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In 1995, 13 municipalities in Twente entered into agreements with a subsidiary of Twence Holding BV (“Twence Holding”), AVI Twente BV (“AVI”), for the treatment and processing of residual household waste. The term of this agreement expired on July 1, 2022. The municipalities are the sole shareholders of Twence Holding BV. Twence Holding owns all of the shares in Twence Bioconversion BV (“Twence Bioconversion”) and AVI Twente. The municipalities of Twente have also entered into an agreement with Stadt Münster, according to which Stadt Münster supplies the remaining household waste to the municipalities of Twente on a public-private partnership basis.

The municipalities have entered into a new agreement with Twence Bioconversie and AVI Twente to treat and treat residual household waste. This Agreement entered into force on July 1, 2022 and is in effect indefinitely. AVR-Afvalprocessing BV (“AVR”), a company engaged in the processing of waste for private and public parties, demands in legal proceedings, among other things, the cancellation of the agreement between the municipalities of Twente and Twence Holding and its company. Subsidiaries.

Judgment court

The key question in this procedure is whether municipalities rightfully invoke the semi-in-sourcing exception (Article 2.24b Aw 2012). It should be checked whether the supervision criterion (the contracting authority must supervise the legal person under control) and the activity standard (more than 80% of the activities assigned to the controlled legal person must also include the performance for which it is assigned) that have been assigned by the contracting authorities regulatory). It is also required that there is no direct participation of private capital in the regulated legal entity.

supervision standard

Court rule That the supervision standard has been met and confirms that it is important to subscriber The supervision of the participating municipalities is sufficiently effective. Adequate oversight is not lacking if one or more municipalities cannot agree to proposed decisions or measures, or if there are internal discussions. In this case, there is sufficient oversight because the Twente Municipalities are shareholders of the Twence Holding and in this capacity are authorized to appoint the Supervisory Boards of AVI Twente and Twence Bioconversion. These supervisory boards are empowered to appoint the boards of directors of companies, so that the contracting authorities are represented in the decision-making bodies of the regulated legal entities.

activity standard

With regard to the activity criterion, it is important that more than 80% of the activities assigned to Twence Holding and its subsidiaries must involve the performance of activities entrusted to them by the municipalities of Twente as supervisory contracting authorities (cf. Article 2.24b Aw 2012). In calculating this percentage it is not necessary, in the opinion of the Court, to consider per se the average turnover over the past three years. An appropriate alternative activity-based measure may also be used, such as the amount of waste purchased in this case (Article 2.24b, Paragraph 3 in conjunction with 2.24a Paragraph 4 Aw 2012).

The court states first of all that if the amount of household waste provided by the city of Munster is ignored, the 80% requirement will not be met. Subsequently, it has been established that there is a public-private cooperation between the municipalities of Twente and Stadt Münster (cf. Article 2.24c Aw 2012). The court rules that the treatment of household waste provided by Stadt Münster is considered to be the performance of the tasks entrusted to AVI Twente and Twence Bioconversion by the municipalities of Twente. The waste from Stadt Münster can thus be allocated to the municipalities of Twente, so that the activity criterion is met.

Now that all outsourcing requirements have been met, the conclusion is that the municipalities have been allowed to enter into an agreement with AVI Twente and Twence Bioconversie without a prior tender procedure.

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From a practical point of view, it is important first of all that when calculating the 80% percentage, the activities of the contracting bodies with which there is a public-private partnership can also be included, in this case the supply and treatment of waste left over from Stadt Münster. This makes it easier for contracting authorities to fulfill the activity criterion and thus award a contract to a supervised legal entity without a procurement procedure.

The ruling also confirms that contracting authorities are free to calculate the activity standard. In practice, the question arose whether calculating on the basis of turnover is the main rule and whether a suitable alternative calculation can only be considered in exceptional cases. With this ruling, it becomes clear that there is freedom of choice.

Do you have any questions about public procurement or exceptions to the procurement obligation? Please contact Mathijs Jonkers or Tony van Wijk.