Public contracts are an important economic factor. Contracting authorities procure a large amount of services, works and goods from almost all sectors. Modern procurement legislation guarantees the fair, efficient and sustainable award of public contracts in the context of transparent award procedures. It stipulates what contracting authorities need to do when they procure supplies, works and services or award concessions.

The provisions on the award procedure guarantee competition, transparency and equal treatment. The public sector should use taxpayers’ money to attain the best cost-benefit relationship available on the market.

The reform of German procurement legislation became necessary due to three new EU procurement Directives. They provide for harmonised rules for the whole procurement process ('single rulebook') throughout Europe. This refers to procurement procedures with high contract values (contract awards above the 'EU thresholds').

The new Directives were transposed into German law in April 2016.

The reform has made the rules on the award of public contracts simpler, more flexible and more user-friendly. At the same time, public procurement has become more social, ecological and innovative (strategic procurement).

German procurement legislation can already serve as a model for EU legislation when it comes to granting small and medium-sized enterprises access to public contracts. The government's draft legislation sticks to the principle that contracts must be broken down into (partial or technical) lots because many small and medium-sized enterprises cannot handle large contracts.

Furthermore, it must be ensured that the requirements regarding for instance the economic capacity of SMEs are not disproportionate. And newcomers must also be given a real chance.

The draft legislation makes clear that applicable law must always be complied with when public contracts are executed. The nation-wide statutory minimum wage and collective agreements that have been declared as universally applicable must be observed. Violations of labour, social and environmental provisions may result in the exclusion of companies.

If there is, for example, a change in the operator of a local public transport railway line following a contract award, the jobs of the employees should be secured. According to the draft legislation, contracting authorities can make new operators employ the workers at the same conditions, i.e. those that were granted by the former operators.

It is to become possible to award contracts for the provision of social services, such as the integration of job-seekers, in a simplified procedure. In the future, contracting authorities can choose one of the competitive tender procedures.

Furthermore, more account will also be taken of the interests of people with disabilities. The technical specifications, for instance, must consider the aspect of accessibility.

The reform of procurement legislation will take the public procurement system into the digital age. The principle of electronic communications will be anchored in the Act.

In the future, communications between contracting authorities and contractors and the exchange of documents must take place electronically. The procedures will thus be facilitated and accelerated. As regards the concrete implementation, it will, however, be ensured that both the public sector and the business community will have sufficient time to make the necessary technical adjustments.

Since 18 April 2016, it has been mandatory to publish invitations to tender electronically and to make the related documents available online. The procurement procedure will be handled entirely online by 18 October 2018.

The public sector serves as a model in the field of sustainability. The draft legislation increases the possibilities of including more social, ecological and innovative aspects in the various stages of the procurement process. This also improves legal certainty for contracting authorities.

The possibility of taking account of sustainability objectives in the various stages of the procurement procedure is in the interest of many German companies as they are doing quite well in terms of energy efficiency and the sustainability of their products.

The draft legislation for the first time stipulates the grounds for the exclusion from procurement procedures. This applies in particular to exclusion due to conviction for bribery or other economic crimes. Companies excluded from procurement procedures are to be given the chance to take measures to restore their reliability. The conditions of these measures are also to be stipulated in the Act.

The Federal Government's draft legislation on the reform of public procurement provides that the key data on public procurement are to be collected in statistics throughout Germany. At present, the Federal Government has no valid data on public procurement.

Statistical data on public procurement are important for the assessment of the economic significance of public procurement. This also plays a key role in the context of the Federal Government's investment campaign.

Germany thus also meets reporting obligations vis-à-vis the European Commission.