In Germany, the procurement of government contracts is primarily governed by the Act Against Restraints of Competition (Gesetz gegen Wettbewerbsbeschränkungen, GWB). Its Sections 97 et seqq. transpose the EU procurement directives into national law. Thus, the GWB provides the general framework for the procurement of government contracts exceeding certain minimum value thresholds (see 1.3 Types of Contracts Subject to Procurement Regulation). An official translation of the GWB into English has been provided by the German Federal Ministry of Justice.

The GWB is supplemented by several ordinances spelling out further details of how procurement processes must be conducted:

• the Procurement Ordinance (Vergabeverordnung, VgV) governing tenders for works and services;
• the Sector Ordinance (Sektorenverordnung, SektVO) governing tenders by entities operating in the water, energy, transport and postal services sectors;
• the Concession Award Ordinance (Konzessionsvergabeverordnung, KonzVgV) governing concession tenders; and
• the Defence and Security Award Ordinance (Vergabeverordnung Verteidigung und Sicherheit, VSVgV).

Government tenders that do not exceed the minimum value thresholds are not governed by the GWB and its ordinances. Rather, such tenders are typically governed by the German Regulation on Sub-Threshold Procurement (Unterschwellenvergabeordnung, UVgO). As the UVgO is technically not a binding ordinance, it only applies to the extent that the federal government and the (total of 16) federal states have each adopted it for application in their areas of competence. 14 federal states have already done so, but adoption in Saxony and Saxony-Anhalt is still pending. These two federal states continue to apply the UVgO’s predecessors, the Public Procurement and Contract Regulations for Services, Part A, Section 1 (VOL/A) as well as the Construction Tendering and Contract Regulations, Part A, Section 1 (VOB/A).

In keeping with EU procurement law, German procurement law applies to the following entities:

Contracting Authorities (Section 99 of the GWB)

Public authorities at all levels, including federal, state, regional and local authorities, as well as their special funds, are considered contracting authorities. Associations whose members are contracting authorities are also subject to procurement law.

In addition, legal entities both under public or private law are considered contracting authorities (and thus have to apply procurement law) if (i) they have been established for a specific purpose of meeting a non-commercial need that is in the general interest and (ii) are for the most part financed by contracting authorities, subject to management supervision by a contracting authority or if their managerial or supervisory board is primarily appointed by a contracting authority. These criteria often lead to difficult delineation issues in practice, especially for companies under private law. The particularly difficult question of whether the company pursues a non-commercial need is typically assessed based on whether it is exposed to competition or not. In the case of the latter, procurement law generally applies.

Furthermore, legal entities receiving at least 50% government funding for certain construction projects (civil engineering, hospitals, sports, recreational, educational or administrative buildings) are also required to apply procurement law with regard to these projects.

Sector Contractors (Section 100 of the GWB)

In line with the EU Utilities Directive, entities active in the following sectors are also subject to procurement law:

• provision or operation of fixed drinking water networks and the supply of drinking water to such networks;
• provision or operation of fixed electricity networks and the supply of electricity to such networks;
• provision or operation of fixed gas and heat networks and the supply of gas or heat to such networks;
• provision or operation of transport networks;
• exploitation of a geographical area for the purpose of the provision of airports and ports;
• provision of postal services; and
• exploitation of a geographical area for the purpose of extracting or exploring for fossil fuels.

This also applies to entities under private law provided they either (i) operate on the basis of special or exclusive rights granted by a competent authority or (ii) are controlled by a contracting authority.

Entities Receiving Certain Government Funding

In addition, German law on public grants and subsidies may require that recipients apply procurement law when procuring works and services with government funding in order to ensure the economic use of the funds. In this case, legal entities that are not normally subject to procurement law at all are required to apply procurement law with respect to the specific project for which the government provides funding. The details depend on the funding decision or contract. While some funding decisions and contracts literally require full compliance with almost all procurement law requirements, others impose more lenient obligations, typically requiring that works and services are tendered in a “competitive manner”.

Public Contracts and Concessions

German procurement law generally applies to public contracts (Section 103 of the GWB) and concessions (Section 105 of the GWB).

Public contracts are defined as contracts for pecuniary interest between contracting authorities or sector contractors (see 1.2 Entities Subject to Procurement Regulation) and economic operators for the procurement of services relating to the supply of goods, the execution of construction works or the provision of services.

Concessions are either works concessions or services concessions:

• Works concessions are contracts for pecuniary interest by which a public authority entrusts the execution of construction works to an economic operator. The reward consists either solely of the right to utilise the construction work or of this right plus a payment.
• Services concessions are contracts for pecuniary interest by means of which a public authority entrusts an economic operator with the provision and the management of services other than the execution of construction works. The reward consists either solely of the right to exploit the services or of that right plus a payment.

Minimum Value Thresholds

The GWB and its ordinances (see 1.1 Public Procurement Legislation) only apply to contracts exceeding certain minimum value thresholds. Germany has not set its own specific thresholds. Rather, Section 106 of the GWB directly references the thresholds that have been set for each of the procurement directives at EU level, always in their most recent version. If these thresholds are amended by the EU, the new thresholds then also automatically apply to tenders conducted in Germany.

The threshold values were last updated on 1 January 2024 by the EU and, consequently, also apply to tenders in Germany:

• supply and service contracts for supreme and higher federal authorities and comparable federal institutions: EUR143,000;
• supply and service contracts for all other contracting authorities: EUR221,000;
• works contracts: EUR5,538,000;
• social and other specified services: EUR750,000;
• defence and security-related supply and service contracts: EUR443,000;
• defence and security-related construction contracts: EUR5,538,000;
• concessions: EUR5,538,000;
• supply and service contracts from sector contracting authorities: EUR443,000;
• construction contracts from sector contracting authorities: EUR5,538,000; and
• social and other specified services provided by sector contracting authorities: EUR1,000,000.

