The Public-Private Partnership Law Review: Germany
The German public–private partnership (PPP) market has undergone considerable changes in recent years. Although PPP projects for constructing and operating German motorways continue to make up the lion's share of this market,2 several PPP projects are currently in the planning stages in other sectors as well. While the number of new PPPs decreased in the first half of 2020, the volume of the European PPP market increased, and the average project's volume more than doubled.3 Many expected a significant number of PPP projects to be cleared in 2021 thanks to the recovery fund approved by the EU Commission, but those expectations failed to materialise.4 Instead, authorities focused on projects that can be implemented quickly by the public sector itself.5 The volume of investments in rail infrastructure in particular will likely rise substantially over the next decade, and PPPs will certainly play an important role in urban mobility initiatives as well as in the economic transformation of coal regions following the German government's decision to phase out coal-fired plants.6
The acronym PPP has been used in Article 90(2) of the German Federal Constitution since 2017 and has also found its way into several laws.7 However, at least in Germany, the term has not been conclusively defined. It refers to forms of long-term cooperation between the government and private companies that often involve cost-intensive infrastructure projects. The PPP discussion in Germany often focuses on cooperative projects for the construction, maintenance and operation of public roads or public buildings such as hospitals. Apart from these projects, public–private cooperation has taken on other forms with practical importance. Many German cities have granted concessions to private companies for the modernisation and operation of urban electricity grids. Out-of-home advertisers have concluded long-term contracts with major German cities contributing to investment in the maintenance of cities' infrastructure. The German toll collection scheme for heavy goods vehicles (HGVs) was designed, built and, until recently, operated by a joint venture of private sector companies. Further, public authorities and the private sector have established institutionalised PPPs in the form of joint ventures to operate the airports in Frankfurt, Düsseldorf and Hamburg.8 During the covid-19 pandemic, PPPs were involved in the development and operation of digital infrastructure, most notably Germany's coronavirus exposure notification app.9 A similar form of public–private cooperation is the German government's large-scale funding of research into and development of a covid-19 vaccine and the rapid scale-up of manufacturing capacity in exchange for a reasonable share of the vaccine.10 These complex and diverse projects permit a better understanding of the potential for public–private cooperation in Germany.
The year in review
2020 was marked by a trend towards increased transparency of PPPs at the federal level. This trend continued in 2021. In accordance with the coalition agreement between the partners of the last federal government, the Federal Ministry of Transport and Digital Infrastructure published then current PPP contracts governing the construction of a number of federal motorways.11 Absent a legislative mandate to publish PPP contracts, the Federal Ministry had to obtain the consent of each contracting partner. The government also published its quadrennial report on ongoing PPP projects, which also sets out its general policy on PPPs.12
The legal framework for the administration and financing of motorway projects was modified by an amendment to the Federal Constitution in 2017 and has been in effect since the beginning of 2021. While motorways have been and must remain under the ownership of Germany, the federal states had been responsible for the administration of the motorways and acted as agents of the federal government. With those responsibilities divided, motorway projects could come to a standstill whenever the federal and state governments did not see eye to eye on using PPP structures.13 Thanks to the 2017 reform of the motorway administration,14 the revised constitutional provision now allows the centralisation of the administration of motorways at the federal level only.15 To that end, the federal government established a private law entity corporately structured as a limited liability company, the Autobahn GmbH des Bundes,16 to administer motorways. That entity can decide – subject to the federal government's consent – to use PPP structures for motorway projects. Since 1 January 2020, the company has been permitted to plan and construct motorways with the federal government's and the relevant state's consent.17 However, Autobahn GmbH's predecessor, the Deges authority, continues to be responsible for 136 of 141 highway projects18 because the original plan to merge the two fell through19 due to constitutional concerns of the Federal Court of Audit.20 The federal government has also established a new federal office responsible for, among other things, the supervision of the sovereign rights transferred to Autobahn GmbH.21 A comprehensive or substantial privatisation of the motorways, as well as allowing there to be private shareholders in the newly established federal motorway corporation, has yet to happen, however.
