Sonntag, 01.03.2015
Comment on the Federal Administrative Court ruling: Reimbursement of grants is the norm in the event of a breach of the obligation to issue a public call for tenders.
from
Oliver WeihrauchLawyer
Specialist lawyer for public procurement law
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For the following reasons:
The state of North Rhine-Westphalia has granted a municipal public utility company a subsidy of DM 1,065,000.00 to build a district heating transfer station with a transport pipeline as 15% share financing of the total expenditure of DM 7.1 million. The notice of funding contains a general provision requiring the VOB/A and VOL/A to be observed when awarding contracts. A total of 16 contracts will be awarded for the implementation. In 12 cases, a public invitation to tender took place, followed by a restricted invitation to tender. In the remaining 4 cases, selected companies were sent a set of service specifications with the request to submit an offer. After the offers were submitted, negotiations were held in all cases to reduce the bid amount. The contracts were then awarded to the remaining lowest-priced bidder. In the period that followed, the grant notice was partially revoked and a claim for repayment in the amount of €362,403.69 was made. The reason given for the revocation was that the municipal utilities company had partially awarded the contracts for the subsidized facility in violation of the obligation to issue a public invitation to tender.The Federal Administrative Court ruled that public tendering is the standard form of awarding contracts, and that special circumstances are required to deviate from it. The purpose of its priority over other types of award is to create the broadest and most transparent competition possible, thereby ensuring that the contract is awarded to the most favorable bidder in the sense of the call for tenders. On this basis, it stands to reason that a violation of the provisions regarding the type of award of the contract should generally be classified as serious due to the associated risk of the aforementioned budgetary principles being violated. This justifies a revocation of the grant award notice and thus a reclaim of the grants.
Comment
The Federal Administrative Court has provided clarity in the last instance regarding the standard case. If the recipient of the funds does not issue a public invitation to tender, it must provide a reason for this. As a rule, it can be assumed that a deviation from the public tender procedure means that the contract is not awarded according to economic principles. However, the Federal Administrative Court also makes it clear that this is a general assumption that does not release the funding agency from the obligation to assess all the individual circumstances. In exceptional cases, a partial reclaim can be waived.
Public procurement law often has to contend with the prejudice that its regulations are too rigid and complicated (in part this is also true) and that the lack of opportunity to negotiate with bidders means that the best price cannot be achieved. This is countered by a special report of the Federal Court of Auditors dated February 9, 2012, which deals with the effects of the award facilitations of the Economic Stimulus Package II on the procurement of construction services and freelance services for federal construction projects. 16,000 procurement procedures were examined. The Bundesrechnungshof concludes that "the objectives of the simplified procurement rules have largely not been achieved. Instead, significant disadvantages in competition and economic efficiency had to be accepted, along with an increased risk of corruption and manipulation." The increased proportion of non-public procedures (limited tendering, direct award of contracts) at the expense of the proportion of public tenders has made it possible for fewer companies than before to take part in the competition. Compared to previous years, the number of offers fell by 12% in the construction of buildings and by 15% in the construction of waterways as a result of the easier awarding of contracts. More than twice as many offers were submitted in response to public tenders as in response to restricted tenders, and almost three times as many offers as in the case of free-of-charge awards. It was also found that public tendering is the type of award that yields the most economical results. According to the evaluations of the Federal Court of Auditors, the non-public procurement procedures have on average resulted in additional expenditure of up to 13%. In the reporting period, the additional expenditure of the federal government in the field of building construction alone is said to amount to 50-70 million euros. These results fully justify the rule presumption established by the Federal Administrative Court.
All engineering firms that advise public clients and are thus put in the awkward position of having to make a recommendation on the choice of award method must exercise even more care in the future. If they want to invoke the exception that no public tender is required, this must be justified in detail and with good reason. Otherwise, the consultants may face considerable liability.
The statements represent initial information that was current for the law applicable in Germany at the time of initial publication. The legal situation may have changed since then. Furthermore, the information provided cannot replace individual advice on a specific matter. Please contact us for this purpose.