Public procurement law - horak Attorneys at law, Germany

What does „public procurement law” comprise?

German public procurement law includes Part 4 of the Act against Restraints of Competition (GWB) and the rules applicable to the particular contract, such as the Public Procurement Ordinance (VgV), sector or concession rules and VOB/A EU for works. Below EU thresholds, applicable federal and state rules must be identified, including the UVgO where introduced.

Public procurement law provides an opportunity for competing enterprises to take action against legally incorrect procurement of public contracts.

The Federal Ministry of Economics offers an opportunity to download relevant norms on the following topics:

Non-Restraint of Trade Act (Cartel Act)
In the fourth part of the Cartel Act (Non-Restraint of Trade Act) the general principles of public procurement are regulated and the procedure for reviewing the procurement procedure before the procurement chambers and higher regional courts is standardised.
Public Procurement Ordinance (VgV): relevant rules for covered supply and service contracts above the applicable EU threshold. Special provisions apply to works and other procurement regimes.
Further links: here
Professional services: the former VOF is no longer the current procurement regime. Applicable VgV provisions, including relevant rules for architectural and engineering services, must be considered.
Standard Official Contracting Terms
Standard Official Contracting Terms contain detailed regulations on the awarding of delivery, service or construction contracts. The Standard Building Contract Terms are deposited at the Federal Ministry of Transport, Building and Housing.
Common Procurement Vocabulary (CPV): use the applicable CPV codes to describe the subject matter of the procurement.

Furthermore, the Federal Cartel Office offers reports on procurement procedures free of charge.

What principles are to be taken into consideration?

Section 97 GWB sets out key procurement principles, including competition, transparency, equal treatment, proportionality and economic efficiency:

Transparency (publication of a tender, commitment to the publication, record of the procedure)
Competition (free access to the procedure, considering all appropriate applications, participation of a number of applicants, prohibition of a conduct contrary to fair competition by the contracting authority and applicants, fair competition)
Equality of treatment (equal treatment of all applicants, prohibition of discriminating conduct, neutrality principle)

What are the forms of procurement and when must they be offered by public announcement?

The permitted procedure depends on the applicable legal regime. Under section 119(2) GWB, contracting authorities may choose an open or restricted procedure with a prior call for competition. Other procedures require the relevant statutory conditions. Under section 8(2) UVgO, where applicable, public tender and restricted tender with a prior call for competition are available by choice.

Public tender: an unrestricted number of undertakings may submit a bid. There is no universal municipal EUR 25,000 boundary.
Restricted tender: selected undertakings are invited to bid. The need for a prior call for competition and the conditions for dispensing with it depend on the applicable rules.
Negotiated award: admissibility, competition requirements and any value limits must be assessed under the applicable federal or state rules. No universal municipal EUR 2,500 limit applies.

What should be taken into consideration in case of communal tender?

Below the applicable EU threshold, national procurement rules apply according to the contracting authority and contract type. The estimated value is generally calculated net of VAT. Typical procedural steps include:

completing the documents of the Standard Contracting Terms
laying-down the bid acceptance deadline, the deadline for adjudication and the commitment period
issue of invitations to tender
opening of tenders by the contracting authority and the chairman
evaluation of bids, possible rejection of bids, or complete or partial cancellation of the procurement
adjudication

Where the estimated value reaches or exceeds the applicable EU threshold, the relevant EU procurement regime generally applies unless an exception is available. The following matters must be assessed:

identify the applicable rules for the authority and contract type
choice of the procurement procedure

open procedure
restricted procedure with a prior call for competition, available by choice under section 119(2) GWB

exceptional conditions

choice between open and restricted procedures with a prior call for competition where section 119(2) GWB applies
negotiated procedure with/without contract notice
restricted procedure with compulsory competition

What are the differences between restricted procurement and open procurement at communal level?

Restricted tender limits the undertakings invited to bid. The applicable rules determine whether a prior call for competition is required. There is no universal EUR 25,000 boundary for municipal procurement.

When is negotiated tender an option for communal tender?

The conditions for a negotiated award depend on the applicable procurement rules and, where relevant, federal or state value limits. A universal municipal EUR 2,500 limit must not be assumed. Competition and documentation requirements remain relevant.

Depending on the legal basis, simplified procurement may include the following steps. The required number of quotations and extent of documentation must be checked separately:

checking the price informally at at least three tenderers
awarding of contract
specification of aims
informing procurement office

A competitive procedure typically includes the following steps:

creating bidding documents (performance specification and conditions of contract)
market analysis and based on it selection candidates
invitation to tender
evaluation of tender
awarding of contract

What role do the standard official contracting terms play?

A private-law legal form does not by itself exempt an entity from procurement duties. Private-law entities can qualify as contracting authorities under section 99 GWB. The contracting authority’s characteristics, contract type and value determine which rules apply. Procedural procurement rules must be distinguished from contract terms incorporated into the resulting contract.

What can we do for you?

If you are a contracting authority obliged to public tender, we revise and assist your public tender, from the planning phase up to the awarding of contract until the service is performed and finished.

If you participate in a tender, we enforce your claims for a proper procedure and prevent - in case of unlawfulness – that the contract is awarded to competitors.

Of course, we also represent you in case of official and legal procurement procedures before procurement chambers.

What do we need to handle your question concerning procurement law?

We need to know exactly, which services of what value under which conditions are to be awarded and which have already been offered by public announcement. Further details must be discussed individually

More information on public procurement law.