The Government Procurement Review: Germany

Introduction

German public procurement law stipulates different requirements and review procedures for tenders above and below EU thresholds. For contract values above EU thresholds, contracting authorities and entities must comply with the public procurement provisions laid down in the Act against Restraints of Competition (GWB) in addition to those found in several ordinances. The GWB establishes and defines the basic principles of public procurement in Germany, the GWB's scope of application and exemptions therefrom, the definitions of contracting authorities and entities, and the contracts and concessions covered by that legislation, as well as the general rules on tender procedures, bidder eligibility and exclusion, award criteria and procedures for reviewing allegations of violations. Ordinances such as the following cover different types of contracts and areas of public procurement:

  1. the Ordinance on the Award of Public Contracts (VgV) applies to service and supply contracts in general;
  2. Chapter 2 of the Construction Contract Procedure Rules – Part A (VOB/A) and certain provisions of the VgV govern the award of public works contracts;
  3. the Ordinance on the Award of Concessions (KonzVgV);
  4. the Ordinance on the Award of Public Contracts by Entities operating in the Water, Energy and Transport Sectors (SektVO) covers public procurement in the utilities sectors; and
  5. the Ordinance on the Award of Public Contracts by Contracting Authorities or Entities in the Field of Defence and Security (VSVgV).

Depending on the form of transportation, various (other) EU and German laws apply to concessions and public service contracts for public passenger services.2

Below EU thresholds, public tendering is generally considered a matter of budgetary law.3 The harmonised Procedural Rules on the Award of Public Supply and Service Contracts below EU Thresholds (UVgO) were enacted at the federal level in 2017 and have been adopted in all of the federal states except for Saxony and Saxony-Anhalt. Pursuant to federal and state (budgetary) laws, the first Chapter of the VOB/A also applies to public works contracts below EU thresholds. While the UVgO and the first Chapter of the VOB/A essentially mirror the provisions of the VgV and the second Chapter of the VOB/A, contracting authorities have more flexibility in tenders below EU thresholds.

Contracts and concessions above and below EU thresholds are further subject to the fundamental procurement principles of competition, transparency, cost effectiveness, equal treatment, non-discrimination and proportionality. Additionally, it is a mandatory requirement that the interests of small and medium-sized enterprises be taken into account, and public contracts generally must be divided into lots in Germany. Aspects of quality and innovation, as well as social and environmental considerations, need to be considered too. In addition, most federal states have enacted procurement laws requiring compliance with minimum wage levels and other social criteria.

Public procurement in Germany – as in other EU Member States – is also subject to the World Trade Organization Agreement on Government Procurement (GPA).

Year in review

The events of 2021 were highly influenced by the tremendous global and national impact of the covid-19 pandemic. Germany and the European Union swiftly published interpretative guidelines on how to use exemptions for urgent procurements.4 In particular, goods and services immediately required to contain the pandemic or ensure the functioning of public administration during lockdowns could be procured in negotiated procedures without a call for competition. Urgency notwithstanding, 'light' competition must still be ensured in principle by considering at least several bids.5

To facilitate public procurement below EU thresholds, the federal government and several states either adjusted or adopted entirely new threshold values for restricted and negotiated procedures or direct procurement. Under the temporary federal guidelines that were in effect until 31 December 2021, restricted procedures with or without a call for competition were possible for contracts worth up to €1 million (works) or €100,000 (supply and services). For the latter, negotiated procedures with or without a call for competition were also allowed. Several federal states in fact raised threshold values, some of which will remain in effect even after the pandemic is over.

Another legislative development with relevance for public procurement in Germany is the Bundestag's passage of the Act on Due Diligence in Supply Chains (LkSG). From 2023 onwards, large companies with 3,000 employees or more within Germany (1,000 starting in 2024) must ensure that due diligence obligations on human rights and environmental protection are respected throughout their supply chains. Those obligations include establishing risk management procedures as well as implementing preventive and remedial measures for the possibility of human rights or environmental infringements. Violations of the due diligence obligations may lead to a non-compliant bidder being excluded from public procurement procedures for up to three years.6 In a similar move, the European Commission published its proposal for a directive on corporate sustainability due diligence in February 2022 aimed at fostering sustainable and responsible corporate behaviour throughout global value chains.

In pursuit of its objective of having a climate-neutral federal administration by 2030 and in line with the European Green Deal, the federal government adopted AVV Klima in September 2021, which is an administrative guideline to further promote climate-friendly procurement. These plans follow the AVV-EnEff reforms on energy efficiency passed in 2020 that require public authorities to procure the product with the highest efficiency class available.