Tenders Below the Minimum Value Thresholds

Tenders not exceeding the minimum value thresholds are subject to national procurement laws and regulations (see 1.1 Public Procurement Legislation). While, in the past, these laws and regulations have been diverse and notably different to EU procurement law, the introduction of the UVgO, in particular, has led to a significant level of harmonisation. The main differences are more flexibility for contracting authorities to conduct negotiated proceedings, the ability to award low-volume contracts (eg, below EUR1,000) without a tender at all, more limited legal recourse for bidders and less severe legal consequences in case of violations (no invalidity of the contract).

German tenders subject to procurement law are generally open to any interested economic operator from any jurisdiction. The principle of equal treatment of all economic operators is one of the core principles of German procurement law (Section 97 para. 2 of the GWB). This applies irrespective of the nationality of an interested economic operator, and generally, national economic operators, economic operators based in the EU and economic operators from outside of the EU are treated equally in all tenders. As regards EU economic operators, discrimination is strictly forbidden by EU law. In addition, Germany (as an EU member) is a signatory to the Agreement on Government Procurement (GPA) of the World Trade Organization and consequently allows equal access to its tenders to all other GPA signatories (including, eg, the US, the UK and Japan).

(De facto) exceptions to this rule apply under very limited circumstances and are generally not motivated by an economic operator’s nationality per se but rather by other factors, such as:

• the requirement of a local branch or subsidiary for the provision of services; however, this only applies in very exceptional cases, provided that there are appropriate, substantive and contract-related reasons for such criteria or eligibility requirements;
• national security reasons (according to Section 147 of the GWB, for reasons of national security, economic operators may be excluded based on a case-by-case assessment);
• sanctions and export control restrictions, in particular related to Russia imposed by the EU in response to the attack on Ukraine, including a general prohibition on awarding a contract to or executing a contract with economic operators having certain connections with Russia; and
• restrictions under the Foreign Subsidies Regulation (EU) 2022/2560 on awarding a contract to a non-EU economic operator that has received a foreign subsidy considered to distort the internal (EU) market.

It should be noted, however, that the principle of equal treatment under German law does not require contracting authorities to actively support foreign economic operators. Procurement documents are therefore typically written in German only, eligibility criteria need to be met by all economic operators (while certain exceptions may apply regarding the provision of documentation not readily available outside of Germany) and tenders by foreign bidders will be evaluated on an equal footing with tenders by national bidders.

The following key principles apply to procurement procedures in Germany. These principles are spelled out in Section 97 of the GWB and (in less detail) in Section 2 of the UVgO:

• free and open competition for government contracts;
• sound financial management of government funds;
• transparency;
• proportionality;
• equal treatment and non-discrimination;
• facilitating the participation of small to medium-sized enterprises; and
• adequate legal protection.

Award procedures generally have to be published in advance. The only exceptions are negotiated procedures without prior publication and direct awards (see 2.5 Direct Contract Awards), which are only permitted in exceptional cases (see 2.4 Choice/Conditions of a Tender Procedure).

Tenders Above the Minimum Value Thresholds

As a general rule, Section 40 para. 2 of the VgV requires that award procedures for contracts above the minimum value thresholds are first published by the Publications Office of the EU, which is done at https://ted.europa.eu. An (additional) publication at national level is only permissible once this publication has been done or 48 hours after confirmation of receipt of the notice by the Publications Office of the EU. A common publication platform in Germany is, for example, service.bund.de.

Tenders Below the Minimum Value Thresholds

Award procedures below the minimum value thresholds do not have to be published through the Publications Office of the EU. However, the UVgO generally requires that the tender is made available on the contracting authority’s website or through another internet platform and that it must be possible to find the contract notices via the search function of the internet portal www.bund.de. In addition, the notice may also be published in daily newspapers, official publications or through other free and directly accessible internet portals (Section 28 of the UVgO). Section 29 of the UVgO further requires that the tender documentation is made available free of charge, without limitation, completely and directly.

General

German procurement law allows contracting authorities to conduct preliminary market consultations. According to Section 28 of the VgV and in line with the EU procurement directives, before launching a formal procurement procedure, the contracting authority may conduct what is known as a “market investigation” in preparation for the formal award procedure and to inform market participants about its procurement plans and requirements. In contrast, Section 28 para. 2 of the VgV clarifies that a formal procurement procedure solely for the purposes of market investigation and determining costs or prices (ie, without an actual intention to award a contract) is not permissible.

Terms and Conditions

There are certain terms and conditions that must be followed when conducting a market investigation. While not specifically spelled out in Section 28 of the VgV, they can be derived from Article 40 para. 2 of Directive 2014/24/EU:

• In its market investigation, the contracting authority may seek or accept advice from (i) independent experts, (ii) authorities, or (iii) market participants.
• The market investigation should not distort competition.
• Discrimination against any (potential) economic operator is strictly forbidden. For example, every interested economic operator should have equal access to information provided during the market investigation.
• The market investigation should be transparent, with clear instructions and guidelines provided. These should describe the purpose, scope and rules of engagement.

Similar terms and conditions apply to the SektVO and VSVgV.

