Recent case law of the Council of State regarding the signature of a tender for a public procurement contract

In a recent decision (Council of State, 5 February 2021, n° 249.726) the Council of State once again had to deal with the issue of the correct signature within the framework of a public procurement contract.

According to the public procurement regulations (more specifically article 44, § 1, of the royal decree of 18 April 2017 on the award of public procurement in the classic sectors), a tender must be signed by the person(s) authorised to bind the tenderer.

This case concerned the actual signing of an offer by a group of economic operators (temporary partnership) whereby one person from the various participating companies received a power of attorney to sign the tender on behalf of the temporary partnership. However, one special power of attorney was signed by the managing director of one of the participating companies.

Or, to be even more accurate, the person signing the tender received, amongst others, a power of attorney from another company which in turn received a power of attorney from a limited liability company, itself one of the participating companies, signed by the managing director of this limited liability company.

However, in order to understand the reasoning of the Council of State, it is sufficient to know that one power of attorney was thus issued within the framework of the daily management of one of the participating companies.

The applicant (a tenderer whose tender was declared irregular) obviously did not fail to refer to the “constant case law” of the Council of State which does indeed confirm that the signing of a tender – and by extension the signing of a power of attorney in view of the signature of a tender – cannot in principle be considered as an act of daily management.

The Council of State did not follow the applicant’s argument and rejected the ground of appeal.

In its assessment of the ground of appeal, the Council of State was guided by the fact that there has been a reform of company law. The Act of 23 March 2019 (Official Gazette 4 April 2019) introduced the Code of Companies and Associations (CCA) and, as of 1 January 2020, the mandatory provisions of the CCA also apply to companies that already existed on 1 May 2019, the day on which the CCA entered into force.

Under the old Companies Code, the concept of “daily management” was not defined. The Court of Cassation retained two hypotheses and defined them in its decision of 26 February 2009 (TRV, 2009, 444) as follows (free translation): “The acts of daily management are [1] those necessitated by the needs of the company’s daily life and [2] [a] those which, both because of their minor importance [b] and because of the need for a quick solution, make the action of the board of directors itself unnecessary“. The urgency and the minor importance of the act were cumulative conditions for the second hypothesis.

The Court of Cassation’s interpretation of the concept of “daily management” formed the basis for the definition of “daily management” in the CCA, with the significant difference that the condition of urgency and the condition of minor importance were retained in the CCA as alternative conditions and not as cumulative conditions.

According to the definition in the CCA (article 7:121 CCA for the limited liability companies), 3 acts fall under the concept of “daily management”, namely (1) the acts and decisions which do not go beyond the needs of the daily life of the company, (2) the acts and decisions of minor importance and (3) the acts and decisions of an urgent nature.

Because the applicant had based its ground of appeal on the old case-law interpretation of the concept of “daily management”, which is no longer entirely accurate in the light of the CCA and can therefore be challenged, and because the applicant had only argued during the pleadings, and thus belatedly, that the power of attorney did not comply with the criteria of article 7:121 CCA, its ground of appeal was rejected.

Consequences of this decision

It seems premature to regard this decision as a (definitive) change in the case law of the Council of State on this matter.

The Council of State ruled that the jurisprudential interpretation of the concept of “daily management” in the field of public procurement litigation is no longer entirely accurate and appears to be open to legal dispute, but did not further examine the discussion in the context of this procedure of extreme urgency. The Council of State limits itself in such proceedings to a prima facie examination.

We must therefore wait for the further interpretation of this concept in the case law of the Council of State.

How to deal with this case law in practice

Of course the question remains how contracting authorities and tenderers should deal with this case law.

The message here remains to be careful.

For tenderers it is advisable, given the uncertainty that has now arisen, to err on the side of caution and not simply submit tenders that have only been signed by the managing director. After all, the risk remains that a contracting authority – possibly still followed in this by the Council of State – will consider this insufficient. If there is no alternative, such signature can be attempted, with reference to the parameters emphasized by the Council of State and arising from article 7:121 of the CCA (for limited liability companies). It may be recommended for the managing director himself to include a justification of the applicability of one or more of the criteria of the notion of “daily management” in the signed tender, which will also provide the contracting authority with arguments to accept the tender (on that point) in a reasoned manner. In our opinion, however, this remains a very risky approach.

For contracting authorities, this decision certainly does not simplify matters. When a contracting authority is confronted with a tender that has only been signed by the managing director, it is advisable to make a concrete assessment and ask itself, on the basis of the new definition of the concept of “daily management“, whether the signing of the tender can (in this concrete case) be considered an act of daily management for the company concerned. A thorough motivation of both the acceptance and the irregularity of the tender is required.

Do you require specific assistance?

Contact our public law team!