The German federal legislature also adopted new rules on the procurement of clean and energy-efficient road transport vehicles. The Clean Vehicles Procurement Act (SaubFahrzeugBeschG) requires that a certain quantity of the total number of vehicles that public authorities procure be clean and energy-efficient vehicles. The SaubFahrzeugBeschG applies to procurement procedures for purchasing, renting or leasing vehicles – even in the utilities sectors – and to public service contracts on the provision of passenger services.

The Federal Competition Register is finally being put into effect. Since 1 December 2021, relevant decisions on criminal convictions and fine issuances have begun to be submitted to the register by law enforcement authorities. The register provides contracting authorities with an easily accessible overview of these notices of offences committed by potential tenderers. The register therefore enables public authorities to decide whether or not to exclude certain bidders. Starting 1 June 2022, public authorities must consult the register in the course of procurement procedures for contracts worth €30,000 or more. When awarding contracts in the utilities sectors or concessions, consultation is compulsory above the EU thresholds.7

In 2019, the Court of Justice of the European Union (CJEU) ruled that the minimum and maximum tariffs under the binding Fee Ordinance for Architects and Engineers (HOAI) infringe the freedom to provide services.8 A reform of the HOAI to ensure conformity with EU rules came into force on 1 January 2021. What effect the CJEU ruling should have on contracts concluded before the HOAI reform, however, has remained in dispute.9 In January 2022, the CJEU ended this debate following a request for a preliminary ruling submitted by the Federal Court of Justice.10 Despite its 2019 ruling, the CJEU has allowed the earlier version of the HOAI to continue to apply to contracts concluded before 2021.11 The private parties to these older contracts may therefore continue to seek in court the enforcement of the minimum and maximum tariffs under the former version of the HOAI.

Initially submitted in January 2019, the European Commission's request to Germany to rectify violations of EU rules arising from a provision on architectural planning services is still pending. According to that provision, when calculating the aggregate contract value of a construction project that can be divided into lots, lots for planning services must be included in that calculation only if they have the same subject matter.12 The European Commission has deemed this rule to be in breach of the 2014 Public Contracts Directive and renewed its request on 15 July 2021, sending a reasoned opinion to Germany. Now that the two-month period for response has expired, the European Commission may decide to bring the case before the CJEU.

Scope of procurement regulation

i Regulated authorities

German procurement law has implemented the EU definitions of contracting authorities and contracting entities. Apart from the classic contracting authorities (i.e., federal, state, regional and municipal authorities and their respective special funds), bodies governed by public law can also be contract authorities, which are public and private legal entities established for the specific purpose of meeting needs in the general interest that do not have an industrial or commercial character and are publicly financed or majority-controlled by contracting authorities or any of their associations.13 Statutory health insurance schemes and public broadcasting corporations, for example, qualify as contracting authorities.14 Further, public and private entities are considered contracting authorities for certain projects that are more than 50 per cent state-funded.15

Contracting entities in the utilities sectors comprise all contracting authorities, and all persons and companies that conduct a defined activity in the water, energy and transport sector. However, to fully meet the definition of contracting entity, a person or company must either conduct a defined activity on the basis of special or exclusive rights granted by a competent authority, or contracting authorities must be able to directly or indirectly exercise a dominant influence on them through ownership, financial participation or the rules governing that person or company.16 Contrary to the 2014 Utilities Contracts Directive, postal services are not covered by the German utilities regime. The production and wholesale of electricity from conventional sources, the retail supply of electricity and gas,17 and, to a certain extent, the exploration and extraction of petroleum, gas and coal18 have been exempted.

Below EU thresholds, typically only the classic contracting authorities are subject to public procurement requirements.

ii Regulated contracts

Public contracts for services and the supply of goods (VgV), works (VOB/A) and concessions (KonzVgV) in general require a public procurement. These types of contracts are also governed by the specific provisions concerning utilities (SektVO) and the defence and security sectors (VSVgV). The VSVgV covers contracts with the purpose of:

  1. procuring the supply of military equipment;
  2. the supply of equipment under classified contracts;
  3. the provision of other supplies, works and services directly connected to those kinds of equipment; and
  4. works and services specifically for military purposes or that are provided under classified contracts.