German procurement law, in accordance with the EU procurement directives, stipulates the tender procedures that may be used for awarding contracts:

• Open procedure (Offenes Verfahren, Section 119 para. 3 of the GWB): In an open procedure, any interested economic operator may submit a tender. The tender must include both the specific aspects relating to the procurement (such as the price) and the general proof of capability and eligibility. Negotiations are not permissible.
• Restricted procedure (Beschränktes Verfahren, Section 119 para. 4 of the GWB): This procedure is divided into two stages:
1. the contracting authority invites all interested economic operators by a public notice to express their interest in participating; and
2. based on the submissions received, the contracting authority assesses the candidates’ capability and eligibility and selects only a limited number of candidates that may then submit their tender.
• Negotiated procedure (Verhandlungsverfahren, Section 119 para. 5 of the GWB): Where the nature of a contract requires negotiations, this procedure allows the contracting authority to negotiate directly with economic operators, provided certain requirements are met (see 2.4 Choice/Conditions of a Tender Procedure). As with the restricted procedure, the negotiated procedure is generally preceded by a call for tenders and a subsequent selection of candidates (Verhandlungsverfahren mit Teilnahmewettbewerb, which can be translated as “negotiated procedure with prior publication”) – subject to some exceptions in which the contracting authority selects economic operators or only one economic operator without any invitation or public call (Verhandlungsverfahren ohne Teilnahmewettbewerb, which can be translated as “negotiated procedure without prior publication”; see 2.4 Choice/Conditions of a Tender Procedure). The negotiated procedure is characterised by greater flexibility, as the contents of the contract will be negotiated with the bidders. Furthermore, tenders can be amended even after they have been submitted.
• Competitive dialogue (Wettbewerblicher Dialog, Section 119 para. 6 of the GWB): This procedure allows the contracting authority to engage in a dialogue with interested economic operators in order to identify and determine the means by which the needs of the contracting authority can best be met – eg, to develop technical specifications. In such cases, the needs of the contracting authority are already defined, but there are uncertainties as to how these needs can best be satisfied. Thus, in this procedure, the contracting authority first publishes a call for participation and select candidates; then the contracting authority enters into a dialogue with selected candidates to identify the best solutions before finally (after having declared that the dialogue is concluded) inviting the selected candidates to submit their tenders.
• Innovation partnership (Innovationspartnerschaft, Section 119 para. 7 of the GWB): Where a solution for a need is not yet available on the market, contracting authorities can participate in innovation partnerships. An innovation partnership aims to foster innovation and address related challenges through multi-stakeholder collaboration.

In contrast to the above procedures, direct awards are only permissible in very exceptional cases (see 2.5 Direct Contract Awards).

Tenders Above the Minimum Value Thresholds

For tenders above the minimum value thresholds, the following applies:

General Principle

In principle, the contracting authority may only freely choose between the open and the restricted procedures (see 2.3 Tender Procedure for the Award of a Contract). All other procedures may only be chosen if additional requirements are met, which are specified in Section 14 para. 3 to 6 of the VgV.

Negotiated Procedure With Prior Publication/Competitive Dialogue

According to Section 14 para. 3 of the VgV, the contracting authority may choose (i) the negotiated procedure with prior publication or (ii) the competitive dialogue if:

• the needs of the contracting authority cannot be met without adapting existing solutions;
• the contract involves conceptual or innovative solutions;
• the contract cannot be awarded without prior negotiation due to specific circumstances linked to the nature, complexity or legal or financial framework or the risks involved;
• the service, in particular its technical requirements, cannot be described with sufficient precision by the contracting authority with reference to a standard, a European Technical Assessment (ETA), a common technical specification or technical references set out in Annex 1 to the VgV; or
• no proper or only unacceptable tenders have been submitted in an open or restricted procedure.

Negotiated Procedure Without Prior Publication

According to Section 14 para. 4 of the VgV, the contracting authority may choose the negotiated procedure without prior publication, inter alia:

• where no or only non-suitable tenders or requests to participate have been submitted in response to an open procedure or a restricted procedure, provided that the initial conditions of the contract are not substantially altered and that a report is sent to the Commission where it so requests;
• where, at the time of the tender, the works, supplies or services can be supplied only by a particular economic operator (i) due to intellectual property rights or where no competitive market exists for technical reasons and (ii) where no reasonable alternative is available;
• in cases of extreme urgency, where, for reasons brought about by events unforeseeable to the contracting authority, the time limits for the open or restricted procedures or competitive procedures with negotiation cannot be complied with; or
• if a delivery service is to be procured that was produced exclusively for research, testing, investigation, or development purposes.

Conditions for Specific Award Procedures under KonzVgV and VSVgV

According to Section 12 para. 1 of the KonzVgV, the grantor of a concession may freely organise the procedure without justification if it adheres to the principles set out in the KonzVgV and the general procurement principles (see 1.5 Key Obligations of Awarding Authorities). Section 12 para. 1 sentence 2 of the KonzVgV explicitly stipulates that the procedure may be organised in accordance with the provisions on the negotiated procedure with prior publication as outlined in the VgV (see 2.3 Tender Procedure for the Award of a Contract).

For award procedures subject to the VSVgV, the contracting authority may freely choose between the restricted procedure or negotiated procedure with prior publication. In contrast, choosing a negotiated procedure without prior publication or a competitive dialogue requires justification; however, the requirements are rather generous and typically apply to research and development projects (see Sections 12 et seq. of the VSVgV).

Contracts Below the Minimum Value Thresholds

For contracts below the minimum value thresholds, the UVgO (where applicable) generally provides for the same procedures as the VgV with the following two exceptions: (i) the UVgO does not include a competitive dialogue and (ii) the contracting authority may also select a restricted procedure without prior publication in exceptional cases (Section 11 of the UVgO). Furthermore, the UVgO follows the same principles and contains similar justification clauses as the VgV.