In 2015, the federal government initiated a programme for a new generation of PPP projects for 600 kilometres of motorway with a total investment of €15 billion: €7.5 billion for construction and €7.5 billion for maintenance and operation.22 For now, this new generation programme includes 10 projects for which the government is considering the PPP procurement option.23 The financial closing of the PPP motorway project of Motorways 10 and 24 between Neuruppin and Pankow was reached in February 2018, and the project is now in the construction phase, scheduled to be finished in December 2022.24 Valued at €1.4 billion over the next 30 years, the project will extend the motorway by 58.8km and ensure the maintenance of 64.2km until February 2048.25 A consortium of two private companies were awarded the PPP contract in December 2017.26 Further, the public procurement procedures for the PPP motorway projects on Motorway 3 between Biebelried and Fürth/Erlangen and Motorway 49 between Fritzlar and Ohmtal were concluded in 2020. Worth approximately €2.8 billion, the Motorway 3 PPP contract was awarded in April 2020 for the 30-year operation and maintenance of approximately 76km and the building of 71km of an additional lane.27 The €1.4 billion, 30-year Motorway 49 contract was awarded in August 2020 and provides for the maintenance of 62km, including the construction of an additional 31km.28 The Kallmerode bypass on Federal Route 247 has been under construction since 1 October 2019, with completion expected in February 2022.29 Other motorway projects are in preparation.30 The Federal Ministry for Digital and Transport has published several of these PPP contracts on its website, only redacting a few business secrets, in addition to a sample availability model (V model) contract.31
These new generation projects were all designed based on the V model32 rather than the extension model (A model).33 Under the availability model, which has been used more frequently since 2009, the level of remuneration for the private operator depends on the availability of the relevant motorway section (rather than, for example, the amount of toll revenue) and thereby sets quality incentives. The merits of these models have also been debated in the Motorway 1 consortium's legal dispute over the completed motorway section between Bremen and Hamburg. Since the revenue from HGV tolls – which had been agreed upon as the compensation for the project costs – has been far lower than expected, due in particular to decreased HGV traffic during the financial crisis, the consortium demanded additional payment of roughly €778 million in a lawsuit against Germany in 2017, albeit without success.34 The courts of first and second instance reasoned that the circumstances did not meet the legal criteria (clausula rebus sic stantibus doctrine – see Section 313 of the German Civil Code (BGB)) to amend the contract because the risk for the traffic volume had been contractually allocated to the contractor. Any limitation of that allocation could not be proved in court. According to the courts, this leaves no room for a supplementary interpretation of the contract.35
In 2016, the federal government initiated a public procurement procedure for operating the HGV toll collection scheme on all federal roads. The government envisaged using a call option on the shares in the current project company. The public tender provided that a private investor would acquire the shares in the project company together with a new contract for the operation of the HGV toll collection scheme for a duration of 10 to 15 years. In January 2019, the government terminated the public procurement procedure without awarding any contract36 and, having used the call option,37 will keep running the project company and toll collection scheme as state-owned.38
The initiative of the federal government to also introduce a toll scheme for passenger cars has been declared inconsistent with EU law in an infringement procedure promoted by Austria and supported by the Netherlands.39 Prior to that, the European Commission had terminated its own infringement procedure after having reached an agreement with the German Federal Ministry for Digital and Transport on a reasonable pricing scheme for the envisaged toll scheme.40 In contrast to the HGV toll scheme, the toll for passenger cars was to be charged based on time (10 days, two months or one year). At the end of 2018, the contract for setting up and operating the system was awarded to a German–Austrian consortium for 12 years with an extension option for another three years. The levying of the tolls was to start in October 2020. However, contrary to the opinion of the Advocate General,41 the ECJ found that the toll scheme constituted indirect discrimination on grounds of nationality and infringed the principles of the free movement of goods and services. From the end of 2019 until the summer of 2021, an investigative committee of the German Bundestag conducted an inquiry into the circumstances surrounding the tender, the contracts that were signed and any possible political responsibility. While the coalition partners at the time were unwilling to acknowledge any explicit legal violations, the opposition accused the Federal Ministry for Digital and Transport of breaking the law and governmental principles.42 However, both the government and the opposition agreed that many questions remain unanswered.43
PPPs are also used for the construction and operation of public buildings such as hospitals, schools, administrative buildings, sports facilities and prisons. These types of projects had a total value volume of approximately €118 million in 2018 (down from €242 million in 2017). Unlike the construction and operation of public buildings, the total value of PPP projects for roads increased from €491 million in 2017 to approximately €500 million in 2018. On the state and local level, the PPP market differs widely across Germany, with some states such as Hesse having concluded more than 50 PPPs with a total volume of €1.2 billion, and some states such as Hamburg and Saarland having concluded no PPPs at all.44
i Types of public–private partnership
PPP projects may be structured in very different ways in Germany. For the construction of public buildings such as hospitals and schools, the public authorities in most cases want to continue to hold the ownership rights in the real property and only transfer the right to build, operate or manage the public building to a private investor.45 From a legal perspective, it is also possible for a private investor to acquire title to the real property and either be obligated to retransfer the real property to the public authority46 or remain the owner at the end of a fixed term.47
Public authorities may also award concessions to private investors. The main difference between a public contract and a concession is the type of consideration that the contractor receives.48 While the contractor receives remuneration under a public contract, a concession holder obtains a right to use or market the provided service or good (i.e., even to third parties). These types of contracts are prevalent in the transfer and operation of electricity and gas grids in German municipalities and cities: there are approximately 20,000 such agreements in Germany.49 The concession holder has the right to market the grid's capacity to power or gas providers50 for a maximum period of 20 years. Although some municipalities and cities have shown a tendency in recent years to establish or mandate a public entity to operate an electricity and gas grid (remunicipalisation), the law provides that municipalities may not award concessions in-house without a public procurement procedure having taken place (see Section 46(4) of the German Energy Industry Act (EnWG)).51 Therefore, private sector entities can participate and – with a good offer – be awarded such concessions in a public tender.
