Public procurement procedures

Which regulations apply to a public procurement procedure depends largely on whether the estimated contract value is above or below the European thresholds. The thresholds are based on different types of procurement, such as the procurement of goods and services on the one hand or construction services on the other. With some exceptions, they are set every two years by the EU Commission and then published by the Federal Ministry for Economic Affairs and Climate Protection.

Currently - for example in the area of federal procurement - the most important thresholds are EUR 140,000 for the majority of goods and services purchased by contracting authorities and EUR 5,382,000 for construction contracts. The thresholds will next be updated on 01.01.2024.

Procurement procedures above the EU thresholds:

In the so-called upper threshold range, the national procurement law which implements EU procurement law in this respect, provides for different types of procedures for awarding public supply, construction and service contracts. different types of procedure for the award of public supply, works and service contracts:

• open procedure
• restricted procedure
• negotiated procedure
• Competitive dialog
• innovation partnership

In open procedure the contracting authority publicly invites an unlimited number of companies to submit tenders.

In the restricted procedure which requires a prior call for competition, the contracting authority selects a limited number of companies following a prior public invitation to participate on the basis of objective, transparent and non-discriminatory criteria.

The contracting authority can always choose between the open and restricted procedure freely both procedures are of equal importance. The aim is always to ensure the broadest possible competition as possible.

The other types of procedure are

• negotiated procedure
• Competitive dialog
• innovation partnership

These procedures are linked to the existence of certain eligibility requirements, which are set out in the Ordinance on the Award of Public Contracts (VgV) and, for construction contracts, in the Public Procurement and Contract Regulations for Construction Works Part A EU (VOB/A EU). The contracting authority can only choose one of these procedures if the requirements are met.

The negotiated procedure allows negotiations on the subject matter of the contract between the contracting authority and the participating companies. For example, the content and price may be negotiated, but not the minimum requirements of the specifications. The negotiated procedure can be carried out with or without a prior call for competition. The latter variant does not require Europe-wide publication and is therefore only permitted in particularly restrictive exceptional cases.

The competitive dialog gives the contracting authority greater leeway in negotiations with bidders.

In the within the framework of an innovation partnership the contracting authority negotiates initial and follow-up bids with the selected companies in several phases following the call for tenders.

Procurement procedures below the EU thresholds

Below the EU thresholds, in the so-called sub-threshold area, the different types of procedure are primarily based on the Sub-Threshold Procurement Regulation, insofar as this is applicable. Accordingly, the contracting authority is free to choose between

• the public invitation to tender to an an unlimited number of addressees and
• the restricted public invitation to tender with competitive tendering .

These two procedures have priority over the other types of procedure

• restricted invitation to tender without a call for competition and
• negotiated award with or without a call for competition ,

which in turn require additional eligibility requirements specified in more detail in the sub-threshold procurement regulations.

Up to a certain, low contract value a contract can also be awarded without an award procedure as a direct contract be awarded as a direct contract.

Special features exist for the awarding of construction services . Section 1 of the German Construction Tendering and Contract Regulations (VOB/A) applies in the sub-threshold area. Here too, public contracts are to be awarded primarily by means of public tendering and restricted tendering with a call for competition, between which the contracting authority can choose. Subsequently, limited tendering without a call for competition and the so-called direct award may be considered if the other necessary admission requirements are met.

In the sub-threshold area, it is always important that compliance with the requirements of the sub-threshold procurement regulations or the procurement and contract regulations for construction work is prescribed separately. Unlike in the above-threshold area, the public procurement regulations are not automatically applicable. A so-called application order is always required, which stipulates compliance with procurement law in the sub-threshold area. This can be a state law or an official order.

Are there different rules depending on the type of tender?

Yes, different rules apply depending on the type of tender. This depends in particular on whether the award is in the upper or lower threshold range and which service is to be procured.

In the upper threshold range

For awards from reach the EU thresholds the so-called Act against Restraints of Competition - Public Procurement Law which is based on the implementation of corresponding provisions in the EU directives.

The principles of procurement law above the threshold values are contained in Part 4 of the Act against Restraints of Competition (GWB). This part consists of two chapters with:

• Provisions on the award procedure in Chapter 1 and
• the review procedure in Chapter 2.

