in the public procurement legislation, and the authority will need to justify its choice in the procurement documents.
A contracting authority may publish a prior information notice. The period covered by the prior information notice is a maximum of 12 months from the date the contracting authority transmits the notice for publication. A prior information notice cannot substitute a contract notice.
The legislation does not provide for any other deadlines in relation to the contract notice. All procurement documents need to be freely, fully and directly accessible without any cost, as of the publication date of the contract notice.
The legislation imposes a minimum duration for the candidates to be able to submit their request to participate or their offer. The most important minimum durations are as follows:
There are exceptions to such rules if the authority has made a pre-notification and in cases of urgency.
In addition, all procurement documents need to be freely, fully and directly accessible without any cost, as of the publication date of the contract notice.
In line with the EU legislation on public procurement, the Belgian legislation enumerates certain exclusion grounds (such as bribery, participation in a criminal organisation, etc) under which it is mandatory to exclude those tenderers that have been convicted of such crimes by a final judgment. In addition, the legislation provides for optional exclusion grounds (bankruptcy, grave professional misconduct, distorting of competition, etc) upon which a contracting authority may exclude a tenderer.
However, in certain instances, the authority can make an exception for overriding reasons relating to the public interest, or if the candidate has taken adequate corrective measures (so-called “self-cleaning measures”).
In addition, contracting authorities can request certain technical and economic capacity. A tenderer must demonstrate that it meets certain technical and/or economic thresholds in order to be able to participate in the procurement process.
Moreover, for works contracts, the contracting authority can determine that potential contractors must be accredited under national regulation in order to be eligible to be awarded the contract.
In the case of a restricted procedure, a competitive procedure with negotiation, a competitive dialogue or an innovation partnership, the authority may decide to limit the number of participants. In such cases, the contract notice should include the objective and non-discriminatory criteria on the basis of which the authority will select the limited number of participants. If the contract reaches the thresholds for European publication, the minimum and maximum number of participants it will select also needs to be published.
In a restricted procedure, at least five participants need to be invited. In the other procedures mentioned above, at least three participants will need to be invited. In any case, the number of participants invited needs to be sufficient to safeguard fair competition. If the number of candidates that fulfil the selection criteria is not sufficient, the authority may proceed with the procurement and only invite those that do fulfil the criteria.
In the course of the competitive procedure with negotiation, the competitive dialogue and the simplified negotiation procedure with publication, the number of offers or solutions to be negotiated or discussed can be further limited on the basis of the award criteria mentioned in the procurement documents. In the final phase, the number of offers/solutions/candidates must still be sufficient to guarantee an actual competition, insofar as sufficient offers/solutions/candidates fulfil the requirements.
The authority must always award the contract to the subscriber with the economically most advantageous offer, which may be assessed on the basis of the following, at the choice of the authority:
The award criteria should be included in the procurement documents and should be accompanied by specifications that allow an effective assessment of the information provided by the subscribers against the award criteria.
For contracts that reach the European thresholds, the authority needs to specify the relative weight that is given to each of the award criteria, unless the award is determined solely on the basis of price.
The criteria for selection and the accepted means of proof regarding the fulfilment of such criteria must be mentioned in the contract notice, or in the other procurement documents if there is no contract notice.
The award criteria and their relative weight, as well as the specifications thereof, must be disclosed in the contract notice or another procurement document (eg, invitation to tender/specifications).
For public procurement contracts and concessions that reach or exceed the European thresholds, the contracting authority should notify each non-selected tenderer of the following, amongst other things, immediately after the selection decision:
The notification should be done by fax or email, or via the electronic platform for public procurement procedures.
Similar notification obligations often apply for public procurement contracts and concessions not exceeding the European thresholds. However, a case-by-case analysis should be made to determine the exact notification obligations for the contracting authority and the options and time limits for a (non-)selected candidate/tenderer to request further information and/or documentation.
For public procurement contracts and concessions exceeding the EU thresholds, the contracting authority should notify the following, immediately after the award decision:
The candidates are notified by fax or email, or via the electronic platform for public procurement procedures.