Direct awards (freihändige Vergaben) are only permissible in rare cases – eg, when the value is very low (generally not exceeding EUR1,000; see Section 14 of the UVgO). Furthermore, a negotiated procedure without prior publication may de facto result in a direct award if only one economic operator is being asked to submit a bid (see 2.4 Choice/Conditions of a Tender Procedure for the requirements to justify such award).

In view of the general principles of transparency, competition, and fairness, contracting authorities are required to publish documents in good time to allow economic operators sufficient time to prepare, express their interest and submit a tender. This must be generally determined on a case-by-case basis, taking into account the complexity of the specific procurement.

Where documents for tenders above the minimum value thresholds must be first published by the Publications Office of the EU, notices shall be published not later than five days after they are sent there by the contracting authority (Article 51 para. 2 of Directive 2014/24/EU). According to Section 40 para. 2 of the VgV, (voluntary) publication at national level is only permissible (i) after the publication by the Publications Office of the EU or (ii) 48 hours after confirmation of the receipt of the notice by the Publications Office of the EU.

Similar provisions are included in the KonzVgV.

Time limits for the receipt of expressions of interest in a contract award procedure or the submission of binding bids generally must be set by the contracting authorities in accordance with the general procurement principles. Thus, time limits depend on the procurement procedure selected and the complexity of the specific procurement.

German procurement law, in accordance with the EU procurement directives, sets the following minimum time limits:

• Open Procedure: The minimum time limit for receipt of tenders is 35 days from the date on which the contract notice was sent.
• Restricted Procedure: The minimum time limit for receipt of requests to participate is 30 days from the date on which the contract notice or, where a prior information notice is used as a means of calling for competition, the invitation to confirm interest was sent; and the minimum time limit for the receipt of tenders is 30 days from the date on which the invitation to tender was sent.
• Negotiated Procedure: The minimum time limit for receipt of requests to participate is 30 days from the date on which the contract notice or, where a prior information notice is used as a means of calling for competition, the invitation to confirm interest was sent; and the minimum time limit for the receipt of initial tenders is 30 days from the date on which the invitation was sent.
• Competitive Dialogue: The minimum time limit for receipt of requests to participate is 30 days from the date on which the contract notice was sent.

The KonzVgV sets out similar minimum time limits (30 days), whereas Section 20 of the VSVgV defines different minimum time limits for procurement procedures within its scope. The UVgO does not stipulate specific minimum time limits but underlines the importance of the general requirements described above (Section 13 of the UVgO).

Under certain limited circumstances, the above time limits can be shortened – eg, due to urgency.

German procurement law provides for eligibility criteria that economic operators must meet to be eligible to participate in a procurement process as well as for specific exclusion grounds.

Eligibility Criteria

The eligibility criteria set out by the contracting authority have to be limited to those that are appropriate to ensure that a bidder has the legal and financial capacities and the technical and professional abilities to perform the contract to be awarded. The key criteria set out in Section 122 of the GWB (in compliance with Article 58 para. 1 of Directive 2014/24/EU) are the following:

• Suitability to pursue the professional activity: The economic operator must specifically have the legal capacity to enter into the relevant contract (eg, it might be required to hold relevant permissions or be enrolled in professional or trade registers).
• Economic and financial standing: The economic operator has to demonstrate its financial and economic standing to ensure it has the necessary resources and capacity to perform the contract.
• Technical and professional ability: The economic operator has to demonstrate that it also has the required set of skills, human and technical resources (including relevant experience, qualifications and technical expertise) to perform the contract.

Grounds for Exclusion

With regard to the grounds for exclusion, a distinction must be made between mandatory grounds for exclusion (Section 123 of the GWB) and discretionary grounds for exclusion (Section 124 of the GWB). An excluded bidder can restore its eligibility by taking adequate measures (“self-cleaning”, Section 125 of the GWB). Furthermore, Section 126 of the GWB sets out maximum periods of exclusion. All these national rules implement Article 57 of Directive 2014/24/EU.

• If there are mandatory grounds for exclusion, the relevant economic operator must be excluded from the award procedure. Such grounds exist, in particular, if it has been established by a binding court or administrative decision that (i) an economic operator has committed certain criminal offences, such as fraud or terrorist financing or (ii) the economic operator has not paid taxes, duties or social security contributions.
• In case of discretionary grounds for exclusion, the economic operator may be excluded from the procurement process, but the decision is at the discretion of the contracting authority. Discretionary grounds for exclusion do not have to be established by a binding court or administrative decision and include: grave professional misconduct; (ii) insolvency; (ii) antitrust or competition law violations; or (iii) material non-compliances with the obligations under (other) government contracts. In addition, failure to transparently disclose existing grounds for exclusion may, by itself, constitute grounds for exclusion.

Bidders may conduct and demonstrate self-cleaning measures to avoid exclusion (Section 125 of the GWB). In addition, the time limit for excluding a bidder due to misconduct is five years for mandatory grounds for exclusion and three years for discretionary grounds for exclusion (Section 126 of the GWB).

In all procedures except for the Open Procedure, the contracting authority may limit the number of suitable candidates invited to submit a tender or to engage in a dialogue. The ranking forming the basis for this restriction (and to exclude certain bidders) must be established based on objective, transparent and non-discriminatory criteria. The number of candidates and the criteria must be proportionate to the nature of the need and the contract, and all information must generally be published in advance in a public notice.