Chapter 1 consists of 3 sections:

• Section 1 includes regulations on the scope of application, principles and definitions.
• Section 2 sets out the main rules for "traditional" procurement by contracting authorities. It sets out regulations on the entire course of the award procedure, such as the types of procedure, the design of the specifications, suitability, grounds for exclusion, the award of the contract through to the performance conditions and contract amendments.
• Section 3 contains regulations on awarding contracts in special areas and for concessions.

Chapter 2 contains provisions for the review procedure before the public procurement tribunals and for the procedure before the public procurement senates of the higher regional courts.

The Public Procurement Ordinance (VgV) specifies the provisions on the award of public contracts in Part 4 of the GWB.
It initially regulates the general provisions and cross-sectional rules on (electronic) communication, on the award procedure, on the respective requirements and the exact course of the various types of procedure; in particular on formal issues, tender submissions and suitability tests.

Furthermore, the VgV is dedicated to the award of contracts in special areas such as the awarding of contracts:

• social and other special services,
• the procurement of energy-related services and road vehicles,
• the implementation of planning competitions and
• the special features of awarding architectural and engineering services as well as
• of building design competitions.

In addition to certain parts of the VgV, the Public Procurement and Contract Regulations for Construction Services within the scope of the EU Directive on Public Procurement, Public Procurement and Contract Regulations for Construction Services - Part A European Union (VOB/A EU), must also be taken into account when awarding construction services.

Sector Regulation
The awarding of construction, supply and service contracts in the areas of transport, drinking water supply and the energy supply by sector contracting authorities is governed by the Utilities Ordinance (SektVO). In addition to public contracting authorities, these can also be certain private companies. The SektVO takes account of the special features of the sector.

Concession award ordinance
In the Concession Award Ordinance (KonzVgV) contains regulations on the awarding construction and service concessions . The scope of application also includes sector contracting authorities. Concessions are generally long-term and complex agreements in which the concessionaire assumes responsibilities and risks that are usually borne by the grantor of the concession and normally fall under its responsibility.

In contrast to the award of public contracts by contracting authorities and sector contracting authorities, concession providers are not restricted to certain types of procedure, but are free to structure the award procedure as they see fit.

Defense and Security Procurement Ordinance
The Defense and Security Procurement Ordinance (VSVgV) was issued for procurement in the defense and security sector. It serves to implement EU Directive 2009/81/EC and takes into account the sector-specific features of the procurement of defense and security-related services.

In the sub-threshold area

In principle, budgetary regulations apply to the award of public contracts. These are supplemented in more detail by the so-called procurement regulations.

Since 2017, the rules of procedure for the award of public supply and service contracts below the EU thresholds (Sub-Threshold Procurement Regulations - UVgO) have applied to the award of contracts by the federal government and its authorities.

This also applies to awards at state and municipal level the UVgO applies in the version valid in the respective federal state. For the most part, the federal states have issued corresponding application orders for the UVgO in their state laws. In a few federal states, the UVgO has not yet come into force; instead, the Public Procurement and Contract Regulations for Services (VOL/A Section 1) continue to apply.

The awarding of construction services is also an exception here. Part 1 of the German Construction Tendering and Contract Regulations (VOB/A) continues to apply here.

Are there value limits that determine different regulations?

Yes, even in the sub-threshold area depending on the federal state and type of contract different value limits which should be checked in each individual case. The range of value limits can vary considerably.

In principle, according to Section 14 UVgO, services up to an expected contract value of contract value of EUR 1000 excluding VAT as a direct contract without award procedure can be awarded.

In addition, pursuant to Section 8 (4) No. 17 UVgO, implementing provisions of a federal or state ministry may permit negotiated awards with or without a call for competition (without further requirements) up to a certain value limit.

Sometimes, however, the respective state laws also provide for value limits that deviate from the UVgO.

When can a bidder be excluded from participating in a tender?

The GWB stipulates in § 123 sets out mandatory grounds for exclusion if they exist, a company must be excluded from participating in an award procedure. These include, in particular, legally binding convictions or fines imposed in accordance with the German Administrative Offenses Act:

• bribery
• human trafficking
• Formation of criminal organizations
• financing of terrorism
• money laundering
• Withholding of social security contributions
• tax evasion

Additionally defined § 124 GWB defines optional grounds for exclusion - in particular Violations of antitrust and labor law regulations - in the presence of which a company can be excluded from the award procedure.