The definition of works and service concessions laid down in the 2014 Concession Contracts Directive has been transposed exactly into the KonzVgV. Furthermore, certain social, health, legal and other services are subject to less restrictive public procurement requirements.19

The GWB exempts certain contracts from public procurement requirements if they deal with certain matters, for instance the acquisition and lease of real estate, certain financial instruments or the essential security interests of Germany.20 However, exempted contracts may still be subject to procurement principles derived from the Treaty on the Functioning of the European Union (TFEU), or to federal or state budgetary laws. In 2019, the CJEU ruled that the scope of the exemption for emergency services in Germany is not fully in accordance with EU law.21 The reasoned opinion submitted by the European Commission in July 2021 in the infringement procedure against Germany for violations of EU procurement rules (see Section II) picks up on this point and addresses the continued exemption of rescue services from public procurement rules. German review bodies have been ruling that the German exemption rule can be interpreted in accordance with EU law in compliance with the CJEU decision.22 The Federal Constitutional Court had previously rejected a constitutional complaint.23

Substantial modifications of public contracts or concessions generally require a (new) tender procedure.24 Modifications are considered substantial especially if they extend the scope of the contract considerably, or if they introduce conditions that would have allowed other candidates to be admitted to the tendering procedure or other tenders to be accepted. However, if a substantial modification were to be provided for in a clear, precise and unequivocal review clause in the initial procurement documents, no new tender procedure would be required. Transferring a contract to another contractor generally requires a new procurement procedure unless the transfer takes place as part of a corporate restructuring and the new contractor is eligible under the initial tender requirements.

Special contractual forms

i Framework agreements and central purchasing

Under German public procurement law, framework agreements are those between one or more contracting authorities and one or more economic operators, the purpose of which is to establish the terms governing contracts to be awarded during a given period, in particular with regard to the price and quantity envisaged.25 Framework agreements are generally subject to the same requirements as other public contracts, including public notice requirements. To enable bidders to assess whether or not they are capable of fulfilling a framework agreement, the notice must specify the estimated quantity or value, as well as a maximum quantity or value, of the supplies to be provided under the agreement. The framework agreement will no longer have any effect once that limit is reached.26 Individual contract orders under a framework agreement are awarded pursuant to the rules of the framework agreement, which can provide for a mini-competition between framework contractors. The term of framework agreements is not permitted to exceed a maximum of four years (seven years for security and defence contracts and eight years in the utilities sector) unless there are exceptional circumstances.

Central purchasing refers to a contracting authority engaging in public procurement activities and, possibly, ancillary purchasing activities on behalf of other contracting authorities. Central purchasing is an option27 not frequently used in Germany other than for standard products. At the federal level, central purchasing bodies have been established, some of which have set up the fully electronic Federal Department Store to meet the standard demands of all federal authorities (e.g., office supplies).

Under the SektVO, contracting entities can use qualification systems that have the function of a call for competition. The contracting entities can use such systems to procure specific contracts exclusively among economic operators pre-qualified under the system.28 Beyond utilities, procurement laws provide for other pre-qualification procedures (especially for public works); however, these only simplify the eligibility documentation and do not substitute a call for competition.

ii Joint ventures

Germany has transposed in the GWB the EU criteria for in-house procurement derived from CJEU case law, in line with the intention of the 2014 Procurement Directives.29 In-house procurement is exempt from public procurement requirements if the contracting authority exercises control over the contractor similar to its control over its own departments, provided that the contractor provides more than 80 per cent of its services or supplies to the contracting authority or to other legal persons controlled by that contracting authority. Control may also be exercised jointly with other contracting authorities, but the contractor may not have any private shareholders under any circumstances. The in-house exemption also applies in horizontal and inverse (bottom-up) control scenarios.

Further, contracts between contracting authorities are exempt from public procurement requirements if:

  1. the contract establishes or implements a cooperation between participating authorities with the aim of ensuring that public services they have to perform are provided with a view to achieving objectives they have in common;
  2. the implementation is governed solely by public interest considerations; and
  3. the open-market activities of the participating authorities count for less than 20 per cent of their activities covered by the cooperation.

This provision on 'inter-municipal' cooperation has its roots in several German cases heard by the CJEU. In 2020, the CJEU clarified that a partner must be further involved than simply by paying the costs for the cooperation to qualify as such and a cooperation must not grant a competitive advantage to a private undertaking.30 The mere formation of a special purpose association that links local authorities for the joint performance of certain tasks, which is common in the transport sector and for waste management, is generally not subject to public procurement requirements.

Public–private partnerships (PPPs) may require a public tender in different respects. For example, the selection of a private partner has to be tendered if there is an 'encapsulated' contract. If the private partner is not selected by public tender, a later contract must be awarded to the PPP through public tender unless an exemption applies (e.g., the in-house exemption). The PPP itself is obliged to abide by public procurement requirements if it qualifies as a contracting authority, for instance because another contracting authority provides it with a predominant level of its financing or controls it outright (see Section III.i).