The minimum number of candidates to be invited by the contracting authority must be at least three, and, in the restricted procedure, at least five (Section 51 of the VgV). For tenders falling under the VSVgV or for tenders below the minimum value thresholds that are subject to the UVgO (see 1.2Entities Subject to Procurement Regulation), in general three offers are required. However, in any case, the number of candidates to be invited must ensure genuine competition, provided that there are enough suitable candidates.

Tenders Above the Minimum Value Thresholds

According to Section 127 of the GWB, and in accordance with Directive 2014/24/EU, the contract must be awarded to the “most economically advantageous tender”. This is not to be equated with the lowest price. Rather, the most economically advantageous tender can also be identified on the basis of value for money, where there may be other factors in addition to the costs. Also, the cost criterion may be based on the price or a cost-effectiveness approach, such as life cycle costs. Qualitative aspects as well as environmental and social aspects may be taken into account.

In any case, each evaluation criterion must be transparent, non-discriminatory and objectively verifiable. Further, each criterion must be set out by the contracting authority in advance and linked to the subject matter of the public contract in question. The criteria must be demonstrated by a list in the procurement documents, which starts with the most important criterion and ends with the least important. Additionally, the contracting authority may determine a certain weight for each criterion to ensure a transparent evaluation of the tenders. While contracting authorities do have some discretion, courts in Germany generally require that the price (compared to other qualitative criteria) has a certain minimum weight and should not just play a subordinate role.

Concessions

In contrast, Section 152 para. 3 of the GWB sets out fewer requirements for concessions in accordance with the relevant Directive 2014/23/EU and does not refer to the stated concept of the most economically advantageous tender. Instead, it refers to an overall economic advantage. In order to identify this advantage, the contracting authority must award the concession on the basis of objective criteria which comply with general public procurement principles (ie, transparent, objectively verifiable and non-discriminatory criteria). Here too, the award criteria may include qualitative, environmental or social aspects.

Tenders Below the Minimum Value Threshold

The concept of the “most economically advantageous tender” likewise applies to tenders below the minimum value thresholds (Section 43 of the UVgO).

General Exclusion Grounds

In addition to the exclusion grounds relating to the bidder described above (see 2.8 Eligibility for Participation in a Procurement Process) according to Section 57 of the VgV, tenders have to be excluded, inter alia, if:

• the tender was not submitted in time or in the required form;
• the tender does not include the requested documents and information; or
• changes or additions have been made after submission.

Abnormally Low Tenders

Furthermore, according to Section 60 of the VgV (implementing Article 69 of Directive 2014/24/EU), tenders that are abnormally low can be excluded where a bidder fails to sufficiently explain the price or costs proposed in the tender in relation to the works, supplies or services and with regard to the basic principle of procurement law and standards in the fields of environmental, social and labour law. An abnormally low tender may be excluded in particular if the price is abnormally low because the bidder has received state aid and cannot demonstrate compatibility with state aid law.

VSVgV, KonzVgV

According to Section 33 of the VSVgV, tenders whose prices are obviously disproportionate to the service may similarly not be awarded the contract. With regard to concessions, although the KonzVgV does not contain any provisions comparable to Section 60 of the VgV, an obligation to review abnormally low bids can be derived from general principles guiding public procurement law, in particular the principle of sound financial management (Grundsatz der Wirtschaftlichkeit).

Tenders Below the Minimum Value Thresholds

The UVgO includes similar provisions for tenders below the minimum value thresholds (see 1.2Entities Subject to Procurement Regulation) as those set out in the VgV.

Under German procurement law, the contracting authority has to disclose the criteria and evaluation methodology on the basis of which bidders are selected and tenders are evaluated in advance. This requirement is rooted in the principles of transparency, equal treatment and non-discrimination (see 1.5 Key Obligations of Awarding Authorities and 2.10 Evaluation Criteria).

In general, the selection criteria and methodology for a restriction of participation in a procurement process must be outlined in the contract notice or in the request for expression of interest; and the awarding criteria and their weighting must be outlined in the contract notice or procurement documents (see Section 127 para. 5 of the GWB).

As with any procurement document, the information must be disclosed in a timely manner to ensure that interested economic operators have sufficient time to understand the criteria and methodology and to prepare their submissions accordingly (see 2.7 Time Limits for Receipt of Expressions of Interest or Submission of Tenders for specific time limits).

Once set and published, changes to the criteria are only permitted under limited circumstances.

In award procedures in which participation is restricted (see 2.9 Restriction of Participation in a Procurement Process), applicants who have not been selected to proceed to the next stage need to be informed immediately and at least within 15 days following a respective request for information (Section 62 of the VgV).

Tenders Above the Minimum Value Thresholds

For tenders above the minimum value thresholds, prior to the award of the contract, bidders (and candidates if they have not been informed about their exclusion) must be informed about the contract award decision and the contracting authority’s intention to award the contract to a certain bidder, after which a standstill period begins (see 3.5 Requirement for a “Standstill Period”). The notice is also referred to as a “standstill letter” or an “Alcatel letter”, referring to the CJEU’s Alcatel judgment (C-81/98).

Section 134 of the GWB, as further supplemented by Section 62 of the VgV, requires that the contracting authority informs unsuccessful bidders of:

• its intention to award the contract to the winning bidder;
• the date on which the contract shall be concluded; and
• the reasons.

This must be done immediately and in text form (which may include electronic forms and fax). Upon request, the contracting authority must provide further details.

Additionally, Section 39 of the VgV stipulates that every award decision must be submitted to the Publications Office of the EU within 30 days of the award of the contract by the contracting authority. The contract award notice is then published in a Supplement to the Official Journal of the European Union and can be found on TED (see 2.1 Prior Advertisement). Also, changes to contracts have to be published under certain conditions.

