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Trends and Features in the Trends and Features in the Review and Remedies System Review and Remedies System

in Germanyin Germany

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 Special features of the German Public Procurement LawPublic Procurement Law

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 Economic importance of public contractspublic contracts

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 General character of EEC secondary lawsecondary law

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 Adaptation of German Law to Directive 89/665/EEC of 21 Directive 89/665/EEC of 21

December 1989December 1989

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 Directive´s new aspects for German lawGerman law

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 Division of German review system into two partssystem into two parts

Below thresholds:EEC Directives do not regulate pp below thresholds: German system adapts this division

absence of effective remedies

• German Constitutional Court: division goes conform with German constitution

Above thresholds:

Effective remedies in a sense of „primary“ legal protection, which means: the tenderer´s chance to get the contract still exists, not only recovery of damages at civil courts.

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U. In the following: focus on In the following: focus on

tendering procedures tendering procedures above thresholds.above thresholds.

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Institutions in chargeInstitutions in charge

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 – Germany as a Federal State –

consequences for the institutions in charge:consequences for the institutions in charge: 1st instance:

• 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 Composition of PPTs in 1st instance:1st instance:

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 The two major requirements for applications at the PPT in German law:applications at the PPT in German law:

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 Basis for these requirements for applications:applications:

Article 1 Section 3 of the Review and Remedies

Directive

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Review procedures are only Review procedures are only available for:available for:

Persons having an interest in obtaining a 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 Jurisdiction of Germany´s Federal Court of Justice:Federal Court of Justice:

Tenderer must be excluded from 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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Important: The legal Important: The legal consequence does not depend consequence does not depend on how significant the missing on how significant the missing

reference/declaration is!reference/declaration is!

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Strict legal consequence for the Strict legal consequence for the tenderer concerned:tenderer concerned:

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 Consequence of the formalistic

approach:approach:

Advantage:

Transparency, as strict consequence does not depend on significance

no litigation about: which missing reference etc. is significant and justifies the exclusion of the tenderer?

Economic disadvantage:

often the formally most correct offer is being selected for the award, not the economically advantageous offer

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Necessary Necessary previousprevious actions of actions of the applicant:the applicant:

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 instanceTribunal procedure 1st instance

Initiation of review proceedings only upon 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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Parties may inspect the files. Exception: competitor´s

business- secrets

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 Most important effect of the review procedure:review procedure:

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“ Contracting authority´s „weapon“ against automatic suspension: against automatic suspension:

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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2nd2nd instanceinstance

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.