Alternatively, public authorities may establish joint ventures with private partners. Sometimes referred to as institutional PPPs,52 these joint ventures can be given the corporate structure of a limited liability company.53 Such entities may be used, for example, in the areas of waste management, water supply services and sewage treatment. Public law rules generally require that the public authority hold a majority of the voting rights in the joint venture. The shareholders' agreement will also include additional safeguards for ensuring the fulfilment of public tasks. These may include restricting the statutory purpose of the company to fulfilling the public task, obligations to fund the legal entity and options for the public authority to call shares under certain circumstances. Public law structures (i.e., institutions formed under public law) have also been used for such public–private joint ventures (e.g,, for the operator of Berlin's water supply system, Berliner Wasserbetriebe, until October 2012).54 However, an act of the legislature must explicitly allow the participation of a private investor in a public law entity.
ii The authorities
In Germany, the federal government has (some) administrative powers for specific tasks – such as operating a military, the federal waterways and rail infrastructure. The Federal Republic of Germany is often the contract partner and is represented by the ministry in charge of the relevant task or by a subordinated federal authority. Other public tasks and much of Germany's infrastructure are administered by the federal states, such as state roads, universities, schools and prisons. The situation is the same here with the federal state being the contracting authority represented by the competent state ministry or subordinated authority. Hospitals, schools, local and regional bus and train transport, electricity and water supply are all administered and commissioned at the municipal or district level. Municipalities may also form special purpose entities fulfilling certain public tasks, in particular those relating to regional traffic, water supply and waste management. The Federal Audit Office and its equivalents at the state level scrutinise ongoing and future PPP projects.55
iii General requirements for PPP contracts
In Germany, there is no specific act on PPP projects or contracts apart from the constitutional provision on the administration of motorways. Nevertheless, the civil law framework and regulatory requirements apply to PPP projects; these include the laws on taxes, social security, minimum wage, trade unions and health and safety. More specific requirements can derive from budgetary provisions, public procurement law and provisions on specific sectors, such as energy.
Before using a specific procurement structure such as a PPP, the government – subject to budgetary requirements – has to conduct a cost-benefit analysis of different procurement possibilities (see Section 7(2) of the Federal Budget Act). State laws contain similar requirements for state and municipal decisions. This analysis must also take into consideration the risks of different structuring options and, in particular, the possibility of involving the private sector to fulfil the task or service. For PPP projects, permits or approvals may be required under the budgetary provisions. In particular, the Ministry of Finance or – for municipalities – the supervisory authority may need to grant its consent to contracts pursuant to which a public authority grants a guarantee or takes out a loan. In addition, the approval of the federal or state parliament or of the municipal council may be necessary for the addition of costs to the budget.56
A private entity must be entrusted with the authority under public law to take authoritative decisions that will affect third parties. Such an authority may only be granted by or based on an act of a legislature.57 For example, the former operator of the German toll collection scheme for HGVs had been publicly entrusted with certain tasks to that effect (see Section 4(2) of the Federal Road Toll Act). However, in most PPP projects, the private partner acts only as an administrative assistant, and the transfer of such tasks generally does not qualify as a public authorisation. German law may not allow certain tasks to be performed in PPP projects, for example, tasks that (regularly) require the use of direct force.58 The details are controversial and have been debated in connection with prisons.59
Bidding and award procedure
The legal framework for public procurement within the European Union is harmonised for public contracts (including supply, works and services contracts) and concessions that exceed certain thresholds. The relevant EU provisions were reformed in 2014,60 and Germany implemented these provisions in April 2016. The main provisions under German law are found in Sections 97 et seq. of the German Act against Restraints of Competition (GWB). There are also implementing regulations such as the Public Procurement Regulation, the Concessions Regulation, the Regulation on Procurement in the Sectors of Transportation, Water and Energy Supply, and the Regulation on the Procurement in the Sector of National Defence and Security.61
i Expressions of interest
The contracting authority has to publish a contract notice in the Supplement of the Official Journal of the European Union if the value of a public contract exceeds certain thresholds.62 The standard form of a contract notice shows, inter alia, information on the type of contract, its value, the selection criteria for the tenderer and the award criteria. The selection criteria typically include certain grounds for exclusion, for example, the commission of certain criminal acts by the management or responsible employees of the tenderer or the initiation of insolvency proceedings against it. Additionally, contracting authorities may use financial selection criteria such as a minimum annual turnover or minimum insurance requirements as well as criteria concerning technical and professional qualifications (e.g. references, necessary licences or a sufficient number of suitable employees to perform the contract). The public authority will then also review whether the applicants fulfil the selection criteria.