Section 35 of the VSVgV (for procurement in the field of defence and security) and Section 21 of the KonzVgV (for concessions) set out similar obligations, but the time limit for the submission to the Publication Office is 48 days.

Tenders Below the Minimum Value Thresholds

For tenders below the minimum value thresholds, Section 46 of the UVgO sets out similar requirements. However, there is no mandatory standstill period and there is no need to submit information to the Publications Office of the EU. Rather, Section 30 of the UVgO requires that the contracting authority provide certain information merely on its website or on internet portals (see also 2.1 Prior Advertisement) for a period of three months about each contract that:

• is awarded in the restricted procedure without prior publication or in the negotiated procedure without prior publication (see 2.3 Tender Procedure for the Award of a Contract and 2.4 Choice/Conditions of a Tender Procedure); and
• has a value of at least EUR25,000 excluding VAT.

There is no obligation to grant a prior hearing to bidders before an award decision is taken. However, a prior hearing is required if a bidder is excluded – eg, due to exclusion grounds. Furthermore, the contracting authority may contact bidders to clarify certain aspects of the tender provided that the bidder and the contracting authority do not negotiate the tender or any aspect of it. In the absence of a right to a prior hearing, legal protection is guaranteed by the notification obligations (see 3.3 Obligation to Notify Bidders of a Contract Award Decision) and the standstill period (see 3.5Requirement for a “Standstill Period”).

According to Section 134 of the GWB and subject to exceptions, the contract may only be concluded 15 calendar days after the notice described in 3.3Obligation to Notify Bidders of a Contract Award Decision has been dispatched. If the information is sent electronically or by fax, the standstill period is reduced to ten calendar days.

In contrast, there generally is no standstill period for tenders below the minimum value thresholds, subject to exceptional cases (see 4.2 Remedies Available for Breach of Procurement Legislation and 5.4 Recent Important Court Decisions).

In Germany, a distinction must be made between legal recourse against the procurement award procedure and claims for damages due to an unlawful award decision, as well as legal protection for tenders above the minimum value thresholds and those below the minimum value thresholds.

Tenders Above the Minimum Value Thresholds

Comprehensive legal recourse against the award procedure is admissible for public contracts and concessions that exceed the minimum value thresholds. In general, specific legal protection under public procurement law must be sought before claims for damages/compensation can be claimed (see 4.2 Remedies Available for Breach of Procurement Legislation). In the first instance, the award decisions are reviewed by “procurement chambers” (Vergabekammern). Procurement chambers are specialised, independent, court-like adjudicative bodies and part of the German executive branch. Because Germany is a federation, procurement chambers exist in each federal state and are responsible for awards of the federal state and its authorities. Correspondingly, federal procurement chambers exist that are responsible for awards of the federal government and its authorities. The latter form an (independent) part of the Federal Cartel Office. An immediate appeal (sofortige Beschwerde) against any decision by a procurement chamber is admissible at the public procurement senate (Vergabesenat) of the competent higher regional court (Oberlandesgericht).

Tenders Below the Minimum Value Thresholds

For tenders below the minimum value threshold, the scope of legal protection varies depending on the law of the relevant federal state.

In general, only claims for damages can be sought before the ordinary courts (ie, civil courts, not administrative courts that usually have jurisdiction to review measures by public authorities; see 4.2 Remedies Available for Breach of Procurement Legislation). Decisions can be appealed through the ordinary courts of law.

Where, in exceptional cases, federal states also allow legal recourse against the award decision (see 4.2 Remedies Available for Breach of Procurement Legislation), in general a special supervisory authority has the power to review the award procedure (for example see Section 8 of the Saxon Public Procurement Act, “Sächsisches Vergabegesetz”).

Due to the different scope of legal protection granted, a distinction must be made between tenders above the minimum value thresholds and tenders below the minimum value thresholds.

Tenders Above the Minimum Value Thresholds

For tenders above the minimum value thresholds, legal recourse against the award procedure is the primary remedy. Thus, according to German procedural law, claims for damages/compensation can only be sought if the plaintiff has previously taken legal action against the award procedure, to the extent that this is feasible.

In legal recourse against the award procedure, particularly the performance or omission of an action can be claimed (such as the amendment of the procurement documents, the decision not to award the contract, the re-evaluation of the tenders, setting aside an unlawful decision taken in the procurement procedure or the repetition of the award procedure). However, in case of an unlawful procurement procedure, according to Section 168 of the GWB, the procurement chamber will take the appropriate measures to remedy the infringement and prevent damage to the interests concerned. This means, in particular, that the procurement chamber is not bound by the specific claim but can decide on the measures at its own discretion.

If the plaintiff had an actual chance of being awarded the contract, but this chance was impaired by an infringement of procurement law, the plaintiff may claim damages for the costs of preparing the tender and participating in the procurement procedure (Section 181 of the GWB). In contrast, lost profits from a contract not awarded generally cannot be claimed, except in rare situations where the plaintiff would have been entitled to the award of the contract.

