Principles of public procurement law

When purchasing goods or services, the public sector has to make an economic use of the communal funds, as public contracts are paid by citizens ‘taxes.

For this reason, it has to adhere to a few principles in the occasion of carrying out new awards (which are regulated in § 97 GWB). These requirements have to be respected for the choice of proceedings, the type of service description, the selection of participants in the competition and the awarding criteria.

Principle of competition

As stipulated in § 97 (1) GWB, the competition principle in the public sector allows as many bidders to participate in the procurement process. That is why the open procedure enjoys top priority. The public authority is prohibited from restricting the competition by legal (or factual) requirements.

 Requirements for transparency

The transparency requirement of § 97 (1) GWB obliges the contracting authority to conduct the procedure in accordance with clear and pre-defined requirements. This includes the obligation to inform the bidder comprehensively, for instance on the required proof of eligibility and the award criteria. The requirement of transparency is followed by the obligation of the public sector to issue a so-called “publicity note” in which the essential steps of the award procedure are to be written down.

Prohibition of discrimination

According to § 97(2) GWB, the participants in an awarding procedure shall be treated equally unless discrimination is expressly required or permitted under this act. Acting in favour of a tender to the detriment of somebody else is considered unlawful. It is also prohibited to use other criteria other than those relating to the granting (e.g. payment of standard wages, promotion of women, employment of the long-term unemployed, residency) with no relevance for suitability or efficiency as the basis of the awarding of the contract; unless this is permitted by federal/ state law, according to § 97 (4) GWB.

However, additional criteria concern, for instance, social environmental or innovative aspects that are permissible insofar as they are materially related to the award of the contract and result from the terms of reference.

Requirements of lottery procedure

According to § 97 (3) GWB, this lottery procedure serves to adequately take into account medium-sized interests by dividing the order into professional and partial lots, as far as this makes economic sense. For example, small and medium-sized enterprises should be involved in tenders within their capacity.

Bidders suitability

The principle of bidding in § 97 (4) GWB stipulates that contracts can only be awarded to competent, efficient, lawful and reliable companies.

Proof of bidding is provided by submitting the proof of eligibility required by the contracting authority.

For bidders it is advisable to keep the proof of eligibility (which is regularly requested in tendering proceedings) on file and up to date. The existence of certain qualifications can be proven by registration in a prequalification system, according to § 97 (4a) GWB.

For the award of construction contracts, a prequalification procedure has recently being introduced in the VOB. Since September 2009, it has been introduced the nationwide prequalification database PQ-VOL concerning the service sector.

If you are registered in such directories, you do not have to resubmit your documents every time you apply. Note: The entry in such a register only replaces the standard certificate, not the order-specific proof of suitability.

Efficiency principle

Due to the economic efficiency requirement of § 97 (5) GWB, the surcharge is in principle not to be awarded on the cheapest, but on the most economical offer.In addition to the price, criteria associated with the subject matter of the order, such as quality, customer service, delivery and execution deadlines, etc., also play a fundamental role.

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