GERMANY | PROCUREMENT | Overview of Communications, Circulars, Decrees and Administrative Regulations at EU, Federal and State Level concerning the Implementation of Award Procedures during the Corona Crisis (as of 2 April 2020)
This article provides an overview of existing facilitations in the implementation of procurement procedures at EU, federal and state level. The article also contains direct links to the relevant communications, circulars, decrees and administrative regulations and is regularly updated.
The constant spread of the SARS-CoV-2 infectious agent in Germany also has a massive impact on the procurement activities of public-sector clients in Germany. Different products are needed quickly and in large numbers – from remedies and aids (e.g. respirators) to information technology equipment (e.g. laptops) and video conferencing technology for working from home.
In the range above the EU thresholds (supplies and services: EUR 214,000, works contracts: EUR 5,350,000), the legal framework is provided by EU procurement directives 2014/23/EU (concessions directive), 2014/24/EU (public procurement directive) and 2014/25/EU (sectoral procurement directive). The federal legislator has implemented the above-mentioned directives into national law as part of the Amendment to Procurement Law 2016.
Below the EU thresholds, on the other hand, procurement law is budget law which is why the federal states there define the factual and personal scope of application of the regulatory framework of procurement law by means of corresponding administrative regulations to the respective federal state budget regulation and in the municipal budget regulation.
With regard to the communications, circulars, decrees and administrative provisions set out below, a regulatory distinction must therefore be made as follows:
- The communication of the EU Commission as well as the circulars of the Federal Government interpret applicable pan-European public procurement law and point out the already existing scope and exceptions without directly creating new law. The legal opinions expressed there are not binding for the procurement review bodies (public procurement chambers and higher regional courts) but should certainly be used in the review case to interpret the underlying standards and to assess the respective individual case. The BMWi circular of 19 March 2020 for the supply and services sector and the BMI decree of 27 March 2020 for the construction sector are likely to be of particular relevance here.
- On the possibilities of accelerated procurement in the upper threshold area, see also our article in the BEITEN BURKHARDT Corona Information Center dated 13 March 2020 (updated on 23 March 2020).
- The decrees and administrative regulations of the federal states, on the other hand, amend – usually initially for a limited period of time – the state budget law for the im-plementation of “corona-related” award procedures. Apart from this common focus, the individual decrees and administrative regulations differ in part significantly from one another in terms of their regulatory content.
II. Overview of regulations at EU, federal and state level
- Competent authority / regulation: EU Commission, COMMUNICATION FROM THE COMMISSION European Commission Guidelines on the use of the public procurement framework in the emergency situation caused by the COVID-19 crisis (2020/C 108 I/01) of 1 April 2020
- Essential contents: Shortening of the standard time limits of the open and restricted procedures to the minimum time limits (open procedure: 15 calendar days; restricted procedure: 15 calendar days in the call for com-petition and 10 calendar days in the bidding phase); Admissibility of the negotiated procedure without a call for com-petition where the shortening of the standard time limits is not sufficient to meet short-term needs. Direct needs of hospitals and other health care facilities are particularly mentioned; In individual cases even direct award permitted if only one company is able to supply; Reference to the fact that the negotiated procedure without a call for competition is primarily intended to cover short-term needs (“interim awards”) and not long-term needs (number 2.3.4 of the Commission communication); Reference to possible arrangements in the procedure (e.g. contact by telephone, e-mail or in person).
- Competent authority / regulation: Federal Ministry for Economic Affairs and Energy, Circular on the application of public procurement law in connection with the procurement of services for the containment of the spread of the new coronavirus SARS-CoV-2 of 19 March 2020.
- Essential contents: Admissibility of the negotiated procedure without a call for competition for the purchase of services for the containment and short-term management of the corona pandemic and/or the maintenance of public administration services; Permitted for the procurement of remedies and aids (masks, gloves, etc.) and certain IT services required to deal with the corona crisis (home office work-places, video conferencing technology, etc.); List of possible procurement objects is not exhaustive; Wherever possible, participation of several companies, but also direct award of contracts is permitted; Application of these principles also in the regulatory area of the Sectoral Regulation (SektVO) and the Defence and Security Procurement Regulation (VSVgV); Extension of existing contracts under section 132 (2) sentence 1 no. 3 German Antitrust Act (GWB) up to 50 % of the value of the originally specified contract
- Competent authority / regulation: Federal Ministry of the Interior, Building and Community, COVID-19 Pandemic: Procurement law issues Decree BW I 7 70406/21#1 of 27 March 2020
- Essential contents: Recourse to negotiated proceedings and direct awards of con-tracts by private treaty also permissible for works contracts due to special urgency analogous to the letter of the BMWi dated 19 March 2020; The instructions on how to deal with disruptions in the construction process from the decree on construction contract law of 23 March 2020 (Chapter II) must be included in the tender documents; Priority of the self-declaration over the submission of supporting documents if timely submission is not possible due to the corona crisis; Adaptation of procedural and contractual deadlines where possible; E-Awarding before submission of paper tenders; For paper tenders: Opening date according to section 14a German Award and Contract Procedures for Construction Services Part A (VOB/A) is no longer applicable but is replaced by a mere open-ing date according to section 14 VOB/A; Contractual penalties to be applied “only in exceptional cases”.
