Trends and Features in the

Review and Remedies System

A joint initiative of the OECD and the European

in Germany
Union, principally financed by the EU.

International Conference in Dubrovnik

24th – 25th May 2007
„Public Procurement Review and Remedies
Systems“

Dr. Gabriele Herlemann

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 Special features of the German
Public Procurement Law
A joint initiative of the OECD and the European
Union, principally financed by the EU.

● Regulated under various different laws

● „Cascade“: regulated in a variety of
different sources of law (historic reasons)
● In the beginnings: public procurement =
part of budget law only
● ⇒ no redress in law for the tenderers
towards the state (contracting authorities)

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 Economic importance of
public contracts
A joint initiative of the OECD and the European
Union, principally financed by the EU.

● Opening-up of public procurement to

community competition: Common
market for public procurement
● Primary law not sufficient

Secondary law (=EU Directives) was

issued

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 General character of EEC
secondary law
A joint initiative of the OECD and the European
Union, principally financed by the EU.

● Provides only a framework for the

national laws of the member states
● Member states have to decide how to
adapt their national laws to the Directives
● Member states must work within the
framework
● ⇒ pp-law varies across EU-member
states

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 Adaptation of German Law to
Directive 89/665/EEC of 21
December 1989
A joint initiative of the OECD and the European
Union, principally financed by the EU.

● Directive 89/665/EEC = basis for the

review and remedies system
● Integration of review system into German
antitrust law
● Reflections of the German legislator:
having both to do with competition
● However: Antitrust law and pp-law do not
hang together ⇒ no necessity

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 Directive´s new aspects for
German law
A joint initiative of the OECD and the European
Union, principally financed by the EU.

● Redress in law, rights for tenderers

towards the state regarding pp-law
● Introduction of thresholds: Directive is only
relevant for public contracts above a
certain value
● Introduction of a new definition of „public
contractor“: also subjects to private law
can under certain circumstances be
defined as public contractors

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 Division of German review
system into two parts
A joint initiative of the OECD and the European
Union, principally financed by the EU.

Below thresholds: Above thresholds:

EEC Directives do not Effective remedies in a sense
regulate pp below of „primary“ legal protection,
thresholds: German system which means: the tenderer´s
adapts this division chance to get the contract still
∀ ⇒absence of effective exists, not only recovery of
remedies damages at civil courts.
• German Constitutional
Court: division goes
conform with German
constitution

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 A joint initiative of the OECD and the European
Union, principally financed by the EU.

above thresholds.
In the following: focus on
tendering procedures

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 Institutions in charge
A joint initiative of the OECD and the European
Union, principally financed by the EU.

● 1st instance:
Public Procurement Tribunals. Legal
status: part of the administration.
Attention: Directive demands „courts“,
but: not necessarily in a constitutional
sense.
● 2nd instance:
Higher Regional Courts (pp chambers).
● 3rd instance? No (but see below).

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 Germany as a Federal State –
consequences for the institutions in charge:
A joint initiative of the OECD and the European

● 1st instance:
Union, principally financed by the EU.

• Federal Public Procurement „Tribunals“

(3 special divisions of the Federal Cartel Office), if
the contracting authority is federal;
• State PPT´s, if the contracting authority is a state
authority.
● 2nd instance:
Higher Regional Court for the region of the 1st instance
that has issued the decision.
● Federal Supreme Court (= High Court of Justice):
Competent only if one Higher Regional Court intends to
release a decision which differs from another Higher
Regional Court´s decision in an identical case. Rarely
the case ⇒ diversified jurisdiction.

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 Composition of PPTs in
1st instance:
A joint initiative of the OECD and the European
Union, principally financed by the EU.

● Chairperson (=civil servant)

● Two associate members, of whom one
serves in a honorary capacity (= a layman).
Intention: honorary associate should have
practical experience.
● Judicial in character: PPT exercise their
functions independently and on their own
responsibility.

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 The two major requirements for
applications at the PPT in German law:
A joint initiative of the OECD and the European
Union, principally financed by the EU.

● Interest in obtaining a particular public

contract, risk of being harmed by an
alleged infringement

● Previous notification to the public

contracting authority of the alleged
infringement

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 Basis for these requirements for
A joint initiative of the OECD and the European

applications:
Union, principally financed by the EU.

