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Seminar Paper, 2005
27 Pages, Grade: 9 out of 10 - excellent
B. Need for Regulation (?)
C. The Original Framework of German Public Procurement (until 1993)
D. Reform(s) of German Public Procurement
I. European Legislation – Competences and Manifestion
II. The “Budgetary Law Solution” (haushaltsrechtliche Lösung)
III. Today’s System
1. In General
2. In Detail
a) Systematic Classification
b) General Principles (§ 97 GWB)
c. Scope of Application
aa. As Regards the Person Affected, § 98 GWB
bb. As Regards the Subject Matter, § 99( 1) GWB
e. Types of Procurement – Awarding procedures
f. Suitability Criteria, Contract Award Criteria and so called “ vergabefremde Kriterien”
g. Review Procedures, §§ 102-104 GWB
E. Future Developments
I. Systematic Classification & General Principles (§ 97 GWB)
II. The Scope of Application
III. Types of Procurement – Awarding Procedures, § 101 GWB
IV. Suitability Criteria, Contract Awarding Criteria and so called vergabefremde Kriterien
V. Review Procedures
There is rarely one legal sphere which has changed so much because of European legislation in Germany during the last fifteen years than the German public Procurement. That is why I will provide an overview of the development of German public procurement. Firstly, the need to regulate the public procurement will be explained briefly (B.). Secondly, I will describe the original framework of German public procurement (C.). After having a view on the reforms which took place in Germany since 1993 (D.), I will move over to the future developments (E). Finally, I will give a summarizing conclusion about the development of the German public procurement (F.).
The need for the regulation of public procurement can be explained by the fact that the contracts between public authorities and private firms have huge macroeconomic dimensions. Awarding public contracts is an important measure in economic policy especially in a situation of weakened domestic economic activities and an economic downturn within a country. The stimulation of business activities by awarding public contracts to domestic suppliers represents a disruptive element for the realization of the Common Market within the European Community/Union and for a free global trade.
Moreover, there are products (“individualistic products” - Individualleistungen) which lack free competition. The contract awarding procedure is supposed to create the missing competition between the product suppliers.
The huge economic significance of public contracts encourages suppliers to build combination or to agree stipulation in restrain of competition (bidding cartel) in order to have an influence on the awarding procedure and the tender price and finally win the contract (so called collusive tendering - Submissionsbetrug).
Owing to the high demand of public authorities for goods and services there is a considerable need for a transparent regulated awarding procedure preventing arbitrary and discrimination.
Public procurement was originally recognised as a part of the German Budgetary Law (Haushaltsrecht) and therefore of the state’s internal law (staatliches Binnenrecht).
First of all, it must be pointed out that contracting authorities agree on a contract with private tenders in accordance with German civil law due to the German legal tradition. Against this setting, the awarding of public contracts was, as a form of public commodity coverage, only fixed to the Federal Code on Budgetary Principles (vgl. § 30 Haushaltshaltsgrundsätzegesetz, HGrG). The principle of thriftiness, which is of common interest, was the basis for public invitations to tender.
§ 55 Federal Budgetary Statute (Bundeshaushaltsordnung -BHO) was the legal basis in the German federal law which was equalled by regional state law. The awarding of public contracts was regulated more precisely by regulatory provisions (Public Procurement Ordinance - Vergabeverordnung (VgV)) based on the budgetary law (Haushaltordnung). These administrative rules made (static) references in § 1 VgV to three internal regulation governing specific public contracts (Verdingungsordnungen) which were introduced based on § 55(2) BHO, which regulated the awarding procedure. Those regulations were worked out by committees including both representatives from the state and private companies (Verdingungsausschüsse). The fundamental obligation for public authorities to carry out public invitations to tender was laid down in § 55(1) BHO. This provision forced public authorities to perform in accordance to uniform guidelines. These guidelines stated when and how public invitations to tender had to be carried out, according to which procedure the suitable bidders were to determine and according to which criteria the successful offer was to determine.
Accordingly to traditional German comprehension, the procedure of the awarding of public contracts had to be in accordance with the regulations because of the principle of thriftiness in public housekeeping. Owing to this, those provisions had no protective function for the bidders and were without external effect (internal administrative law - Verwaltungsbinnenrecht).