The bidding process

i Notice

Above EU thresholds, calls for competition in Germany have to be transmitted through electronic standard forms to the Publications Office of the European Union, which publishes the notices on the online platform Tenders Electronic Daily (TED). The notice may be published at the national level only after it has been published by the Publications Office or after 48 hours have elapsed since the Publications Office confirmed receipt of the notice. Apart from essential data on the contracting authority and the subject matter of the contract (including CPV codes for the goods, services and works), all eligibility criteria and the requirements in order to prove fulfilment of each of them have to be stated in the notice. The notice must also include a link to where the procurement documents can be retrieved free of charge. While case law used to be very strict about all eligibility criteria being included explicitly in the notice itself, more recent decisions allow contracting authorities to make precise reference in the notice that the eligibility criteria can be found in the online procurement documents. Recent case law has also permitted that only certain parts of procurement documents be provided upon publishing the notice in a two-stage or multi-stage procedure.31

The mere intention to tender a public contract in the future can be published through an indicative notice, which decreases the minimum time frames for a subsequent tender.

A notice on TED is also required for certain exempt contracts. Apart from explicit requirements of this kind, a notice may be required to ensure transparency in light of fundamental EU principles. In this case, publication on TED is not necessary, but certainly sufficient to be adherent to those principles.

The award of a contract has to be published within 30 days; that deadline is extended to 48 days for the award of concessions and public defence and security contracts. The award notice has to include the name of the successful bidder.

Below EU thresholds, public tender notices in adequate federal, state, regional or local publications are common. Nevertheless, any notice subject to the UVgO must be available online and on the federal platform www.bund.de.

ii Procedures

Procurement laws generally provide for open, restricted and negotiated procedures (with or without a call for competition) as well as competitive dialogues and innovation partnerships.32 Any interested party is invited to tender their bid in an open procedure. In a restricted or a negotiated procedure, tenderers first have to submit a request for participation (RfP). Contracting authorities will typically limit the number of tenderers for participating in the bidding phase based on an evaluation of their eligibility according to their RfPs. In negotiated procedures, (initial) bids may be negotiated provided that the substance of the public tender is not modified. Competitive dialogues are rarely used in Germany. Innovation partnerships are still fairly new, but certainly an interesting option.

Contracting authorities are generally free to choose either an open or restricted procedure. A negotiated procedure is an option only under certain circumstances, for example if the procurement needs cannot be met by readily available solutions without adaptation or if the contract includes innovative solutions.

Under the SektVO, contracting entities are free to choose any procedures with a call for competition. For public contracts covered under the VSVgV, however, the open procedure cannot be used.

The procedures for tenders below EU thresholds are similar to the procedures at or above the EU thresholds, but provide more flexibility.

iii Amending bids

Before the submission deadline, tenderers can typically withdraw their bid and submit an entirely new bid. Once the submission deadline expires, however, amendments are no longer permitted and tenderers may only provide clarification on their bids at the contracting authority's request. This does not apply if the procurement procedure that the contracting authority has selected allows for negotiations (see Section V.ii). A contracting authority may also request a tenderer to submit missing or rectify incomplete information. Such information must not change the application or bid.33 The contracting authority has to further evaluate a tender's price and underlying calculation if it appears unusually low. This has been defined as a price that falls below the next lowest price by 10 per cent or more. Contracting authorities may also investigate a price if the bid gives a concrete reason for a price check.34

Tenderers are not allowed to modify or amend the procurement documents of a contracting authority. Such an action qualifies as mandatory grounds for exclusion if the procurement documents were clear and if the modifications or additions cannot be interpreted in a way that conforms to the procurement documents. For reasons of proportionality, refraining from excluding a tenderer may be justified in rare cases if the amendment concerns a purely marginal aspect that is not relevant for the evaluation of the bids and that might not even be significant in the performance of the contract.35 The contracting authority may explicitly permit variants if it establishes minimum requirements for the variants and if the award criteria apply to both the main tender and the variants. The contracting authority is free to determine the minimum requirements for variants, provided that they are objective, transparent and non-discriminatory.36

Eligibility

i Qualification to bid

Contracting authorities typically define selection criteria for tenderers' eligibility.37 These criteria may relate to tenderers' suitability to pursue their professional activity, their economic and financial standing, and their technical and professional ability. The criteria must be adequate and proportionate to the subject matter of the contract and be published in the contract notice, which regularly include a request for references on past, comparable contracts. Any minimum eligibility requirements have to be clearly stipulated. Self-declarations are sufficient unless the contracting authority requests specific documents of proof.

A tenderer can rely on the capacity of other economic operators provided that the tenderer can prove that it will have at its disposal the other operators' capacities necessary to perform the contract. This is known as a capacity loan. Where capacity loans are made to perform a public contract, joint liability may be required for the performer's economic and financial ability, and actual performance is required for technical and professional ability.