- Competent authority / regulation: Federal Ministry of the Interior, Building and Community, Decree on construction contract law of 23 March 2020.
- Essential contents:Construction work is to be discontinued only if official measures require it (e.g. entry bans) or if further operation is not possible due to official measures; Construction workflow disruptions: The corona pandemic is basically suitable to trigger the facts of force majeure in the sense of section 6 (2) no. 1 lit. c German Award and Contract; Procedures for Construction Services Part B (VOB/B) but individual case review is still necessary; Contractor must prove the existence of the conditions of force majeure (e.g. quarantine of employees, travel restrictions, no availability of building materials); Cost increases are not unreasonable per se; Extension of the execution deadlines by the duration of the impediment plus a reasonable surcharge for resuming work (section 6 (4) VOB/B); Principal is not in default of acceptance (section 642 German Civil Code (BGB)); Possibility for contracting authorities to make advance payments against a guarantee by the contractor (section 16 (2) No. 1 VOB/B).
- Federal state / Competent authority / regulation, Baden-Wuerttemberg
Ministry of Economic Affairs, Labour and Housing, Public Procurement Urgent awards of supplies and services in the light of the corona pandemic of 20 March 2020.
- Essential contents: (Merely) Reference to the existing possibilities for accelerated procurement, in particular in accordance with section 8.3 of the German Administrative Regulation (VwV) to award a negotiated contract without a call for competition if the contract value is not expected to exceed EUR 50,000
- Competent authority / regulation: Fee State of Bavaria, Bavarian state government, Administrative regulation on public procurement (VVöA) of 24 March 2020. Extension to municipal contracting authorities available by circular letter.
- Essential contents: All procurements up to reaching the EU threshold (also without corona reference) can be awarded until 30 June 2020 by negotiated procedure with or without call for competition or by restricted tendering without call for competition; Raising of the threshold for direct contracts to EUR 25,000 for corona-related contracts; General revision of the German Administrative Regulation on Public Procurement (VVöA) independent of Corona (increase of value limits and possibility of communication by e-mail – including submission of bids – for negotiated procedures and restricted tendering without call for competition); Modifications also apply to municipal contracting authorities.
- Competent authority / regulation: Berlin, Senate Department for Economics, Energy and Public Enterprises, Circular SenWiEnBe II DNo. 03/2020 Public procurement: eProcurement of goods and services below the EU thresholds
- Essential contents: No eProcurement obligation in the case of procurement of goods and services above the value lim-it of EUR 25,000 up to the EU threshold (in deviation from no. 8 General Administrative Regulation (AV) section 55 Regional Budget Code (LHO)); Valid until 30 June 2020.
- Competent authority / regulation: Hamburg, Fiscal Authority, Changes to the Hamburg Procurement Law of 20 March 2020
- Essential contents: Temporary increase until 31 December 2020 of the value limit for negotiated contract awards under the German Rules of Procedure for the Awarding of Below-Threshold Contracts (UVgO) for procurements connected with securing supplies for the population and fighting the spread of coronavirus; Obligation for eProcurement suspended; Query suspended under the Law on the Establishment of a Register for the Protection of Fair Competition” (GRfW).
- Competent authority / regulation: Lower Saxony, Ministry of Finance of Lower Saxony, Facilitations under procurement law in the context of the corona crisis; increase of the value limit for the direct order pursuant to section 14 UVgO of 20 March 2020.
- Essential contents: Temporary increase of the threshold value for direct contracts to EUR 20,000, limited until 31 May 2020, for procurements justified in the corona crisis, including protective clothing, laboratory equipment, equipment for mobile work such as laptops, mobile phones, head-sets, etc.
- Competent authority / regulation: Lower Saxony, Ministry of Finance of Lower Saxony and Ministry of Economics, Labour, Transport and Digitalisation of Lower Saxony, Provision on the award of supply and service contracts by negotiated procedure with or without a call for competition in accordance with the Below-Threshold Award Regulation of 18 March 2020.
- Essential contents: All contracts for goods and services (including non-corona related contracts) whose award procedures began before 31 May 2020 may be awarded below the relevant EU threshold by means of negotiated contract award with or without a call for competition.
- Competent authority / regulation: Lower Saxony, Ministry of the Interior and Sport of Lower Saxony, COVID-19 (Coronavirus) Notes on municipal decision-making processes, direct orders and liquidity loans of 19 March 2020.
- Essential contents: For procurements of supplies and services, in particular for services of special urgency, justified in the corona crisis, municipal contracting authorities may, until further notice, set the value limit for direct orders in their own competence and responsibility (only within the scope of application of section 28 (2) sentence 1 Municipal budget and cash desk ordinance (KomHKVO), i.e. orders below EUR 20,000 and freelance services).
