25.10.2007  Öffentliches Wirtschaftsrecht • 

Public Procurement

All public tenders which exceed a certain threshold value are subject to European public procurement law. The law is designed to open up the EU's public procurement market to competition, to prevent "buy national" policies and to promote the free movement of goods and services.

The public procurement rules generally apply when three main pre-conditions are met:

  • The procuring body is a "contracting authority" as defined in the regulations. The definition is very broad and includes central government, local authorities, associations formed by one or several such authorities and other "bodies governed by public law" (e.g. universities and fire authorities);
  • The contract is a public works, services or supplies contract. Occasionally, the contract will be a mixed contract (e.g. for the supply and maintenance of computers). In this case, a contracting authority must determine, in accordance with the rules, the predominant element of the contract and thus which set of rules will apply;
  • The estimated value of the contract should equal or exceed the relevant financial threshold. The rules expressly prohibit splitting contracts so as to bring them below the thresholds.

A company that offers its services to a specific contracting authority should be aware of certain important issues. Foreign companies participating in public procurement projects in Germany must also comply with German anti-trust law (Gesetz gegen Wettbewerbsbeschränkungen “GWB”) which imposes strict conditions on the participation of the bidder during the process and in particular on the issuance of a bid. The application of public procurement law also ensures that the procurement decisions of contracting authorities can be reviewed by a procurement review panel.

During the bidding process, the principles of equality and transparency as well as that of fair competition must be observed. For the bidder, this means that it must follow the strict formal regulations regarding the bidding process. Formally incorrect applications will not be considered.

Once the bidder’s paperwork has been reviewed and found to be complete and correct, the bid itself will be considered. It is important to follow the official instructions. Deviations generally lead to a disqualification of the bid. The contracting authority is obliged to require appropriate evidence from the bidder in order to determine his eligibility to participate in the tender.

If the contracting authority makes a mistake in the process of considering the company’s bid and the bidder realizes the mistake, then the bidder must inform the contracting authority so that it can correct the mistake. If the bidder discovers further discrepancies with their application review process, it has the opportunity to have the contracting authority’s process reviewed by the procurement review panel.