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Topic - Public Procurement

Public Procurement

Introduction

Every year, the public sector grants contracts worth hundreds of billions of euros to private companies. So public procurement is a significant element of the economy. As the lead ministry in the Federal Government, the Federal Ministry for Economic Affairs and Energy defines the principles and the legal framework for public procurement in Germany. The comprehensive reform of procurement law undertaken in April 2016 has modernised public procurement and is boosting the level of digitisation.

The prime aim of procurement law is to make economic and careful use of budget funding to cover the procurement needs of the public sector. The contracting authorities are not only public bodies, but can also be private companies subject to procurement law – such as certain energy or transport companies.

The goal: fair competition

The requirements for equal treatment, non-discrimination and transparency are intended to ensure fair competition between the bidding companies and to prevent corruption and nepotism. The inclusion of sustainability aspects, and particularly of environmental, social and innovative criteria, can also help public procurement to achieve strategic policy goals.

Rules and regulations for public procurement: procurement law

Procurement law includes all the rules and regulations to be followed by the public sector when procuring goods and services and awarding concessions. Whenever a federal or Länder agency, for example, wants to buy paper or office equipment or to build a new office block, it must observe these rules. Here, a distinction needs to be made depending on whether the value of the contract is above or below the EU threshold. A losing bidder can challenge a procurement decision where the contract value is higher than the EU threshold by appealing to the public procurement tribunals or even the higher regional courts. Contract notices above the EU threshold must be announced on an EU-wide basis using the standard forms. The forms are prescribed by the European Commission.

What contracts need to be advertised throughout the EU? EU thresholds for procurement procedures since 1 January 2016:

5.225.000
Symbolicon für Kran

euros
for public works

135.000
Symbolicon für Lastenwagen

euros
for public supply and public service contracts of supreme and higher federal authorities

418.000
Symbolicon für eine Aufgabenliste

euros
for public supply and public service contracts in the fields of drinking water, energy, transport, defence and security

209.000
Symbolicon für Transporter

euros
for all other public supply and public service contracts

Reform of procurement law in 2016

Modern, digital and simple procurement

The biggest reform for more than 10 years, based on the new EU procurement rules, has made public procurement more modern, simple and user-friendly. Contracting authorities and companies are to enjoy greater flexibility in awarding contracts in future.

The EU-wide modernisation of procurement law aims to develop the rules for procurement in line with the current needs of the developing internal market and to achieve greater harmonisation within the EU.

Biggest reform since 2004

The reform of procurement law which entered into force on 18 April 2016 aims to make procurement procedures more efficient, simple and flexible, and to facilitate the participation of small and medium-sized enterprises in procurement procedures. The new legal framework permits contracting authorities to make more use of public procurement to support strategic objectives. These particularly include social, environmental and innovative aspects. The new rules of Part 4 of the Act against Restraints of Competition also set out the main exceptions from procurement law. This ensures that municipalities in particular will have greater legal certainty when they provide public services.

Moving procurement into the digital era

In future, the requirement to introduce eProcurement for contracts above the EU threshold means that the entire procurement procedure will be conducted online. This will reduce the amount of effort companies need to make to find out about and bid for contracts – procurement procedures will become quicker.

FAQs on Germany's procurement legislation

1. What is stipulated by Germany's procurement legislation?

See answer Open detail view

2. Why has the Federal Ministry for Economic Affairs and Energy amended procurement legislation?

See answer Open detail view

3. What does the reform of procurement legislation mean for German SMEs?

See answer Open detail view

Acts and ordinances on procurement law (in german)

Strategic procurement

Taking account of innovative, ecological and social factors

Procurement law offers contracting authorities a host of ways to take account of strategic aspects in the procurement procedures. This means that they can procure services which are particularly innovative or environmentally or socially aware.

The Act against Restraints of Competition and the key ordinances, and particularly the Ordinance on the Award of Public Contracts, set out the legal framework for the inclusion of these criteria at various stages of the procurement process, e.g. in the specification, the award criteria and the contract performance clauses.

For example, contracting authorities can specify an environmentally friendly production process, as long as this does not mean that the market is reserved for certain companies and as long as the requirements to use a certain production process are not discriminatory. In this way, for example, green electricity, timber from sustainable forest management, or organically grown and fairly traded food can be procured.

Ruder-Wettkampf symbolisiert Wettbewerbspolitik; Quelle: picture alliance/dpa

© picture alliance/dpa

Digital procurement

More efficient procurement online

Electronic procurement (eProcurement) permits procurement procedures to be handled entirely online. The advantages: Due to the uniform procedures, online procurement is more efficient and cheaper both for the contracting authority and for private-sector contractors.

Promoting eProcurement

As of 18 April 2016, EU-wide notices must be submitted to the Publications Office of the EU online. By 18 October 2018, all contracting authorities and contractors must have moved entirely to the online handling of procurement procedures for public procurement and concessions above the EU threshold. This means that – except for a very few exceptions – tenders, requests to participate, declarations of interest and confirmations of interest can no longer be accepted or considered.

The Federal Government’s procurement portal

The website www.evergabe-online.de can be used to conduct procurement procedures entirely online. Nothing needs to be sent by post.

Bridge construction symbolizes public procurement; Source: mauritius images/imageBroker/Jochen Tack