In certain instances, contracting authorities may have to exclude economic operators from a tender. They are generally obligated to exclude economic operators in cases of criminal convictions or administrative fines for bribery or money laundering (mandatory grounds for exclusion).38 Convictions can be imputable to a tenderer if the convicted person acted as one of the responsible persons for the management of the undertaking. However, economic operators are not to be excluded based on convictions or past major failures if they can prove that they have self-cleaned or if specified periods have lapsed.39

Contracting authorities also have discretion to decide whether or not to exclude an economic operator for certain reasons known as facultative grounds for exclusion. For example, if an economic operator previously provided false information to influence a contracting authority's decision or violated a major requirement under a former public contract, or if there are indications of anticompetitive behaviour, a contracting authority may bar it from the tender.40 The question of whether bids from two tenderers who form an economic unit must be excluded for reasons of equal treatment is currently being deliberated on by the CJEU. A German review body argued that excluding the affiliated tenderers for anticompetitive behaviour could not be justified because Article 101 of the TFEU did not apply to the agreements or practices of undertakings that constitute an economic unit. However, the review body found that both bidders should be excluded on the grounds of equal treatment as their bids were not autonomous and independent.41

The Federal Competition Register, which has been accessible to contracting authorities since December 2021, is to facilitate contracting authorities' decisions on the exclusion of tenderers (see Section II).

The SektVO provides for more leeway on the part of the contracting entity. The number of eligibility criteria is not limited, but they do essentially have to be adequate, objective, transparent and non-discriminatory. Further, any exclusion – even if based on grounds that are mandatory grounds for exclusion in the general procurement regime – is at the discretion of the contracting entity.

ii Conflicts of interest

Representatives of a contracting authority exposed to a conflict of interest may not participate in a tender procedure.42 A conflict of interest exists if the representative is involved in conducting the procurement procedure or may influence the outcome of that procedure and, at the same time, either the representative or a close relative has a direct or indirect financial, economic or personal interest that might be perceived as compromising their impartiality and independence. A person is deemed so compromised if he or she is the tenderer; if he or she advises, supports or represents a tenderer; or if he or she is employed or works for a tenderer or for a company that has business relationships with both the contracting authority and the tenderer.

The secrecy of competition principle requires that tenderers – as well as the contracting authority – not disclose the identities of the tenderers participating in a tender or any information on the bids. A bid that has been prepared with knowledge of relevant details of another tenderer's bid usually has to be excluded.

Having been involved in the preparation of a procurement procedure does not automatically lead to exclusion.43 The contracting authority has to take all necessary measures to ensure a level playing field for all bidders before considering exclusion as a last resort.44

iii Foreign suppliers

In accordance with the EU principle of non-discrimination, no difference can be made directly or indirectly between tenderers from Germany or any other EU Member State.

In general, German procurement provisions do not discriminate against non-EU tenderers (those coming from GPA signatory states or even from countries without a multilateral or bilateral procurement agreement). These third-state tenderers can generally assert the same rights as tenderers from Germany and the European Union. However, contracting entities in the utilities sector can reject bids for supply contracts where the proportion of the products originating in third countries exceeds 50 per cent. Third countries are countries other than members of the European Union or the European Economic Area that have not signed an agreement on reciprocal access to markets.

The introduction of the International Procurement Instrument (IPI) initially proposed by the European Commission in 2012 to ensure more reciprocity in international public procurement markets is still pending. Following the positive vote by the European Council and the European Parliament on their common position on the IPI in 2021, trilogue negotiations are scheduled for 2022. The proposals currently under discussion are based on the idea of restricting the access of non-EU companies to EU procurement markets if their home countries do not offer mutual access to their procurement markets.

In the future, bidders from third countries could also face redressive measures (e.g., fines, transaction reviews, prohibitions of contract award) if subsidies they receive from non-EU countries are seen as distorting competition in the EU single market. The European Commission's proposal for a regulation on foreign subsidies distorting the internal market currently being discussed in the European Parliament aims to ensure a level international playing field by tackling unfair advantages accorded through foreign subsidies.

Award

i Evaluating tenders

The contract has to be awarded to the most economically advantageous tender.45 This can be the best price or a combination of the price and qualitative criteria adequately linked to the subject matter of the contract.46 In the field of security and defence, three quality criteria are explicitly mentioned: interoperability, operating capability and supply reliability. The award criteria and their relative weight have to be published in the notice or in the procurement documents.

The award criteria must be comprehensible and concrete to allow all bidders to prepare their bids accordingly. After years of a more restrictive understanding by some higher regional courts, the Federal Court of Justice has clarified that 'school marks' or other point scales can generally be used for evaluating qualitative criteria, but there are certain qualifications to this.47

In awarding concessions, the authority may, inter alia, subsequently change the weighted order of the criteria if there are bids with an unpredictable, innovative solution.48 In that case, the authority has to inform the bidders of the modification and issue a new invitation to submit tenders.

ii National interest and public policy considerations

Considerations of national interest cannot be used as award criteria. The principles of non-discrimination and equal treatment generally prohibit preference of domestic suppliers (see Section VI.iii). However, particular considerations of national interest may allow exemptions from public procurement requirements where it is necessary for the protection of the essential security interests of Germany (see Section III.ii). Pursuant to the VSVgV, such considerations may also permit the imposition of strict requirements on the handling of sensitive or classified information.