Tenders Below the Minimum Value Thresholds

For tenders below the minimum value thresholds, financial compensation is the primary remedy. A claim for damages requires the contracting authority to have breached procurement law negligently or wilfully. In contrast, legal recourse against the award decision itself is generally inadmissible subject to the following exceptions:

• Some federal states (in particular Rhineland-Palatinate, Saxony, Saxony-Anhalt and Thuringia) also allow legal recourse against the award decision itself, but only if the contract value is above certain thresholds depending on the type of procurement. To the extent legal recourse against the award decision is admissible, the respective federal state law sets out further requirements for the contracting authorities, such as a standstill period.
• In exceptional cases where a tender below the minimum value threshold has a cross-border context – eg, if it attracts economic operators from EU member states other than Germany, legal action against the procurement procedure can be sought for violations of fundamental European procurement principles (eg, transparency, equal treatment or the non-discrimination principle).

German procurement law provides for interim measures, especially with the aim of suspending the contract award procedure. Interim measures primarily aim to secure the status quo. Thus, the interim measure may not prejudge the outcome of the main proceedings. Therefore, in principle, no repetition of the award procedure can be demanded as an interim measure. Furthermore, if the main proceedings following an interim measure are lost, there is a risk of claims for damages – eg, for damages resulting from the delay or measure itself.

However, interim measures are often not required for tenders above the minimum value threshold as (i) the standstill period applies (see 3.5 Requirement for a “Standstill Period”) and (ii) public procurement law stipulates that a contract may not be concluded during proceedings before a procurement chamber (automatic suspensive effect; see Section 169 para 1 of the GWB).

In practice and in accordance with the general principles of German procedural law, only economic operators who have taken part in the tender have standing to bring an action. An exception may apply under certain conditions – eg, where (i) an economic operator did not participate due to criteria that have been unlawfully changed during the procurement procedure or (ii) no tender was conducted at all. In particular, pursuant to Section 160 para. 2 of the GWB, an economic operator has standing to challenge the awarding authority’s decision if it (i) has an interest in the public contract and (ii) asserts a violation of its own rights due to non-compliance with public procurement law provisions. Furthermore, the economic operator must demonstrate that it has suffered or is at risk of suffering damage as a result of the breach of procurement law.

Similar requirements apply to tenders below the minimum value thresholds (for the scope see 4.2 Remedies Available for Breach of Procurement Legislation). Also, the preclusion provisions are of practical importance in this context (see 4.5 Time Limits for Challenging Decisions).

For tenders above the minimum value thresholds, Section 160 para. 3 of the GWB sets out time limits that vary depending on when an economic operator has knowledge of the potential non-compliance with public procurement law. In particular, an economic operator cannot file a complaint with the procurement chambers if:

• it has become aware of the alleged breach of procurement law before submitting its claim and has not notified the contracting authority of this within a period of ten calendar days – beginning as soon as the economic operator has recognised the alleged breach;
• the alleged breach of public procurement law is recognisable in the contract notice or procurement documents and the contracting authority was not informed of this breach by the deadline for the application or submission of tenders at the latest; or
• more than 15 calendar days have passed since the receipt of a notification from the contracting authority stating that it does not intend to remedy a notified (alleged) breach.

An economic operator that is precluded under the above provisions may also not seek financial compensation. This does not apply to tenders below the minimum value threshold, as legal recourse against the award procedure is generally inadmissible (see also 4.2 Remedies Available for Breach of Procurement Legislation).

In German public procurement law the principle of urgency (Beschleunigungsgrundsatz) applies, thus the law, at least on paper, is committed to time-efficient, speedy procedures. The procurement chamber must make its decision and publish its reason within five weeks, with the exception of particularly complex cases, which must be justified by the chair of the procurement chamber (Section 167 para. 1 of the GWB). In general, an appeal procedure lasts between three and six months. For tenders below the minimum value threshold, on the other hand, compensation claims before the ordinary courts can take considerably longer.

In 2022, there were 702 review applications (across all procurement chambers) and 133 appeal proceedings according to the German Federal Ministry for Economic Affairs and Climate Action.

In particular, the following costs may be incurred:

• fees of the procurement chamber (or the ordinary court; see 4.1 Responsibility for Review of the Awarding Authority’s Decisions);
• costs for a party’s own lawyer and that of the opposing party; and
• costs for other participants (including witnesses and bidders where required).

According to Section 182 of the GWB, the fee of the procurement chamber (see 4.1 Responsibility for Review of the Awarding Authority’s Decisions and 4.2 Remedies Available for Breach of Procurement Legislation) depends on the amount in dispute and the expense required. In general, the fee must be set between EUR2,500 and EUR50,000. In very exceptional cases, the fee can be set up to EUR100,000. The procurement chambers often refer to a fee table (Gebührentabelle) in order to determine the fee which is within their discretion. Each procurement chamber in general publishes its fee table on its webpage.

In principle, the losing party must bear the costs of the proceedings. This means that in the event of a successful claim, all paid costs will be reimbursed. However, costs for a party’s own lawyer can only be reimbursed to the extent that a lawyer was required. In practice this means that the cost for a lawyer will only be reimbursed to the amount set out for administrative procedures in the German Lawyers’ Compensation Act (Rechtsanwaltsvergütungsgesetz).

Also, for proceedings before the ordinary courts, the fees for the proceedings are specified in an ordinance and the reimbursable costs for lawyers are outlined in the German Lawyers’ Compensation Act.

