Update in public procurement legislation – new rules targeting SMEs

Public procurement legislation underwent a new makeover. A number of legislative changes aim to promote the access of SMEs to public works, supply and service contracts. The changes in legislation relate to the use of advance payments, granting of bidding fees, transparency during the procurement process and reducing the administrative burden for bidders.     

Objectives of the new rules

An Act of 22 December 2023 made several amendments to the Public Procurement Act of 17 June 2016. The amendments aim to promote SMEs’ access to public procurement.

99.8% of Belgian companies are SMEs. Although they make up the vast majority of Belgian enterprises, they are underrepresented in public procurement procedures. With the introduction of the new rules, the legislator seeks to change this.

The new legal framework introduces a number of novelties for contracting authorities as well as bidders in public procurement procedures, as will be discussed below.

Main changes to public procurement legislation

1. Advance payments

The Act of 22 December 2023 establishes new rules on advance payments to the contractor.

Contracting authorities always have the possibility to voluntarily grant advance payments when this is provided for in the tender documents.

Contracting authorities that are also administrative authorities now have an obligation to provide for advance payments in certain cases. The extent of this obligation depends on whether the contractor is indeed an SME:

  • Where (1) the contractor is an SME and (2) the contract is awarded under a procedure other than the negotiated procedure without prior publication, the contracting authority is obliged to provide advance payments.

The advance payment amounts to:

    • 5% of the contract value, if the contractor is a medium-sized enterprise;
    • 10% of the contract value, if the contractor is a small enterprise;
    • 15% of the contract value, if the contractor is a micro-enterprise.

The contracting authority may provide for a higher advance, up to a maximum of 20% of the contract value.

  • Regardless of whether the contractor is an SME, there is always an obligation to provide advance payments if the negotiated procedure without prior publication is used and:
    • The expenditure to be approved for the contract is less than € 143,000; or
    • No (suitable) request for participation or offer was submitted following an open or restricted procedure; or
    • The contract relates to the supply of products manufactured exclusively for research, experimentation, study or development.

The advance payment shall then in principle amount to 15% of the contract value.

Barring exceptional cases, in absolute figures, advance payments may never exceed € 225,000.

The new Article 12/1 of the Public Procurement Act provides for a number of specific exceptions to the obligations relating to advance payments, more specifically:

  • Contracts related to the financing and execution of works;
  • Contracts relating to leasing, rental or hire purchase;
  • Contracts for insurance services;
  • Contracts involving payment on the basis of a subscription or periodic consumption; or
  • Contracts with an execution period of less than two months.

In introducing these rules, the legislator wants to ensure that cash flow tensions can be avoided, or at least limited. After all, the Public Procurement Act stipulates that contractors can only be paid for performances that have been provided and accepted. In other words, in principle, contractors must first be able to fund their performances themselves before the contracting authority will pay them for those performances. This mechanism may cause cashflow issues, especially for SMEs, especially taking into account the often long verification and payment periods.

The new obligations relating to advance payments came into force on 1 January 2024.


2. Bidding fees

When the contracting authority requires tenderers to provide models, drawings, samples, prototypes, other graphic designs or any other design in the fields of plastic arts, musical arts, cinematographic arts or performing arts to the offer, the contracting authority will now be obligated to pay a bidding fee to the tenderers.

The law provides for some exceptions. A bidding fee does not have to be paid:

  • to tenderers who have submitted substantially irregular or unacceptable offers, if this exception has been provided for in the tender documents;
  • to the successful tenderer;
  • where an open procedure or simplified negotiated procedure with prior publication or call for competition has been used.

The contract documents must specify the amount of the fee and the deadline by which it will be paid. The law does not provide for a minimum bidding fee, which means that contracting authorities will have to provide for a bidding fee that is reasonable and in proportion to the subject matter of the contract.

This requirement will enter into force on 1 February 2024.


3. Mandatory communication of individual ranking

The contracting authority will be obliged to simultaneously notify all tenderers of their individual and provisional place in the ranking of offers when the following conditions are met:

  • The estimated value of the contract is below the threshold for European publication;
  • The contract is being awarded through the open or restricted procedure;
  • The most economically advantageous offer is determined solely on the basis of price;
  • The contract does not concern sectors with an increased risk of agreements resulting in unfair competition.

This obligation is intended to allow tenderers to assess their chances and better organize their schedule.

This amendment will enter into force on 1 June 2024.


4. “Only once” principle applied to design contests

Where tenderers have submitted a European Single Procurement Document, the contracting authority may request supporting documents relating to the grounds for exclusion and relating to selection criteria.

The Public Procurement Act now provides that companies are not obliged to submit supporting documents or other evidence if the contracting authority can also obtain the information itself by consulting a freely accessible database, or if it already possesses these documents as a result of a previous contract or framework agreement.

This principle is known as the only once principle: tenderers have to submit certain documents to the contracting authority only once.

The law of 22 December 2023 now makes this principle applicable to design contests as well.

This amendment will enter into force on 1 February 2024.

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