Among other criteria, contracting authorities can generally take public policy considerations into account when conducting procurement proceedings if they are related to the subject matter of a contract (see Section X). In particular, themes of environmental and social relevance can be used as award criteria (e.g., life cycle costs) and tenderers may have to be excluded for violations of environmental or social law. Further, contracting authorities can stipulate certain social or environmental conditions for contract implementation (e.g., adherence to tariffs or energy consumption limits).

If the contracting authority requires certain quality labels for the offered product or service, these quality labels must be based on objective, reviewable and non-discriminatory criteria, and must have been designed in an open and transparent procedure involving all interested parties. Labels comparable to those specified in the contract notice or the procurement documents must also be accepted.

Information flow

The notice and the procurement documents must contain all relevant information for an economic operator to decide whether to participate in the procurement proceedings and to prepare his or her bid. Tenderers may ask questions about the procurement documents or the performance specifications. To ensure equal treatment and a competitive tender process, the answers to these questions have to be made available to all tenderers.

The contracting authority has to inform the tenderers whose bids were not successful prior to the contract award. In doing so, the authority has to state the name of the successful tenderer, the reasons why a bid was rejected and the earliest date the contract can be awarded.49 The contracting authority may award the contract no earlier than 10 calendar days after the information has been sent electronically or via fax (15 calendar days if sent by post). In the field of security and defence, contracting authorities can limit the information provided to unsuccessful bidders, for instance if the information would be contrary to the public interest or if it would prejudice the legitimate commercial interests of a particular economic operator. At present, providing information to unsuccessful bidders and abiding by any standstill period are not required for contracts below EU thresholds50 (except in a few federal states).

During and after the procurement procedure, the contracting authority has to protect the confidentiality of the tenders submitted. Similarly, tenderers may not disclose confidential information received from the contracting authority.

Challenging awards

i Procedures

Above EU thresholds, a tenderer can file an application to the competent public procurement tribunal for a review of alleged violations of procurement law51 provided that the tenderer had previously raised an objection against the alleged violation within 10 days of positive knowledge of the potential infringement or, as applicable, prior to the end of the RfP or bid deadline. While public procurement tribunals are part of either the federal or the state administration, the proceedings are quasi-judicial. Each federal state has one or two regional public procurement tribunals and, at the federal level, two public procurement tribunals have been set up at the Federal Cartel Office.

Review procedures are admissible only if the applicant can show an interest in the public contract, which it has usually indicated by its participation in the procurement procedure, and that it has been potentially harmed by the alleged procurement law violation. Furthermore, an application for review must be filed within 15 calendar days of the contracting authority's decision to not remedy an alleged violation.

Review procedures should generally be concluded within five weeks, with the possibility of extending the procedure by an additional two weeks; however, on several occasions, they have been extended further. The decision of a public procurement tribunal can be appealed to the competent higher regional court. The Federal Court of Justice only decides on referrals by a higher regional court regarding deviations from other higher regional court decisions. Public procurement tribunals can, and higher regional courts must, refer a question on the interpretation of EU law to the CJEU if they consider it necessary to enable them to render a judgment.

Almost 1,000 review applications were filed with public procurement tribunals in 2020, an increase of about 25 per cent compared to 2019. Approximately 7 per cent of the applications were not forwarded to the contracting authority because they were considered obviously inadmissible or without merit (see Section IX.iii). Applicants were successful in approximately 12 per cent of the decisions rendered by the public procurement tribunal. In approximately 160 cases, the unsuccessful party appealed to a higher regional court. Appellants were successful in approximately 21 per cent of the appeal decisions.

Only Hesse, Rhineland-Palatinate, Saxony, Saxony-Anhalt and Thuringia provide for review proceedings for tenders below EU thresholds. Otherwise, the civil or administrative courts – depending on the subject matter of the envisaged contract – have jurisdiction.

ii Grounds for challenge

The review body assesses whether the contracting authority has violated an applicant's rights under public procurement law, namely any provision intended to protect tenderers or competition between tenderers, which is essentially almost all public procurement provisions. Provisions not protecting tenderers or competition include the imposition of the obligation on contracting authorities to consider the energy efficiency of products and restricting the contract award to bidders with a tariff conformity declaration.