Section 132 of the GWB governs when a modification of a public contract is permissible without a new award procedure. The provision implements the European procurement directives which in turn reflect the CJEU’s case law. As a general rule, Section 132 para. 1 of the GWB stipulates that substantial changes to a public contract during the term of the contract require a new award procedure. However, according to Section 132 para. 2 and 3 of the GWB, a new award procedure is not required if:

• the contract contains a clear, precise and clearly worded review clause and the change does not result in a change of the overall character of the contract;
• (unforeseen) additional works, services or supplies are required and a change of the contractor is not reasonable due to economical, technical or factual reasons provided that the price is not increased by more than 50% of the value of the original contract;
• other reasonably unforeseen circumstances would require a change which does not change the overall character of the contract provided that the price is not increased by more than 50% of the value of the original contract;
• the contractor is replaced by a new contractor due to (i) a review clause (see above for the requirements), (ii) a restructuring of the company or (iii) the contracting authority itself assuming the obligations of the main contractor towards its subcontractors; or
• the value of the change does not exceed 10% of the original contract value in the case of supply and service contracts and 15% in the case of works contracts, provided that the value change itself is below the minimum value threshold for tenders.

In general, Section 132 of the GWB also applies to tenders below the minimum value thresholds according to Section 47 of the UVgO, but the minimum threshold is at 20% of the original contract value.

German public procurement law only provides for specific grounds for the contracting authority to terminate the contract for tenders above the minimum value threshold. According to Section 133 GWB, the contracting authority may terminate the contract if:

• a substantial change to the contract has been made (see 5.1 Modification of Contracts After the Award);
• there have been mandatory grounds for exclusion at the time the contract was awarded; or
• the contract should not have been awarded to the contractor because of a serious breach of the obligations under the Treaty on the Functioning of the European Union or of the procurement provisions laid down in the GWB provided that such breach has been found by the European Court of Justice in proceedings under Article 258 of the Treaty on the Functioning of the European Union.

In addition, the contract itself may contain termination rights. In particular, the German government usually uses standard contractual terms such as the general terms and conditions for service contracts (VOL/B) and the supplementary contract terms for the procurement of IT services (EVB-IT), which provide further termination rights for both parties.

Finally, a contract may be void under German civil law, in particular if public procurement law laid down in the GWB has been wilfully violated (which, however, is only accepted in exceptional cases). Furthermore, according to Section 135 of the GWB, the contract generally will be void where the contracting authority did not comply with the standstill period or where it did not publish the procurement notice at European level – eg, on TED (see 2.1 Prior Advertisement).

No special prerogatives have been established under German procurement law.

Contracting authorities must decide at their own discretion whether to exclude a candidate or bidder due to facultative grounds for exclusion. The principle of proportionality obliges contracting authorities to make a specific and case-by-case assessment of the behaviour of the candidate or bidder considering all relevant circumstances. In light of the general principle of good administration, contracting authorities must also justify the decision to refrain from exclusion. The reasons have to be communicated. See CJEU, decision of 21 December 2023, C-66/22.

Eligibility criteria are not sufficiently transparent if the contracting authority’s understanding differs from the interpretation of an objective, reasonable bidder. See Higher Regional Court Frankfurt a.M. (OLG Frankfurt a.M.), decision of 28 September 2023, 11 Verg 2/23.

The standstill period set out in Section 134 of the GWB does not apply to tenders below the minimum value threshold. See Higher Regional Court Düsseldorf (OLG Düsseldorf), decision of 21 June 2023, 27 U 4 / 22.

The lack of competition as required in Section 14 para. 4 No. 2 lit. b) of the VgV (unique position of an economic operator – technical reasons) for a negotiated procedure without prior publication (which leads to a de-facto direct award, (see 2.5 Direct Contract Awards) requires that a comprehensive market analysis be carried out in advance at European level. See Procurement Chamber South Bavaria (VK Südbayern), decision of 5 June 2023, 3194.Z3-3_01-22-54.

Even for tenders below the minimum value threshold, the formal rule applies that the determination of the electronic communication methods by the contracting authority on the basis of the VOB/A also covers the form (eg, the file format). Submitting a tender in a different form (including files using a file format) than specified in the procurement documents will result in an exclusion. See Federal Supreme Court (BGH), decision of 16 Mai 2023, XIII ZR 14/21.

Following a decision of the CJEU (C-669/20, “Veridos”), the VK Bund held that a price gap of around 20% is established as the basis for determining an abnormally low bid, but this cannot be the sole criterion as all circumstances of the individual case must be taken into account. See Federal Procurement Chamber (VK Bund), decision of 04 April 2023, VK 2-18/23.

The German federal government is currently considering two more significant legislative amendments to German procurement law.

Act for the Transformation of Procurement Law (Expected for 2024)

In its coalition agreement from November 2021, the German federal government committed to reforming German procurement law by making tenders easier, more professional, digital and fast, while at the same time continuing to pursue social, ecological and innovative goals. Following a public consultation in summer 2023, a first draft bill (titled Vergabetransformationspaket) is expected for the first half of 2024, with the finalised law coming into effect towards the end of 2024. Specific details have not been published yet, but the following amendments are expected:

• simplifications for start-ups and non-profit organisations;
• increases in the thresholds for direct awards (without competitive tender; see also 2.5 Direct Contract Awards);
• standardisation of forms to be used in government tenders;
• introduction of a central procurement platform for all government tenders;
• digitalisation of tenders and review procedures by allowing electronic communication, virtual negotiations, etc; and
• strengthening of the legal framework to consider social, ecological and innovative goals in government tenders.

Federal Tariff Loyalty Act (Potentially Expected)

Most of the German federal states have enacted tariff loyalty laws applying to state government tenders, except for the states of Bavaria and Saxony. Back in May 2023, the German Federal Ministry of Labour and Social Affairs published a draft federal tariff loyalty act (Bundestariftreuegesetz) which would require contractors in tenders conducted by federal contracting authorities to comply with applicable tariff agreements. The legislative process, while not abandoned, has stalled due to political opposition and there is currently no clear timeline as to when the federal Tariff Loyalty Act may come into effect.