When the procedure allows negotiation

Amounts are excluding VAT. "Unless otherwise provided, all amounts in this act are understood exclusive of value added tax" (act of 17 June 2016 on public procurement, art. 16; unofficial translation, as are all quotations of legal texts below). The act is federal and applies in all three regions.

The European threshold for works stands at 5,404,000 euros (royal decree of 18 April 2017, art. 11). That threshold does not, on its own, create a right to negotiate.

Below 30,000 euros HTVA (excluding VAT), the contract may be concluded by accepted invoice (act, art. 92). This is the lightest way of concluding a contract that the act provides for; this page does not go into the other rules that apply to it.

For the budget, the risk is the absence of comparison. A single tender accepted without a reference says nothing about its level. Asking for two or three prices on an identical description remains good practice, even where the law does not require it.

This is the procedure for small works contracts, below the amount set by the King. It is available when "the expenditure to be approved, excluding value added tax, is below the amounts set by the King" (act, art. 42, § 1, 1°, a)). The royal decree of 18 April 2017 sets that amount, for works as for supplies and services, at 140,000 euros excluding VAT (art. 90, 1°).

It is conducted, where possible, after consulting several economic operators (art. 42, § 1). The contracting authority chooses which firms it consults; an unsolicited tender from a firm that was not consulted is rejected, unless there is an expressly reasoned decision to the contrary (royal decree, art. 93). For the budget, this means that the choice of invited firms bears directly on price levels: three firms of a suitable size are worth more than five firms of which two will not respond.

The criterion is the expenditure to be approved, not only the estimate. Article 42 refers to the expenditure to be approved; article 41 to the estimated value. The two notions are not the same. A contract estimated just below 140,000 euros excluding VAT whose tenders come back above that figure raises a real procedural question, to be examined with the contracting authority's adviser. This is one of the reasons not to underestimate, developed in the article on the mandatory estimate in a public contract.

Where the contract is divided into lots, a rule specific to lots exists. The royal decree of 18 April 2017 (art. 90, 3°) allows the negotiated procedure without prior publication for each lot below 100,000 euros excluding VAT of a contract whose estimated value does not reach the European thresholds (art. 11), provided that the cumulative value of those lots does not exceed 20% of the estimated value of the contract.

The other cases in article 42 are distinct. The act also admits this procedure in situations unrelated to value, notably where, following an open or restricted procedure, no request to participate or tender, or no suitable request or tender, has been submitted, without substantial change to the initial conditions (art. 42, § 1, 1°, c)). The act states that "a tender is not considered suitable where it is irrelevant to the contract": a tender that is simply dearer than the estimate is therefore not unsuitable for that reason alone, as the article on tenders above the estimate explains.

For works with an estimated value below 750,000 euros excluding VAT, the act opens a published procedure in which the contracting authority "may negotiate" (art. 41, § 1, 2°). Publication widens competition; the possibility of negotiating then allows the tenders to be adjusted.

"May" is not "must". The contracting authority may award on the initial tenders if it considers them satisfactory. It therefore has an interest in drafting documents that allow an award without negotiation, and in keeping negotiation for cases where the gap justifies it.

For the budget, this can be the most useful procedure between 140,000 and 750,000 euros excluding VAT: it combines open competition with room to discuss prices. It presupposes a sound estimate, since it is the estimated value that gives access to it.

Open procedure, no negotiation. Any firm may submit a tender, and the contracting authority awards to the most economically advantageous tender (act, art. 81) after examining the tenders. If prices are too high, it cannot discuss them: it awards, abandons or starts again (art. 85).

The competitive procedure with negotiation exists, but its access conditions are not developed here. It belongs to particular situations and is decided with the contracting authority's adviser.

Choosing the procedure is a budget decision. It is taken on the basis of the estimate, before any tender, and it fixes the contracting authority's room for manoeuvre for everything that follows:

• Estimating high without reason can lead to a heavier procedure than necessary, with more publicity and longer time limits.
• Estimating low can open a procedure whose conditions will no longer be met when the expenditure comes to be approved, or an open procedure with no possibility of negotiating in the face of overpriced tenders.
• Estimating accurately, item by item, at a value date close to tender submission, is the only way to choose the procedure with full knowledge.

Negotiation is prepared before launching the procedure. Four elements make the difference.

Identify the negotiable items. The heavy items where the estimate is uncertain, the options and the specification requirements that could be relaxed. These are what will be discussed, not the total.

Provide for separately priced options. An option priced in the tender can be withdrawn during negotiation without altering the rest. An item buried in an overall lump sum cannot.

Give everyone the same information. Every question put to one tenderer and every clarification given applies to all the tenderers consulted. That is the condition for a fair comparison of the final tenders.

Record every round. Initial tenders, questions, revised tenders: each document is dated and kept. It justifies the award and serves as a reference during execution.

The examination rules continue to apply. Negotiation does not dispense with verifying the prices of all tenders or with questioning prices that appear abnormally low or high (royal decree of 18 April 2017, art. 35 and 36).

The private maître d'ouvrage (bouwheer, the client) negotiates freely, with whomever they wish and as often as they wish. The only limit is the one they set themselves: comparing tenders on the same basis and closing the negotiation before signing, since in a marché à forfait (lump-sum contract), article 1793 of the old Civil Code no longer admits a price increase without a change authorised in writing and an agreed price.