ii Requests for proposals
In the tender documents and invitation to tender, the contracting authority must also define the requirements for the proposals. These may include service specifications, set prices and additional information on the quality of the services or works. Generally, the public authority will provide a rather extensive list of requirements for the tender.
iii Evaluation and grant
The public authority is required to award the contract to a tenderer based on the award criteria set out in the tender documents. Award criteria stipulate whether the contract will be awarded based solely on price or on an assessment of both price and quality aspects. Environmental or social factors may also be considered when selecting the winning bid.
After the selection of the successful tenderer, the contracting authority has to notify the other tenderers of the intended award decision (see Section 134(1) GWB). The public authority may then conclude the contract with the successful tenderer 10 to 15 days after sending the notifications – depending on the form used for the notification – unless a competitor has filed a complaint against the award with the competent procurement chamber. The procurement chamber for federal cases is the procurement chamber at the Federal Cartel Office in Bonn, whose decisions can be appealed to the Higher Regional Court of Düsseldorf.
How payment is structured depends on the type of contract. In PPP projects relating to the construction of a building, the payment may include components for the planning, construction, financing or operation stages and in some cases even the transfer of title to the real property. In these cases, the public authority will make regular payments to the private partner for the contract term. In general, the contract splits up the payments according to the individual components. The agreements may contain provisions on inflation adjustments, as is common also for other long-term service agreements.
In cases where motorways are being constructed or enlarged, there are different types of contracts that public authorities use. Some contracts – such as the contract for Motorway 94 – provide for a monthly payment by the federal government to the consortium. That payment may be reduced if the motorway's use is limited, for example, if a lane is blocked for construction or if a speed limit is necessary because of the road's (poor) quality (otherwise known as the availability model). Other motorway PPP contracts include a payment that is linked to the toll paid for the relevant section of the motorway. In Germany, HGVs have to pay a toll based on the number of motorway sections they use. This scheme was expanded to include more federal routes as of 1 July 2018. Further, as of 1 January 2019, new weight categories were introduced and lighter HGVs (7.5 tons and more) added to the toll collection scheme.63 Under this type of contract, the private investor obtains a claim against the public authority in the amount of the HGV toll paid for the relevant section by the users (referred to as the extension model).64
ii State guarantees
The government often uses guarantees and state grants to assist private investors in securing financing for motorway and hospital projects, to name but two examples. Private entities may apply for loans from public banks, such as the Kreditanstalt für Wiederaufbau or the European Investment Bank, when carrying out such municipal projects as the construction of public buildings. State guarantees require a specific permit or the consent from either the ministry of finance or a municipal supervisory authority. Guarantees and grants issued by the government are subject to strict European requirements on state aid. In particular, large-scale public funding may trigger an obligation of the public entity to report the funding to the European Commission.
iii Distribution of risk
PPP projects entail major risks during planning, execution (specifically, delays in construction), the operation stage and in the subsequent use of the asset.65 With regard to construction risks (e.g., obtaining a permit, usability of the real property, delays), under German law the risk is generally allocated to the party from whose sphere it originates. If a property provided by a public authority cannot be used for a project because of (severe) environmental damage, German law in principle has allocated the risk to the public authority (see Section 645 of the German Civil Code (BGB)). However, if an architect's plan commissioned by a private entity is incorrect and cannot be used, as a rule, this risk is allocated to the private partner. Exceptions apply, for instance, if the contracting parties provide in their agreement that possible risks from the subsoil are borne by the private partner. This was the case in a lawsuit concerning the construction and operation of Motorway 8 between Augsburg and Ulm. The Higher Regional Court of Munich upheld the contested clause allocating the total planning risk to the private partner even though the public authority conducted the reference planning.66
Public and private partners may deviate from these general provisions in their contracts. When it comes to the construction of motorways, PPP structures differ mainly with regard to the allocation of the risks associated with HGVs using the motorway in question. While the private partner bears the risk that the motorway section will not be used sufficiently if the contract bases payments on the amount of tolls incurred,67 the public authority assumes this risk in contracts that base payment on the availability of the relevant section. Similarly, when concessions are awarded, which allow a private entity to market its services to third parties (e.g., using a public space for advertisement or levying a fee for the use of a parking deck in a city centre), the private partner assumes the risk that the facility might not be used sufficiently. With electricity and gas concessions, these risks are reduced because the grid constitutes a natural monopoly for the private partner.