If these regulations were flouted by the public authorities the bidders had no access to an infringement procedure, because of the fact that bidders had no individual right of an non-discriminatory treatment or an accurate awarding procedure (no primary legal protection). Inferior bidders could solely (insufficiently) claim for compensation at civil courts (secondary legal protection; culpa in contrahendo).
European legislation started to influence increasingly the EC Member States’ procurement law with the beginning of the 1990s.
While the European primary law remains silent in terms of procurement law several directives have influenced the Member States’ procurement law. The German public procurement is said to be fundamentally based on European secondary law. The European legislator uses the competence out of Art. 95 TEC concerning the Common Market and his authorization to issue regulation relating to the freedom of service and freedom of settlement to harmonize public procurement within the European Union.
The European Court of Justice (ECJ) ruled in its judgement concerning the German administrative rule (Verwaltungsvorschrift) “TA Luft”, that the implementation of the European directives must include provision providing an infringement procedure, i.e. primary legal protection. The Court clarified, that the lack of comprehensive legal protection for bidders in Germany was not compatible with Community law.
The German legislator nevertheless decided to adopt a special procurement regime: the so-called “budgetary law solution” by implementing §§ 57 a-c Federal Code on Budgetary Principles (Haushaltsgrundsätzegesetz (HGrG)) flanked by two ordinances with the intention to prevent creating “real” individual and legally enforcable rights for the bidders (subjektiv öffentliche Rechte). The implementation of the Review Directive was done by establishing Vergabeprüfstellen, which should ensure that the awarding procedure was kept by the contracting authorities, and procurement review committees (Vergabeüberwachungsausschüsse), which were comparable with courts and were part of Federal Cartel Office (Bundeskartellamt). This solution faced critics by numerous scholars because the bidders’ legal protection guaranteed by the Review Directive could not be effectively exercised in Germany.
The ECJ judged that the “Budgetary Law Solution” was not compatible with European law in another decision in 1995, because it does not include individual and legally enforcable rights for bidders. This judgement initiated the end of the “Budgetary Law Solution” and was the starting point for a legislative fresh start for German public procurement.
Furthermore, the Vergabeüberwachungsausschüsse were criticised owing to constitutional and community law. Solely the administrative Vergabeprüfstellen were allowed to find the facts to a case, while the Vergabeüberwachungsausschüsse could only handle legal questions. Consequently, this was not only a non-conformity with the directive but moreover a breach of German constitutional law in form of Art. 19(4) in conjunction with Art. 92 GG (guarantee of effective legal protection in the form of national courts) because of the fact that the Vergabeüberwachungsausschüsse did not constitute - in any case - a court within the meaning of the German Constitution.
Finally, the political intervention of the US-government is worth to be mentioned in this matter. It put the German government under pressure under threat of a trade war after two US-firms participated unsuccessfully in two awarding procedures in Germany.
The Vergaberechtsänderungsgesetz implemented a legal basis for public procurement in the Anti-Trust Code (§§ 97 ff. Part Four of the Gesetz gegen Wettbewerbsbeschränkung - GWB). The federal legislator’s competence was based on Art. 74 Nr. 11 and Nr. 16 GG.
The Vergaberechtsänderungsgesetz was issued to implement European directives accurately and therefore replaced fundamental structures within German public procurement. This change reached that the efficient public purchase of goods and services is not the main objective of the public procurement anymore. In accordance with the ECJ, the German legislator imposed a “real” individual bidders’ right which is legally enforceable in §97(7) GWB.
The German Kaskadensystem , however, remained unviolated. This term describes a three-stage set of rules and regulations, which has been criticized for being confusing. The GWB is a formally enacted law, which includes the general basis for German public procurement for public contracts above the critical thresholds. The Vergabeverordnungen include on the other hand provisions concerning the awarding procedure and the review procedure. This ordinance referred to the Verdingungsordnungen which describes the awarding procedure and the material awarding criteria in detail.
a) Systematic Classification
The German legislator has imposed public procurement as a part of GWB instead of creating a Procurement Code. This course of action is well-founded because public procurement is relevant for the competition and belongs to fair trade law. Some scholars, however, favoured a Vergaberechtsgesetz .