Violations of requirements beyond those under public procurement laws are reviewable by public procurement tribunals only if they are referred to in those laws and are closely linked to public procurement or its procedures, such as certain aspects of competition and state aid law as well as provisions on the economic activity of municipal undertakings. Because of the limited scope of procurement review procedures, if contractual provisions are potentially non-compliant with, for example, requirements for standard terms and conditions,52 this does not have to be raised in the procurement review procedure for it to be considered in later civil court proceedings.

iii Remedies

Unless the public procurement tribunal considers an application obviously inadmissible or without merit, it will forward the application to the contracting authority, which is then barred from awarding the contract until (at least) two weeks after the tribunal renders its decision in the review proceedings.53 In the event of an appeal to the higher regional court, the appellant can apply for, and is typically granted, an extension of the suspensory effect of the review proceedings until the court makes its ruling.

In its decision, the public procurement tribunal has to order the contracting authority to take the appropriate measures to redress the violation of the applicant's rights and to prevent any damage to the applicant's interests. Public procurement tribunals have broad discretion on this, but may only prescribe such suitable and proportionate actions as are necessary to remedy the infringement. If the contracting authority still intends to proceed with the procurement, the tribunal will typically order the authority to redo the deficient procurement steps and take into account the legal considerations of the review body.

After a contract is awarded, a public procurement tribunal can declare the contract ineffective only if the contracting authority did not adhere to the prior award notice and standstill period or if the contracting authority either did not publish a contract notice as required or did not conduct a required public tender (de facto procurement).54 The complaint must be filed within 30 days of the bidder information letter or award notice or, in the absence of such information or notice, no later than six months from the conclusion of the contract.

Bidders can claim compensation for the costs of bid preparation and participation if they would have had a reasonable chance of being awarded the contract in the absence of the violation of procurement law.55 Other grounds for compensation remain applicable, although claims for compensation of expected profits are rarely successful. Compensation claims generally have to be filed with civil courts (seldom with administrative courts) and do not necessarily require a remedy to have been sought previously in a procurement review procedure.56

Outlook

The monitoring report on public procurement law, which the government published for the second time in October 2021, lists various areas for legislative reform based on proposals from federal ministries and states. The proposals include practice-friendly specifications of the conditions for negotiated procedures without conducting a call for competition and a clearer wording of the rules governing contracting authorities' requests to bidders to submit or clarify missing or erroneous information. The Federal Ministry of the Interior and Community (BMI) claims that there is an inconsistency in certain construction projects when planning services must be tendered EU-wide, but the works to be erected based on that planning do not meet the EU thresholds. According to the BMI, a special threshold for planning services could solve the problem. Further, several federal states are asking for the simplification and streamlining of public procurement laws and for the introduction of a federal database to help standardise the exercise of discretion, particularly with regard to bidders' eligibility. It remains undecided whether those reform ideas will result in concrete legislative proposals in 2022.

Following the reform of the Ordinance on Procurement Statistics for Public Contracts and Concessions (VergStatVO) in 2020, the first biannual report by the Federal Ministry for Economic Affairs and Climate Action on the newly collected data for the first half of 2021 is still pending. The VergStatVO was reformed to provide a more reliable overview on public procurement in Germany. The report will present data collected on concluded public contracts and concessions with a value exceeding €25,000. First data results covering the last quarter of 2020 were published in the monitoring report and included information on nearly 40,000 procurement procedures involving contracts and concessions with a total value of approximately €24 billion. The one-tenth of the notified procurement procedures that fell under EU procurement law due to the respective contract values being above the EU thresholds accounted for almost €18 billion in public contracts. The data shows that sustainability criteria were used in 18 per cent of the above-threshold procurement procedures and that these procedures accounted for 30 per cent of that €18 billion. The sustainability criteria used concerned, in particular, environmental considerations. Social and innovative aspects were rarely taken into account. Measured by contract volume, sustainability criteria were primarily used for supply contracts. The presented data for 2020 should be used with caution as data quality appears to be rather low. A more comprehensive and reliable overview should be available once the first biannual report is published in 2022.

The final step in the implementation of the Competition Register will be reached in 2022. From 1 June 2022, consultation of the register for contracting authorities is mandatory when tendering a contract with a value of €30,000 or more (see Section II).

Footnotes

1 Jan Bonhage is a partner at Hengeler Mueller Partnerschaft von Rechtsanwälten mbB.

2 Such as Article 5 of Regulation (EC) No 1370/2007, Section 131 GWB, Sections 8a and 8b of the German Public Transport Act (PBefG). See CJEU C-266/17 and C-267/17 Rhein-Sieg-Kreis.