Dispute settlement clauses vary in PPP contracts. Generally, contracts concluded for the construction of federal motorways prescribe mediation before the matter can be referred to the local courts.68 Several PPP contracts of the Federal Ministry of Transport provide for an expert determination of technical issues that becomes binding unless a party submits the dispute to the local court.69 By contrast, essentially the only PPP contract of the Federal Ministry of Defence for designing, constructing and operating military barracks contains an arbitration clause.70
iv Adjustment and revision
Under public procurement law, the adjustment and modification of a PPP contract may require a new public procurement procedure if the contract would be materially changed (see Section 132 GWB). An adjustment or modification qualifies as material if it changes key provisions of the agreement and the amendment indicates the parties' intent to renegotiate the agreement. Further specific provisions regulate switching contractors, changing prices and modifying the contract term and the scope of works or services.
v Ownership of underlying assets
In most cases discussed in this section, the government would generally retain title to the property. If the project encompasses a transfer of real property, such an agreement has to be notarised (see Section 311b(1) BGB). The actual transfer of ownership has to be registered in the land register (see Section 873(1) BGB). In addition, the sale of real property by a public authority may require a permit from the Ministry of Finance or a supervisory authority.
vi Early termination
The term of PPP contracts may reflect the amortisation period of the project, which in major infrastructure projects is often 15 to 30 years. Fixing a contract's term under German law means that terminating the contract without cause is excluded unless the agreement contains an explicit right to terminate. From a procurement law perspective, it is helpful to include options for prolonging an agreement. PPP contracts usually contain additional termination rights for the contracting authority, most commonly for a significant delay of the project, non-compliance with essential requirements for construction or financing, bankruptcy and cases of non-compliance with the law (e.g., corruption or antitrust violations).
PPP projects are often financed by a variety of sources, both private and public. There are possibilities for the state to finance programmes in specific sectors (see Section V.ii). Most PPP projects receive part of their funding in the form of bank loans. In many cases, the public authority has a better credit rating than the private investor. To ensure the lowest possible interest rate, the private investor is granted the right to sell its claims against the public authority to the banks in order to secure financing for the project. The public authority will waive its rights to assert certain or all objections against the payment claim, which is known as forfeiture by means of an objection waiver.71
A mix of different instruments is generally used to fund motorway PPP projects requiring a significant investment. The federal government will finance part of the construction costs as an advance payment. The rest of the investment amount has to be financed by equity and bank loans. The loans for these projects are provided by bank consortiums, which may comprise both private and public banks. The loan agreements between the project company and the consortium will address the main risks for the bank consortium.72 During the construction phase, the main risk for the bank consortium is that the project will not be realised. Therefore, the loan agreement may provide for loan instalments based on a milestone plan. The bank consortium will also require a sufficient equity ratio to be provided by the sponsors and may require the sponsors to make additional contributions in the event of changes to the project plan or cost structure. In addition, bank consortiums often demand that the construction agreement contain sufficiently strict contractual penalties for the contractor to ensure that the project is realised on time.
During the past decade, several municipalities have made plans to transfer concessions for the operation of electricity and gas grids in-house to wholly owned and controlled subsidiaries. In two landmark decisions on concessions for electricity and gas grids, the German Federal Court of Justice ruled that if a municipality awards a concession, this must be done in a non-discriminatory way and the municipality is prohibited from preferring its own municipal utility without objective reasons.73
With regard to certain types of PPPs, courts have held that a private sector company itself may qualify as a public authority because of the influence of the state. The Higher Regional Court of Düsseldorf has ruled that even if the state does not hold any shares in a PPP joint venture, the contractual relationships can allow the government to have a dominant influence on the company.74
The year 2021 brought only small changes to the PPP market in Germany, especially compared with the significant changes of 2017, which became effective in 2020 and 2021. While the legal framework for the administration and financing of motorway projects was modified by the 2017 constitutional amendment, the implementation of that amendment continues. Although the privatisation of motorways has been excluded, PPP projects in this area could continue to increase: in 2021, the award process for two major highway PPP contracts was initiated.75 In addition, a contract for a PPP project was also awarded for the building of a federal highway.76 Besides PPP projects and investments in the traditional sectors of public structures and transport, there is potential for future PPP projects particularly in infrastructure, IT and mobility.
Nevertheless, expectations were dashed that there would be an increase in PPP projects as a result of the recovery fund approved by the EU Commission. Instead, public authorities seem to prefer to implement more and more projects themselves. This trend is likely to continue with the new German government. In recent years, the coalition partners of this government have been critical of PPP contracts. Unsurprisingly, their coalition agreement stipulates that stricter award criteria would be developed together with the Federal Audit Office and that the entire procedure would be more transparent and subject to stricter parliamentary control. In particular, performance audits are to be carried out more rigorously and more precisely.77 The coalition partners envisage PPP projects to be implemented only in very exceptional cases.