 Badura/Huber , Besondere Verwaltungsrecht, Rn. 134; Byok , NJW 2004, 198, 198; Huber, EPL 7 (2001), 33, 35; Müller/Ernst , NJW 2004, 1768, 1768; Pietzcker , ZHR 162 (1998), 427, 429; Roebling , Jura 2000, 453, 453. Pache , DVBl. 2001, 1781, 1781 f. and Stober , Allgemeines Wirtschaftsverwaltungsrecht, § 24 IV 1 c., point out that world trade law had also an impact on the German public procurement. Compare: “WTO-Agreement on Government Procurement“.
European legislation affected also the public procurement of the other Member States of the European Community. Compare: Prieß/Hausmann , EuR 1999, 203 ff.
 Badura/Huber , Besonderes Verwaltungsrecht, Rn. 133; Hermes , JZ 1997, 909, 909; Pietzker , ZHR 162 (1998), 427, 427; According to Müller/Ernst , NJW 2004, 1768, 1768, and Pache , DVBl. 2001, 1781, 1782 public porcurement reaches 400 bn. € in Germany. That accounts 13% of the German GDP. Public contracts of over one trillion Euro are awarded within the territory of the EU..
 Pache , DVBl. 2001, 1781, 1782; Stober , Allgemeines Wirtschaftsverwaltungsrecht, § 24 IV 1 a.; compare: ECJ 22/9/1988, C-45/87, (Dundalk); ECJ C-21/88 (Du Pont de Nemours Italiana) Rec. 1990, I-889; ECJ C-351/88 (Laboratori Bruneau) Rec. 1991, I-3671; ECJ 22/6/1993, C-243/89 (Storebaelt) Rec. 1993, I-3353.
 The US „Buy-American-Act“ verifies that it is not an European phenomen.
 A so called “national content clause” is one example for a trade barrier (ECJ 22/6/1993 C-243/89 (Storebaelt), par. 23, 26); Compare moreover: Arrowsmith , The Law of Public and Utilities Procurement, 46 f.; Huber , EPL 7 (2001), 33, 35; Pache , DVBl. 2001, p. 1781, 1783; Pietzcker , ZHR 162 (1998), 427, 429; Roebling , Jura 2000, 453, 454; Stober , Allgemeines Wirtschaftsverwaltungsrecht, § 24 IV 1 b.
 Byok , NJW 2004, 198, 199; Roebling , Jura 2000, 453, 454.
 Compare: Hohmann, Olaf : Die strafrechtliche Beurteilung von Submissionsabsprachen, in NStZ 2001, p. 567 ff.
 Compare: Badura/Huber , Besonderes Verwaltungsrecht, Rn. 133; Huber , EPL 7 (2001), 33, 38; Pache , DVBl. 2001, 1781, 1781; Pietzcker , ZHR 162 (1998), 427, 430.
 Ehlers , in: Erichsen § 2 Rn. 78; Hermes , JZ 1997, 909, 910; Malmendier , DVBl. 2000, 963 f; Pache , DVBl. 2001, 1781, 1787; Pietzcker , ZHR 162 (1998), 427, 457; Rittner , Rechtsgrundlage und Rechtsgrundsätze des öffentlichen Auftragswesens, p. 46 ff..
 Pache , DVBl. 2001, 1781, 1785; Roebling , Jura 2000, 453, 454; Schwarze in: ders. p. 24 f.; Triantafyllou , NVwZ 1994, 943; vgl. § 6 (1) HGrG, § 7 (1) BHO.
 Pietzcker , ZHR 162 (1998), 427, 435.
 I.e. in accordance with the internal regulations: Verdingsungsordnung für Bauleistungen (VOB/A), the Verdingungsordnung für Leistungen – außer Bauleistungen (VOL/A), and the Verdingungsordnung für freiberufliche Leistungen (VOF).
 Byok , NJW 1998, 2774, 2774; Huber , EPL 7 (2001), 33, 36; Pache , DVBl. 2001, 1781, 1785; Roebling , Jura 2000, 453, 455.
 BGHZ 22/2/1973, E 60, 221, 225; Byok , NJW 1998, 2774, 2774; Huber , EPL 7 (2001), 33, 36; Roebling , Jura 2000, 453, 455.