- Competent authority / regulation: North Rhine-Westphalia, Ministry of Finance and Ministry of Economic Affairs, Innovation, Digitization and Energy of the State of North Rhine-Westphalia, Application of procurement law in connection with the procurement of services for the containment of the spread of the new coronavirus SARS-CoV-2 of 27 March 2020.
- Essential contents: Temporary suspension of the Below-Threshold Award Regulation (UVgO) until 30 June 2020 for the purchase of goods and services for the containment and short-term management of the corona pandemic and/or the maintenance of service operations; The principles of economy and efficiency remain in place; Raising of the threshold for direct contracts to EUR 3,000 (also for non-corona related procurements); Contracting authorities shall restrict themselves to requiring such proof of suitability as is mandatory and absolutely necessary
- Competent authority / regulation: Rhineland-Palatinate, Ministry of Economy, Transport, Agriculture and Viticulture, Circular of 20 March 2020 – Facilitations under procurement law for the containment of the spread of the new coronavirus SARS-CoV-2.
- Essential contents: Supplies, services and construction works contributing directly or indirectly to the containment of the corona pandemic may be procured by direct procurement, taking into account the budgetary principles of economy and efficiency; Prioritised review of whether a framework contract can be used before a direct order is chosen; Procedural simplifications also apply to recipients of subsidies who are only obliged to apply procurement law by a grant decision; Valid until 30 June 2020.
- Competent authority / regulation: Saxony-Anhalt, Ministry of Economy, Science and Digitization, Facilitations under procurement law for the containment of the spread of the new coronavirus SARS-CoV-2 of 31 March 2020.
- Essential contents: (Merely) references to the existing possibilities for carrying out a negotiated contract award without a call for competition in cases of particular urgency for supplies and services under the German Procurement and Contract Procedures for Supplies and Services (VOL/A); References also apply to recipients of subsidies; Valid until 30 April 2020.
- Competent authority / regulation: Thuringia, Thuringian Ministry of Economy, Science and Digital Society, Implementation of public contracts in the course of the corona crisis
- Essential contents: (Only) references to the existing possibilities for carrying out a negotiated contract award without a call for competition in cases of particular urgency and the letter of the BMWi of 19 March 2020.
III. Possible subjects of contracts for an accelerated award
Some of the above decrees and circulars give concrete examples of what is meant by particularly urgent procurement matters for which the simplified procurement rules can be applied (subject to individual assessment). These can be classified as follows:
Supplies and services for the containment and short-term management of the corona pandemic:
- Remedies and aids such as disinfectants, disposable gloves, protective masks, protective clothing, bandage materials, swabs, abdominal cloths, hygiene articles / products
- Medical apparatus such as pulmonary ventilators
- Additional beds and other hospital equipment
- All technical equipment for additional hospital infrastructure / capacity expansion
- Laboratory equipment and equipment for the construction of corona test centres
- Drawing up concepts (e.g. for the establishment of a test/crisis centre or similar)
Supplies and services which serve to maintain the operation of the public administration
- Mobile IT device e.g. for setting up home office workplaces (laptops, mobile phones, headsets, etc.)
- Video conference technology
- Expansion of IT line capacities
- Other office equipment
Construction works for the containment and short-term management of the corona pandemic
- Additional hospital infrastructure / capacity expansions (especially intensive care)
- Conversions and equipment to increase the number of video conference rooms
- Installation of partition walls to separate offices with multiple occupancy
In view of the current crisis, the need to enable contracting authorities to award contracts as quickly and unbureaucratically as possible has been acknowledged by the EU, the federal government and many of the federal states.
The added value of the communications and circulars at EU and federal level consists primarily in subsuming the legal requirements for urgent procurements and in this respect at least ensuring a uniform interpretation and additional legal certainty for the contracting authorities. One thing becomes obvious here: the procurements must have a sufficient “corona reference” documented in the award file. The EU Communication and the circulars of the Federal Government are not intended to create general simplifications in award procedures; attempts to circumvent them are (still) inadmissible.
In the below-threshold range, the picture is less consistent:
While some federal states temporarily suspend the UVgO for “corona procurements” (NRW), others raise the value limits for negotiated procurement without a call for competition up to the EU thresholds (Rhineland-Palatinate, Hamburg) or limit themselves again to referring to the decree of the BMWi or to repeating the legal requirements for negotiated procurement without a call for competition (Thuringia, Saxony-Anhalt, Baden-Wuerttemberg). In Bavaria and Lower Saxony it is even the case that negotiated contracts with and without a call for competition (in Bavaria also restricted invitations to tender) are permitted for a limited period for all supply and service contracts – even those without a “corona” reference.
There are also differences in whether the decrees relate only to the (more frequent) case of goods and services or also cover construction works. Thus, in the below-threshold area contracting authorities and bidders currently have to cope with a “patchwork quilt” and observe the regulations that apply to them.