1 Jan Bonhage is a partner at Hengeler Mueller Partnerschaft von Rechtsanwälten mbB.
2 In effect since 1 January 2021, the reform of the German motorway administration both centralises and harmonises PPP projects aimed at maintaining the country's roadways. See the Act for the Amendment of the Federal Constitution (Articles 90, 91c, 104b, 104c, 107, 108, 109a, 114, 125c, 143d, 143e, 143f, 143g), Federal Law Gazette 2017 Part I, No. 47, pp. 2347 et seq.
6 See Section 6(4) of the German Act on Investment in Coal Regions of 8 August 2020, Federal Law Gazette, Part I, 2020, p. 1795.
7 See, e.g., Sections 1(19), (28) of the German Code on Capital Investments.
8 For Frankfurt: https://www.fraport.de/content/fraport/de/unternehmen/investoren/fraport-aktie/basisdaten-aktionaersstruktur.html; for Düsseldorf: https://www.dus.com/de-de/konzern/unternehmen/tochterunternehmen; for Hamburg: https://www.hamburg-airport.de/de/zahlen_daten_fakten.php.
9 The tracking app was developed by SAP and Deutsche Telekom. Deutsche Telekom's CEO has described the development of the app as the 'best public–private partnership he had ever seen during his career': https://www.bundesregierung.de/breg-de/aktuelles/pressekonferenz-zur-vorstellung-der-corona-warn-app-1761058.
10 Federal Ministry of Education and Research, Directive for a Special Programme for the Acceleration of Research and Development of Urgently Needed Vaccines against SARS-CoV-2 of 11 June 2020, Federal Gazette of 18 June 2020, Official Part, B6 (BAnz AT 18 June 2020 B6).
12 Report of the Federal Government on Ongoing PPP Projects, Bundestag document dated 16 December 2020, No. 19/25285.
13 Most notably, the federal government issued a formal instruction to the government of Lower Saxony in 2013 to use a PPP structure for the extension of Motorway 7 between Salzgitter and Göttingen. See www.mw.niedersachsen.de/aktuelles/presseinformationen/rechtsgutachten-zu-oepp-a-7-liegt-vor--weisung-trotz-kritik-des-bundesrechnungshofes-rechtlich-unangreifbar--118125.html.
14 Legislative proposal of the federal government to amend the Federal Constitution (Article 90 et seq. of the Constitution (Basic Law)), Bundesrat document dated 15 December 2016, No. 769/16. For an overview in English, see Hartmut Bauer/Michael Meier, 'Green Light for PPP on German Motorways?', Frontiers of Law in China 14 (2019), pp. 311–334, available at http://academic.hep.com.cn/flc/EN/Y2019/V14/I3/311.
15 The administration of federal roads remains with the federal states except for the city states of Bremen, Hamburg and Berlin. In these three city states, the federal motorway corporation is responsible for federal roads. For an overview of the reform, see https://www.bmvi.de/SharedDocs/DE/Artikel/Stab-IGA/reform-der-bundesfernstrassenverwaltung.html.
16 For further details on the establishment of an infrastructure company for the construction and maintenance of motorways, Autobahn GmbH des Bundes, on 13 September 2018: see https://www.autobahn.de/. With retroactive effect as of 1 January 2019, the Transport Infrastructure Financing Company, Verkehrsinfrastrukturfinanzierungsgesellschaft mbH (VIFG), was merged with the new infrastructure company. The Federal Ministry of Transport and Digital Infrastructure initially planned to merge Deges with this company in 2020 as well, but the merger has been postponed for the foreseeable future, see https://www.bmvi.de/SharedDocs/DE/Artikel/Stab-IGA/reform-der-bundesfernstrassenverwaltung.html.
18 Government response to parliamentary question 19/23863, https://dserver.bundestag.de/btd/19/238/1923863.pdf, p. 9.
19 https://www.bmvi.de/SharedDocs/DE/Artikel/StB/reform-der-bundesfernstrassenverwaltung.html; https://www.bvmb.de/fachbereiche/strassen-tief-ingenieurbau/informationen-ak-strassebruecke/1894-keine-verschmelzung-der-deges-mit-der-autobahn-gmbh-bvmb-funktionierende-strukturen-der-deges-weiterhin-nutzen.
20 https://www.bundesrechnungshof.de/de/veroeffentlichungen/produkte/beratungsberichte/2020/verschmelzung-der-deutsche-einheit-fernstrassenplanungs-und-bau-gmbh-auf-die-autobahn-gmbh-des-bundes; see the PDF at p. 9 et seq.
21 The Federal Trunk Road Authority, Fernstraßen-Bundesamt, was established on 1 October 2018: see https://www.fba.bund.de/EN/About-FBA/about_fba_node.html.