Article 1 Section 3 of the

Review and Remedies
Directive

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 Review procedures are only
available for:
A joint initiative of the OECD and the European

Persons having an interest in obtaining a

Union, principally financed by the EU.

●
particular public contract and
● Who risk being harmed by an alleged
infringement

⇒ Review procedure is not successful in any

case of an infringement, but only if the
infringement causes a damage to the
person seeking the review

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 Jurisdiction of Germany´s
Federal Court of Justice:
A joint initiative of the OECD and the European

Tenderer must be excluded from

Union, principally financed by the EU.

participation in a public contract if:

• a reference for the proof of his
economic, financial standing/his
technical or professional ability
(=criteria for qualitative selection),
which has been required by the public
contractor, does not accompany the
offer
• The offer is not complete, if for
example a price for one position is
missing
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A joint initiative of the OECD and the European
Union, principally financed by the EU.

Important: The legal

consequence does not depend
on how significant the missing
reference/declaration is!

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 Strict legal consequence for the
tenderer concerned:
A joint initiative of the OECD and the European
Union, principally financed by the EU.

⇒ Substantive law: tenderer is not

allowed to compete for this specific
public contract for formal reasons
⇒ Application at the PPT is inadmissible
as a tenderer who is not allowed to
compete can´t be harmed by an
infringement (no chance to get the
award)

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 Consequence of the formalistic
approach:
A joint initiative of the OECD and the European
Union, principally financed by the EU.

Advantage: Economic
Transparency, as disadvantage:
strict consequence ⇒ often the formally
does not depend on most correct offer
significance is being selected
⇒no litigation about: for the award, not
which missing the economically
reference etc. is advantageous offer
significant and
justifies the exclusion
of the tenderer?
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 Necessary previous actions of
the applicant:
A joint initiative of the OECD and the European
Union, principally financed by the EU.

● Applicant has to notify the contracting

authority previously of the alleged infringement
and of his intention to seek review: „without
undue delay after becoming aware“ of the
violation of provisions

● If not: the application at the pp tribunal is

inadmissable

● Previous payment of minimum fee =2.500.- Euros

(only Federal Public Procurement Tribunal)

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 Tribunal procedure 1st instance
A joint initiative of the OECD and the European

● Initiation of review proceedings only upon

Union, principally financed by the EU.

application, not ex officio

● Accelerated proceedings ⇒ maximum 5 weeks

● Person who is supposed to get the award

according to the public authority: = competitor of
the person seeking review ⇒ he has to be invited
to take part in the review procedure and can play
an acitve role; has the same rights as the
applicant.

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 ●Partiesmay inspect the files.
Exception: competitor´s business-
secrets
A joint initiative of the OECD and the European
Union, principally financed by the EU.

●Lawyer not necessary in the 1st

instance

●Decision on the basis of a

Hearing

●Investigation principle

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 Most important effect of the
review procedure:
A joint initiative of the OECD and the European
Union, principally financed by the EU.

● Automatic suspension of the contract to

which the procedure relates ⇒ contracting
authority is not allowed to make the award
prior to the decision and before the expiry
of the period for a complaint
● Otherwise: invalidity of the contract
● ⇒ effective, „primary“ legal protection

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 Contracting authority´s „weapon“
against automatic suspension:
A joint initiative of the OECD and the European
Union, principally financed by the EU.

Application to the PPT ⇒ PPT may allow

the contracting entity to award the contract
if, taking into account all interests which
may be impaired as well as the interests of
the general public in the quick conclusion
of the award procedure the negative
consequences of delaying the award until
the end of the review outweigh the
advantages involved.

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 2nd instance
A joint initiative of the OECD and the European
Union, principally financed by the EU.

● Time for appeal: 2 weeks. Lawyer necessary.

● No limited period for the Higher Regional Court´s
decision
● Automatic suspension effect: only for 2 weeks,
afterwards: applicant has to apply for the
extension of the suspension effect. Depends on
the prospects of success. If the Court doesn´t
extend the suspension: public authority is allowed
to make the award immediately, applicant can
only claim damages.

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