3 This chapter only covers tenders above EU thresholds unless specifically indicated otherwise.

4 Similar national guidelines were issued after the flood emergency in western and southern Germany in July 2021.

5 OLG Rostock, decision of 11 November 2021, 17 Verg 4/21 and decision of 9 December 2020, 17 Verg 4/20.

6 Section 22 LkSG.

7 Section 6 of the Competition Register Act.

8 C-377/17 Commission v. Germany.

9 See OLG Hamm, decision of 23 July 2019, 21 U 24/18 (direct effect only on the Member State, not on the contracting parties) as opposed to OLG Celle, decision of 14 August 2019, 14 U 198/18, KG Berlin, decision of 13 September 2019, 7 U 87/18, and OLG Dusseldorf, decision of 17 September 2019, 23 U 155/18 (rule on the ineffectiveness of fee agreements that undercut HOAI tariffs no longer apply).

10 Federal Court of Justice, decision of 14 May 2020, VII ZR 174/19.

11 C-261/20 Thelen Technopark v. MN.

12 Section 3(7) sentence 2 VgV. Cf. OLG Munich, decision of 13 March 2017, Verg 15/16; CJEU, C-574/10 Commission v. Germany.

13 Section 99 No. 1-3 GWB.

14 C-300/07 Oymanns; C-337/06 Bayerischer Rundfunk et al. v. GEWA.

15 Section 99 No. 4 GWB. Cf. Article 13 of the 2014 Public Contracts Directive, which instead defines regulated contracts, not authorities, in these cases.

16 Sections 100, 102 GWB.

17 Section 140(1) GWB; Commission implementing decisions of 24 April 2012 (OJ L 114, p. 21) and of 15 September 2016 (OJ L 253, p. 6).

18 Section 143 GWB.

19 Sections 130, 153 GWB.

20 Sections 107, 116, 117, 137 to 140, 145, 149 to 150 GWB.

21 C-465/17 Falck Rettungdienste GmbH, Falck A/S v. Stadt Solingen.

22 OLG Brandenburg, decision of 26 July 2021, 19 Verg 3/21; OLG Hamburg, decision of 16 April 2020, 1 Verg 2/20.

23 Federal Constitutional Court, decision of 30 March 2020, 1 BvR 843/18.

24 Section 132 GWB.

25 Section 103(5) GWB.

26 CJEU, C-23/20 Simonsen & Weel A/S v. Region Nordjylland og Region Syddanmark.

27 Section 120(4) GWB.

28 Sections 37, 48 SektVO.

29 Section 108 GWB.

30 C-796/18 Informatikgesellschaft für Software-Entwicklung; C-429/19 Remondis.

31 OLG Dusseldorf, decision of 17 October 2018, VII-Verg 26/18, and of 11 July 2018, VII-Verg 24/18. See also OLG Celle, decision of 19 March 2019, 13 Verg 7/18, OLG Munich, decision of 25 February 2019, Verg 11/18, and of 13 March 2017, Verg 15/16.

32 Section 119 GWB.

33 OLG Karlsruhe, decision of 14 August 2019, 15 Verg 10/19.

34 OLG Dusseldorf, decision of 19 May 2021, VII-Verg 13/21.

35 BayObLG, decision of 17 June 2021, Verg 6/21.

36 OLG Dusseldorf, decision of 20 December 2019, VII-Verg 35/19.

37 Section 122 GWB.

38 Section 123 GWB.

39 Sections 125, 126 GWB.

40 Section 124 GWB.

41 BayObLG, decision of 24 June 2021, Verg 2/21.

42 Section 6(1) VgV; Section 6(1) SektVO; Section 5(1) KonzVgV.

43 C-21/03 and C-34/03 Fabricom.

44 Section 7 VgV; Section 7 SektVO.

45 Section 127 GWB.

46 Regarding the contracting authority's right to determine the subject matter of the contract, see OLG Rostock, decision of 1 September 2021, 17 Verg 2/21 and OLG Brandenburg, decision of 8 July 2021, 19 Verg 2/21.

47 Federal Court of Justice, decision of 4 April 2017, X ZB 3/17; cf. OLG Dusseldorf, decision of 16 October 2019, VII-Verg 6/19.

48 Section 31(2) 1 KonzVgV.

49 Section 134 GWB.

50 OLG Celle, decision of 9 January 2020, 13 W 56/19, KG Berlin, decision of 7 January 2020, 9 U 79/19. Tending towards a general standstill period below EU thresholds: obiter dictum of OLG Dusseldorf, decision of 13 December 2017, I-27 U 25/17.

51 Section 155 et seq. GWB.

52 For the consequences of a bidder's (inadmissible) terms and conditions, see Federal Court of Justice, decision of 18 June 2019, X ZR 86/17.

53 Section 169(1) GWB.

54 Section 135 GWB.

55 Section 181 GWB.

56 Federal Court of Justice, decision of 17 September 2019, X ZR 124/18.

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