23 https://www.bmvi.de/SharedDocs/DE/Artikel/StB/oepp-projekte-der-neuen-generation-liste.html. The expansion of Motorway 4 between Gotha and the Thüringen-Saxony boundary has been abandoned.
27 https://www.bmvi.de/SharedDocs/DE/Anlage/StB/oepp-projektdaten-steckbriefe-sammel.pdf; Federal Budget of 2021, Part XI – Summary of PPP Projects, p. 103, https://www.bundeshaushalt.de/fileadmin/user_upload/BHH%202021%20gesamt.pdf.
28 https://www.bmvi.de/SharedDocs/DE/Anlage/StB/oepp-projektdaten-steckbriefe-sammel.pdf; Federal Budget of 2021, Part XI – Summary of PPP Projects, p. 103, https://www.bundeshaushalt.de/fileadmin/user_upload/BHH%202021%20gesamt.pdf.
35 Higher Regional Court of Celle, judgment of 26 November 2019, case: 13 U 127/18, ECLI:DE:OLGCE:2019:1126.13U127.18.00: see http://www.rechtsprechung.niedersachsen.de/jportal/portal/page/bsndprod?feed=bsnd-r-og&showdoccase=1¶mfromHL=true&doc.id=KORE236052019; Local Court of Hannover, judgment of 7 September 2018, case: 9 O 106/17: see BeckRS 2018, 21922; https://www.lto.de/recht/kanzleien-unternehmen/k/olg-celle-13u127-18-a1-mobil-bund-muss-keine-hoehere-verguetung-zahlen/.
38 Several companies that participated in the award procedure are considering or preparing lawsuits against the federal government based on the early termination of the procedure, see https://www.capital.de/wirtschaft-politik/scheuer-drohen-weitere-mautklagen.
39 ECJ, judgment of 18 June 2019, case: C-591/17, Austria v. Germany, see: http://curia.europa.eu/juris/document/document.jsf;jsessionid=260B8A662B8F2B1EB9A2F8E581B9FDA7?text=&docid=215105&pageIndex=0&doclang=EN&mode=lst&dir=&occ=first&part=1&cid=6318764; https://www.lto.de/recht/nachrichten/n/eugh-c591-17-pkw-maut-rechtswidrig-diskriminierung-klage-oesterreich/.
41 ECJ, opinion of Advocate General of 6 February 2019, case: C-591/17, Austria v. Germany: see http://curia.europa.eu/juris/document/document.jsf?text=&docid=210529&pageIndex=0&doclang=EN&mode=req&dir=&occ=first&part=1&cid=3196574.
42 Final report parliamentary investigative committee, Bundestag document 19/30500, p. 496 et seq.
43 Final report parliamentary investigative committee, Bundestag document 19/30500, p. 496 et seq.
45 This model is generally known as the build–transfer–operate model. In many cases, the public authority will already be the owner of the real property and does not need the private investor to acquire title. See Jacob/Kochendörfer/Drygalski/Hilbig, 'Ten years of PPP in Germany', Management, Procurement and Law, Volume 167, p. 180 et seq.
46 Such a build–operate–transfer contract would include a payment for a term long enough for the investor to amortise its investment plus any profit and risk adjustment. See Jacob/Kochendörfer/Drygalski/Hilbig, 'Ten years of PPP in Germany', Management, Procurement and Law, Volume 167, p. 180 et seq.
47 This model – known in Anglo-Saxon practice as build–operate–own – has two subcategories in Germany. The difference mainly relates to whether the public authority has an option to acquire the real property at the end of the term for a fixed price. See Jacob/Kochendörfer/Drygalski/Hilbig, 'Ten years of PPP in Germany', Management, Procurement and Law, Volume 167, p. 180 et seq.
48 ECJ, judgment of 10 March 2011, case: C-274/09 Rettungsdienste Stadler, ECLI:EU:C:2011:130, Paragraph 24; ECJ, judgment of 10 September 2009, case: C-206/08 Eurawasser, ECLI:EU:C:2009:540. See also Section 105 of the Act against Restraints of Competition (GWB).
49 See Common Guideline of the Federal Cartel Office and Federal Network Agency for the procurement of electricity and gas concessions and to the change of the concession holder in such agreements, dated 21 May 2015, p. 2.
50 For the energy sector, there are provisions on the unbundling of the network operator and the provider of electricity and gas, see Section 6 et seq. of the German Energy Industry Act (EnWG).
51 The Federal Court of Justice, judgment of 17 December 2013, case: KZR 65/12, has confirmed this understanding and has obliged municipalities to award concessions in a transparent and non-discriminatory procurement procedure even if they intend to award the concession to an entity under public law fully controlled by the municipality.
