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Public procurement law - horak Attorneys at law, Germany

What does „public procurement law” comprise?

Public procurement law comprises the Standard Official Contracting Terms for Services, Standard Building Contract Terms, Standard Official Contracting Terms for Independent Professions, European public procurement law, some parts of the Non-Restraint of Trade Act (Cartel Act) and the Fees Ordinance for Architects and Engineers.

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

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

  • Non-Restraint of Trade Act (Cartel Act)
    In the fourth part of the Cartel Act (Non-Restraint of Trade Act) the general principles of public procurement are regulated and the procedure for reviewing the procurement procedure before the procurement chambers and higher regional courts is standardised.
     
  • Regulations on Procurement
    According to the revised text of the Regulations on the Procurement of Public Contracts published on 11th February 2003, public ordering parties are obliged to apply Standard Official Contracting Terms when a certain contract value is exceeded. You can download the latest version of the Standard Official Contracting Terms here from the homepage of the Federal Ministry of Economics.
     
  • Standard Official Contracting Terms for Independent Professions 2002
    Effective as of 1st November 1997 new regulations on the Europe-wide procurement of services entered into force with the publication of the Standard Official Contracting Terms for Independent Professions (published in the Federal Gazette Nr. 164 of 3rd September 1997). They must be taken into consideration by all public ordering parties when the EU threshold values (presently approx. € 200,000) are reached. These regulations, however, do not yet apply to certain ordering parties, namely the sector ordering parties (owner-operated communal enterprises of water, energy and transport supply).
     
  • Standard Official Contracting Terms
    Standard Official Contracting Terms contain detailed regulations on the awarding of delivery, service or construction contracts. The Standard Building Contract Terms are deposited at the Federal Ministry of Transport, Building and Housing.
     
  • Common Procurement Vocabulary (CPV)
    Since 1st January 1999 an amended version of the Common Procurement Vocabulary (CPV) has been in force, regulating the description of the contractual goods and services according to the recommendations of the EU-Commission. You can access the latest version of the CPV at simap.eu.int.

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

What principles are to be taken into consideration?

The following principles might be extracted from the Cartel Act (especially §§ 97, 101 of the Non-Restraint of Trade Act):

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

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

There are three forms of procurement:

  • public tender
    In principle, public tender has priority before other forms of procurement. This form must be chosen when the contract value exceeds € 25,000.
     
  • limited invitation to tender
    As far as a limited invitation to tender is concerned, the circle of the potential applicants has been limited by the contracting party. The contact value must not exceed € 25,000.
     
  • procurement by private contract
    In the case of procurement by private contract, the contracting authority may award the contract to a contractor of his choice. The contract value must not exceed € 2,500.

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

As long as the contract value exceeds € 25,000 and lies below de minimis (according to EU law, compare the respective threshold values in the Regulations on Procurement), the German regulations apply and a national procurement is necessary with the following focus points:

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

If the contract value exceeds de minimis (under EU law), the following requirements have to be checked and, moreover, European procurement regulations apply in principle, so that a European procurement must take place:

  • check whether Standard Official Contracting Terms for Services are being applied
     
  • choice of the procurement procedure
    • open procedure
    • restricted procedure under exceptional conditions
       
  • exceptional conditions
    • open procedure if no such conditions apply
    • negotiated procedure with/without contract notice
    • restricted procedure with compulsory competition

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

A restricted procurement can in principle take place in case of a contract value of up to € 25,000. However, under exceptional conditions public invitations to tender can allow restricted procurement even if the threshold value of € 25,000 is exceeded. There are no differences as far as the basic procedure is concerned, restricted procurement is characterised only by the limitation of access of potential tenderers.

When is negotiated tender an option for communal tender?

Negotiated tender can in principle take place only if the contract value does not exceed € 2,500. Nonetheless, this form tender is the most popular one.

Generally speaking, negotiated tenders in case of contract values of up to € 500 take place in the following order:

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

The following steps are typical for a contract value ranging from €500 to € 2,500:

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

What role do the standard official contracting terms play?

According to procurement procedures, the standard official contracting terms are obligatory for public contracting parties in view of their A-parts starting from the threshold values contained there. It is only by a change of the legal form into an organisation governed by private law that the binding obligation does not apply. This exemption could be the reason the change of the legal form, even though the A-parts only constitute internal administrative regulations (i.e. no external legal norm) and the B-parts are interpreted as a part of the General Terms and Conditions of Trade.

What can we do for you?

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

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

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

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

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

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