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Article - Public Procurement

Public Procurement


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 Climate Action defines the principles and the legal framework for public procurement in Germany.

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.

Companies committing white-collar crime should not benefit from public contracts or concessions. This is why the Federal Ministry for Economic Affairs and Climate Action drafted the Competition Register Act in 2017. The digital, pan-German register makes it easy for procurement agencies to check whether a company has violated any relevant regulations. This is to prevent corruption and white-collar crime in public procurement and concession procedures. In a next step, the practical and technical requirements for the new competition register will be put in place.

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 thresholds. 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.

What contracts need to be advertised throughout the EU? EU thresholds for procurement procedures since 1 January 2020:

Symbolicon für Kran

for public works

Icon trucks

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

Symbolicon für eine Aufgabenliste

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

Symbolicon für Transporter

for all other public supply and public service contracts

New Rules on Public Procurement

Modern, transparent and simple procurement

The Federal Ministry for Economic Affairs and Climate Action has undertaken the biggest reform of procurement law for more than 10 years, which has made public procurement above the EU thresholds more modern, simple and user-friendly. In a second step, we have also reformed public procurement below the EU thresholds. This gives contracting authorities and companies greater flexibility in shaping the procurement procedure.

The reform of rules governing public procurement above the EU thresholds, 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 reformed 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 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.

More flexible procurement procedures at national level too

The new rules on procurement below the EU thresholds will take the flexible provisions in the new rules for procurement above the EU thresholds and apply them to the awarding of public contracts for supplies and services at national level. The new rules were announced in February 2017 and entered into force for the Federation on 2 September 2017 via the amendment to the administrative provisions regarding Section 55 of the Federal Budget Code. The Länder will adapt their budget rules to include the rules on procurement below the EU thresholds in the coming months.

Acts and ordinances on procurement law (in german)

Sustainable, 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.

Find out more about strategic procurement here.

Ruder-Wettkampf symbolisiert Wettbewerbspolitik


Protecting free competition

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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

With regard to contracts above the EU thresholds, all tender documents, and particularly the specification, must now (since 18 April 2016) be freely accessible and available free of charge online. This reduces the amount of effort companies need to make to find out about and bid for contracts – procurement procedures will become quicker. 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 thresholds. This means that – apart from a few exceptions – tenders, requests to participate, declarations of interest and confirmations of interest can no longer be accepted unless they are submitted online.

The Federal Government’s procurement portal

The entire procedures for public procurement below the EU thresholds will be digitised just like public procurement above the EU thresholds. The website can be used to conduct procurement procedures entirely online. Nothing needs to be sent by post.

Bridge construction symbolizes public procurement

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