52 Cruz/Marques, Infrastructure Public Private Partnerships, 2013, p. 4.
53 For example, the airports of Düsseldorf and Hamburg, see Section I.
55 'Öffentlich-Private Partnerschaften im Fokus der Rechnungshöfe', in Hartmut Bauer/Marek Szewczyk/Bozena Popowska/Michael Meier/Adrian Fuks (eds.), Publizisierung öffentlicher Aufgaben, Universitätsverlag Potsdam, 2018, pp. 87–106, available at https://publishup.uni-potsdam.de/opus4-ubp/files/40939/kwischr11_S.87-106.pdf.
56 Regarding the limits of the emergency competencies of the Minister of Finance for permitting expenses, see Constitutional Court of the State of Baden-Wuerttemberg, judgment of 6 October 2011, case: GR 2/11.
57 Federal Constitutional Court, judgment of 18 January 2012, case: 2 BvR 133/10. This case related to the transfer of powers for the operation of a facility for the treatment of persons not legally responsible for their criminal acts because of a psychiatric condition.
58 Ibler, in Maunz/Dürig, GG, 84. Ergänzungslieferung, 2018, 'Art. 86 Rn. 119'; Burgi, Funktionale Privatisierung und Verwaltungshilfe, 1999, p. 209 et seq.
59 Wagner, Zeitschrift für Rechtspolitik, 2000, p. 169; Mühlenkamp, Die Öffentliche Verwaltung, 2008, p. 525.
60 See Directive 2014/23/EU of 26 February 2014 on the Award of Concessions, Official Journal L 94, 28 March 2014, pp. 1–64; Directive 2014/24/EU of 26 February 2014 on Public Procurement, Official Journal L 94, 28 March 2014, pp. 65–242.
61 See Bonhage in Meyer-Sparenberg/Jäckle: Beck'sches M&A Handbuch, 2nd edition 2021, Section 93 Vergaberecht, on the legal framework in Germany, as well as Bonhage/ Terbrack in The Government Procurement Review, 8th edition, 2020, Germany chapter.
62 The value threshold depends on the type of contract. As of 1 January 2020, the threshold for works contracts is €5.35 million and for service contracts either €139,000 or €214,000 depending on the type of contracting authority. See Commission Delegated Regulation (EU) 2019/1828 of 30 October 2019. Similar provisions exist for other types of contracts. Below the threshold, certain – limited – procurement obligations may apply. See also Ordinance on the Procurement Below Thresholds of 2017.
64 In addition, the government offers a third type of contract that gives the private investor the right to levy an (individual) toll for the use of the road (F model). This model has been used for very few bridge and tunnel projects. To date, these projects have been regarded as less successful.
65 Lorson/Haustein/Albrecht/Perlick, Der Betrieb, 2015, pp. 2705, 2711.
66 Higher Regional Court Munich, judgment of 12 February 2019, case: 9 U 728/18 Bau: see Zeitschrift für deutsches und Internationales Bau- und Vergaberecht, 2019, pp. 462–467; previous instance: Local Court of Munich I, judgment of 31 January 2018, case: 11 O 6461/17: see Neue Zeitschrift für Bau- und Vergaberecht, 2018, pp. 672–681.
67 See Section II, especially the lawsuit concerning Motorway 1 between Bremen and Hamburg (A model).
68 See https://www.bmvi.de/SharedDocs/DE/Anlage/StB/oepp-systematische-darstellung-projektvertraeglicher-regelungen.pdf?__blob=publicationFile, §§ 56, 64 of the sample clauses. These sample clauses formed the bases of the PPP contract at issue in the Motorway 1 dispute before the Local Court of Hannover and the Higher Regional Court of Celle: Local Court of Hannover, judgment of 7 September 2018, case: 9 O 106/17: see BeckRS 2018, 21922, Paragraph 93.
69 See Section 59 of the PPP contract for the construction of Motorway 3 between Fürth/Erlangen and Nuremberg, available at https://www.bmvi.de/SharedDocs/DE/Artikel/StB/oepp-vertraege.html.
70 Report of the Federal Government on Ongoing PPP Projects, Bundestag document dated 16 December 2020, No. 19/25285.
71 Lorson/Haustein/Albrecht/Perlick, Der Betrieb, 2015, pp. 2705, 2707.
72 Baums, Recht der Unternehmensfinanzierung, 2017, Section 67, Paragraph 10, et seq.
73 Federal Court of Justice, judgment of 17 December 2013, cases: KZR 65/12 and KZR 66/12.
74 Higher Regional Court of Düsseldorf, decision of 19 June 2013, case: VII – Verg 55/12.
75 Government inquiry, Bundestag document 19/26425, p. 3.
76 See the press release of the Federal Ministry of Transport https://www.bmvi.de/SharedDocs/DE/Pressemitteilungen/2021/075-bilger-zuschlag-oepp-projekt-b247-thueringen.html.
77 Coalition agreement of the federal government (2021), p. 162.