These grounds for exclusion also apply to the sub-threshold area in accordance with Section 31 (1) UVgO.

To intensify the prevention of corruption and to combat white-collar crime a competition register at the Federal Cartel Office was established. The register has been fully operational since June 1, 2022. Among other things, the register contains entries on companies to which certain exclusionary offenses are attributable. Contracting authorities with an estimated contract value of EUR 30,000 or more are obliged to check whether the company that is to receive the contract is entered in the competition register. This makes it easier for contracting authorities to decide whether to exclude a company. Contracting authorities can also query the register below the value thresholds.

Finally, a company is also excluded from the award procedure if it cannot prove that it is at all suitable to carry out the contract.

What deadlines apply to the submission of tenders?

In the upper threshold range

In principle, the contracting authority must take into account the complexity of the service and the time required to prepare the tenders when setting the deadline for submitting tenders for all different award procedures.

In addition, there are statutory minimum deadlines :

• In the open procedure the deadlines of § 15 Para. 2 VgV apply. From the day after the contract notice, interested companies generally have at least 35 days to submit a tender. In urgent exceptional cases, this period may be shortened to 15 days or, if the contracting authority accepts electronic submissions, to 30 days.
• In the restricted procedure with a call for competition, the time limit for submitting requests to participate is at least 30 days and even here only 15 days in justified exceptional cases. Participants who are invited to submit a bid after the applications have been reviewed have at least 30 days to submit their bid. Here too, the deadlines do not begin until the day after the applications or tenders are sent. It is also possible to set individual deadlines if there is agreement between the contracting authority and all applicants.

The corresponding time limits also apply in the negotiated procedure and for the competitive dialog.

In the sub-threshold area

In the sub-threshold area § Section 13 UVgO that the contracting authority must set reasonable time limits for the various award procedures. The following must be taken into account in the decision:

• the complexity of the services required,
• the scope of the documents to be submitted by the interested party,
• the time required for the preparation and
• evaluation of the tenders and applications and
• the means of communication chosen.

What documents can a client request?

As a general rule, public contracts are awarded to competent and capable companies. To this end, the contracting authority checks the suitability of applicants on the basis of various criteria . The declarations, evidence and documents that candidates must submit with their tender therefore depend on the specific contract.

For example, the contracting authority may require proof of the qualification and authorization to exercise the profession demand. He may verify the economic and financial capacity on the basis of various documents, such as

• corresponding bank statements,
• proof of business liability insurance,
• annual financial statements or
• annual reports.

The contracting authority also checks the technical and professional performance and may also request various supporting documents, such as

• References on previous supply and service contracts,
• proof of technical and personnel resources
• proof of studies or training.

In the sub-threshold area
In the sub-threshold area, the contracting authority also checks the suitability of the candidates. Here too, the economic, financial, technical and professional capacity can be linked to certain requirements and these can be checked. However, these requirements must always be related to the subject matter of the tender and proportionate to it.

Where can public tenders be found?

EU-wide notices are published by the Publications Office of the European Union on the Internet - TED - Tenders Electronic Daily and updated there every day.

There are also a large number of different procurement portals on which public clients - at federal, state or municipal level - generally put their projects out to tender online.

The federal government publishes tenders on its central procurement platforms. The federal states also operate their own procurement platforms.

In addition, a number of privately operated procurement portals collect tenders from public contracting authorities and publish them online.

How are electronic invoices submitted?

Since 2018, the Ordinance on the electronic invoicing in public procurement of the federal government (E-Rech-VO) has been in force. The ordinance implements the EU directive on electronic invoicing for public contracts. According to the E-Invoicing Ordinance, companies that have been awarded a public contract or concession must submit invoices electronically.

The use of electronic invoices in the context of contract management in the federal states is governed by the respective state ordinances .

Where can bidders and applicants obtain further information?

Information and support for companies is provided by the procurement advice centers of the federal states. These belong to the self-governing units of the economy and are mainly organized as organizations of the Chambers of Industry and Commerce and the Chambers of Crafts of the federal states.

About current developments in public procurement law can also be found on the website of the Federal Ministry of Economics and Climate Protection and various institutions.

• Ordinance on the Award of Public Contracts (VgV)
• Sector Ordinance (SektVO)
• Concession Award Ordinance (KonzVgV)
• TED - Tenders Electronic Daily
• Electronic invoicing in federal public procurement (E-Rech-VO)