Furthermore, if the contracting authority must respect a standstill period (see 3.4 Requirement for a "Standstill Period"), this notification must also contain:
The notification must also mention the legal remedies, applicable time limits and competent review body, with explicit reference to the applicable articles of the legislation. If this information is required but not included, the time limit to submit a claim for annulment will only commence four months after the reasoned decision has been notified.
For contracts exceeding the European thresholds, a minimum standstill period of 15 days from the day of notification of the reasoned award decision to the candidates, participants and tenderers must be respected before the closing of the procurement contract. However, the standstill period may be waived if:
For contracts that do not exceed the European thresholds and are subject to Belgian publication, a standstill period of 15 days is also applicable if the value of the tender exceeds half of the minimum value of the thresholds for European publication. In addition, a contracting authority can always decide to voluntarily apply the standstill period if the above-mentioned threshold is not exceeded.
The applicable legislation provides that the following review bodies are competent for reviewing award decisions from contracting authorities:
The judgments of the civil courts can be appealed on the merits, but the decisions of the State Council cannot.
In principle, the legal remedies are as follows for contracts exceeding the European thresholds.
Additionally, the civil courts can impose alternative sanctions by shortening the duration of the contract or imposing a fine on the contracting authority.
For contracts not exceeding the EU thresholds, only the annulation procedure, suspension procedure and claim for damages are available, meaning that, in principle, these types of contracts cannot be rendered ineffective. However, if the contracting authority should respect a standstill period, proceedings to have the contract rendered ineffective can also be initiated.
Interim measures are available to interested parties, such as suspension proceedings (see 4.2 Remedies Available for Breach of Procurement Legislation). The contracting authority cannot conclude and/or sign the contract while these proceedings are pending.
In principle, every entity that has or has had an interest in obtaining a certain contract and has been or could be disadvantaged by a violation of the applicable procurement law, other relevant law and legal principles applicable to the contract and the contract documents is able to initiate a suspension or annulment procedure.
This is also the case for the procedure to render the contract ineffective and the above-mentioned alternative sanctions. Claims for damages can be initiated by the entities that have been disadvantaged by a violation of the above-mentioned applicable law and documents.
In principle, the time limits for challenging an award decision are as follows:
If the contracting authority does not respect these conditions, the time limit is six months from the date of the closure of the contract.
These time limits are identical for contracts above and below the EU thresholds.
The length of proceedings will depend on the type of procedure, such as annulment, claim for damages, claim for ineffectiveness of the contract or request for suspension of an award decision. Suspension proceedings usually run rather smoothly and are initiated and completed within a matter of weeks, as they follow the format of summary proceedings (before the civil courts) or extreme urgency (before the State Council). The other proceedings, such as annulment, claim for damages or ineffectiveness, take about two years.
The number of procurement claims is not systematically published, nor are the decisions of civil courts, so it is not possible to provide an average number of procurement claims considered by the review bodies per year. However, most candidates/tenderers do not shy away from launching a claim if the situation warrants it.
Generally, the primary costs involved are lawyer and court fees.
In line with the European legislation on public procurement, the Belgian legislation contains a detailed regime on modifications to contracts during their term (ie, post-award).
In principle, no changes are possible without a new procurement procedure, unless they meet the specifications provided for in the applicable legislation.
The most relevant possibilities for modifications without a new public procurement procedure are:
In certain cases, a publication of the modification to the contract will be required.
As mentioned above, the authority may opt for the competitive procedure without prior publication. In fact, this procedure can lead to a direct award of the contract. This procedure may only be used in specific circumstances that are described in the law, including the following:
There have been a number of interesting court decisions on public procurement in the past year, including the following judgments/topics from the case law of the European Court of Justice and the State Council.
The following legislative initiatives are currently under contemplation:
268A Avenue de Tervuren
1150 Brussels
Belgium
+32 2 780 25 75
Gauthier.vanthuyne@allenovery.com www.allenovery.com/en-gb/global