 Badura/Huber , Besondere Verwaltungsrecht, Rn. 133; Byok , NJW 1998, 2774, 2774; Huber , EPL 7 (2001), 33, 36; Jäckle , NJW 1990, 2520; Lampe-Helbig/Wörmann , Rn. 451 ff.; Lötzsch/Bornheim , NJW 1995, 2134; Noch , Vergaberecht und subjektiver Rechtschutz p. 200 ff.; Roebling , Jura 2000, 453, 455.
 Schliesky , Öffentliches Wirtschaftsrecht, p. 172; Classical directives of the first generation: Directive 71/305/EEC (on the award of public works contracts) and Directive 76/32/EEC (on the award of public supply contracts) which were replaced by: Classical directives of the second generation: Directive 93/37/EC (one the award of public works contracts), Directive 93/36/EC (on the award of public supply contracts), Directive 92/50/EC (on the award of public service contracts), each of them in form of the Directive 97/52/EC. Directive 90/531/ECC (water, energy, transport and telecommunication sectors. Review Directive 89/665/ECC and the Review Directive 92/13/EWG, ABlEG L Nr. 76/14 for the above-mentioned sectors. Recently: General Procurement Directive 2004/18/EC.
 Frotscher , Wirschaftverfassungs- und Wirtschaftsverwaltungsrecht, par. 46; according to Arrowsmith , The Law of Public and Utilities Procurement, p. 45 had the European Community also are great impact on the procurement law in the United Kingdom.
 Boesen Rn. 11 ff.
 ECJ 30/5/1991 C-361/88 (Commission v Germany), Rec 1991, I-2567 par. 15.
 Zweites Gesetz zur Änderung des HGrG, BGBl. 1993 I S. 1928.
 Public Procurement Ordinance (Vergabeverordnung , VgV), BGBl. 1994 I S. 321 and Public Procurement Review Ordinance (Nachprüfungsverordnung , NpV), BGBl. 1994 I S. 324.
 BT-Drs. 12/4636, p. 12; BR-Drs. 5/1993.
 § 57b HGrG i.V.m. §§ 1, 2 NpV.
 § 57b HGrG i.V.m. § 3 NpV.
 The ECJ approved those institutions as courts within the meaning of Art. 234 TEC (ECJ 17/9/1997, C-54-96 (Dorsch Consult/Bundesbaugesellschaft) Rec. 1997, I-4961.
 Pietzcker , ZHR 162 (1998), 427, 438.
 Faber , DÖV 1995, 403, 408; Prieß , EuZW 1995, 793; Pietzcker , NVwZ 1996, 313, 314; Rittner , NVwZ 1995, 313, 315; Ruffert , DVBl. 1998, 69, 75; Schäfer , BB 1996, Beiheft 12.
 ECJ, 11.08.1995 (Commission/Germany) C-433/93 – 1995, I-2303, par. 19.
 Huber , EPL 7 (2001), 33, 41; Pietzcker , NVwZ 1996, 313, 316; Pietzcker , ZHR 162 (1998), 427, 439; Rittner , NVwZ 1995, 313, 315.
 KG, EuZW 1995, 645; Vergabeüberwachungsausschuss Bund, WuW VergAB 27 (General Electric); Byok , VergabeR 1996, 55 (Westingshouse).
 The Vergaberechtsänderungsgesetz of 26.8.1998 (BGBl. I p. 2512) came into effect on 1 January 1999.
 Gesetz gegen Wettbewerbsbeschränkungen in der Fassung der Neubekanntmachung vom 2.9.1998, BGBl. I S. 2546.
 Schliesky , Öffentliches Wirtschaftsrecht, p. 172.
 Pietzcker , ZHR 162 (1998), 427, 442.
 BT-Drs. 13/9340.
 Pache , DVBl. 2001, 1781, 1786; Schliesky , Öffentliches Wirtschaftsrecht, p. 172; Thieme/Corell, DVBl. 1999, 884, 887.
 Pache , DVBl. 2001, 1781, 1786.
 Knauff , EuZW 2004, 141, 144; Pache , DVBl. 2001, 1781, 1790 f.
 BT-Dr. 13/10328; Schliesky , Öffentliches Wirtschaftsrecht, p. 152.
 Schliesky , Öffentliches Wirtschaftsrecht, p. 171.
 Dreher , WuW 1997, 343, 345.
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