On August 31, 2016, the BMWi presented the discussion draft for the Sub-Threshold Procurement Regulation (UVgO) based on a preliminary draft from July 26, 2016. The aim is to ensure that the flexible regulatory approaches of the new above-threshold procurement law are also applied to the award of public contracts for supply and service contracts below the EU thresholds. The Sub-Threshold Procurement Ordinance (UVgO) is intended to replace the VOL/A 2009 (1st section) that has been in force to date.
On the one hand, a certain advantage is that the UVgO structurally follows the new Public Procurement Ordinance (VgV), so that public contracting authorities must observe similar rules when awarding supply and service contracts. However, this advantage is also a disadvantage, particularly for smaller contracting authorities. The extensive references to upper-threshold law (GWB and VgV) mean that local authorities must also rely on all regulations in the sub-threshold area.
Following agreement with the federal states on a joint text, it is expected to come into force in the first quarter of 2017.
In detail
In contrast to the provisions of the previous Section 1 VOL/A, this is the first time that contracts for freelance services have been awarded. However, there is a rather “soft” regulation on freelance services in Section 12 (3) UVgO:
“In the case of a negotiated award pursuant to Section 8 (4) numbers 10 to 14, only one company may be invited to submit a tender or to participate in negotiations. This also applies to the awarding of freelance services that are invoiced in accordance with a binding scale of fees or charges.”
In practice, however, this means: Be careful with funding! For example, the Sächsische ANBest (Sächsische Aufbaubank, explanations on § 44 of the LHO, general ancillary provisions) even stipulate that not only three bidders must be invited (of which only one or two may actually bid), but that three bids must also be submitted as a result. In practical terms, this can mean that It is better to invite six bidders at once, for example. Or you can rely on the case law of the Cologne Administrative Court (judgment of July 1, 2015, 16 K 6872/14), according to which a loss of invited bidders is always to be expected, which in the opinion of the court there, however, should not be detrimental to funding.
Furthermore, criticism should be leveled at Section 2 (3) UVgO. It reads:
“(3) When awarding contracts, aspects of quality and innovation as well as social and environmental aspects shall be taken into account in accordance with these Rules of Procedure.”
It would be better to use the term “sustainability”: the aspects of resource conservation, life cycle and service life are missing in Section 2 (3) UVgO.
There are three pillars of “sustainability”:
- Costs
- Quality/Environment
- Social issues
These are not reflected here.
In Section 2 (5) UVgO “(5) When awarding contracts, the provisions on prices for public contracts must be observed.” the exact reference to VO PR 30/53 is missing.
The provisions of Sections 4 and 5 UVgO (conflicts of interest, project contractor paragraph) are also to be endorsed in the sub-threshold area; the contents are taken from Sections 5 and 6 VgV.
The provision of Section 6 UVgO appears too broad and not comprehensible for the average contracting authority when it states: “The award procedure shall be continuously documented from the outset in text form in accordance with Section 126b of the German Civil Code, so that the individual stages of the procedure, the individual measures and the reasons for the individual decisions are recorded.”
It would be better to define this clearly: What is meant by “text form”? Furthermore, a distinction should be made between documentation and award notice as in the upper threshold area (Section 8 I and II VgV).
With regard to storage, Section 8 IV VgV, “(4) The documentation, the award notice as well as the tenders, the requests to participate, the expressions of interest, the confirmations of interest and their attachments shall be kept until the end of the term of the contract or framework agreement, but for at least three years from the date of the award.” It is to be criticized that this is not a reasonable regulation. Why? At least 10 years – 15 to 20 years in the case of large projects – retention is absolutely essential.
The equal treatment of public and restricted invitations to tender in Section 8 II UVgO, which is modeled on upper threshold law (Section 119 II GWB, Section 14 II VgV) and reads: “(2) The contracting authority may choose between a public invitation to tender and a restricted invitation to tender with a call for competition.”, cannot apply in subsidized cases, because there are then effectively fewer bidders or offers.
There is too much duplication in the provisions of §§ 8 IV No. 1, 2, 3 and 7 UVgO, which are intended to regulate the cases of the newly created so-called “negotiated award with or without a call for competition”.
In terms of the disproportionate cost of carrying out a formal invitation to tender (Section 8 IV No. 9 UVgO), a practical example of a waiver of public tendering can be 70,000 tendering costs for a contract value of EUR 100,000, which can certainly be incurred, particularly in the case of complex test positions.
Within the scope of application of § 14 UVgO, which regulates awards by way of a direct contract: “Services up to an expected contract value of EUR 1,000 excluding VAT can be procured without carrying out a procurement procedure, taking into account the budgetary principles of efficiency and economy (direct contract). The contracting authority should alternate between the contracted companies.” more specific rules in the sense of simplification would be desirable: It is not only about direct awards in the narrower sense, but also about previously so-called direct awards (now: negotiated awards) of lower value, with regard to which, among other things, regulations on screenshots are missing because, for example, online traders do not submit tenders in the context of such awards. Also to be considered here are provisions with permission to dispense with the terms and conditions of the contracting authority, i.e. the VOL/B, which is, however, prescribed as mandatory in principle in Section 21 II UVgO. Some contracting authorities, such as the Sächsische Aufbaubank (SAB), have granted themselves their own dispensations: They accept screenshots of three bids in some procedures. In this context, the need for suitability tests should also be abolished for small-scale awards.
It is good that the UVgO (§ 13) regulates the binding period, which is missing in the VgV.
There is greater regulatory intensity (ignoring the needs of smaller contracting authorities) for special digital features such as dynamic procurement systems and the like (Sections 17 to 19 UVgO). Only the Kaufhaus des Bundes has an electronic catalog system in accordance with § 19 UVgO. This is of no interest to 99.9% of contracting authorities.
With regard to the specification of services, it is worth highlighting § 23 V UVgO, according to which the reference to “or equivalent” may continue to be omitted in very exceptional cases if products with different characteristics are purchased, the use of which would lead to technical difficulties or disproportionate additional financial expenditure, among other things. This was previously also the case under Section 7 IV VOL/A.
Reference to quality marks is now also possible in the sub-threshold area in accordance with Section 24 UVgO. Nevertheless, it should be considered whether this should not be dispensed with because the certifications are very expensive and in some cases the necessary certifications are lacking. This is not SME-friendly. Why does the BMWi, as the author of the UVgO, not provide a list of quality marks? Another question is: Who is allowed to certify? Which companies are behind them? In Germany, only the DAKKS accredits certifiers. This costs a lot of money and takes a lot of time for financially weaker competitors to get this far, if at all.
A definition should be provided with regard to Section 25 (subsidiary tenders) and main tenders – not least following a wide range of case law with terminology that is not always uniform. The contracting authority can already permit or stipulate secondary tenders in the contract notice in the case of public invitations to tender and types of procedure with a call for competition, otherwise in the tender documents. This does not make sense as it violates the principles of transparency.
The provision in Section 29 I UVgO on the provision of tender documents copies Section 41 VgV: “(1) The contracting authority shall specify in the contract notice an electronic address at which the tender documents can be accessed free of charge, without restriction, in full and directly.”
This could mean the end of one or two business models of platform operators who have been paid for providing the tender documents. In the new sub-threshold VOB of 22. 6. 2016, this regulation will come into force in October.
The provision in § 36 concerning the form and transmission of requests to participate and tenders is also very noteworthy:
“(1) The contracting authority shall determine whether the undertakings are to submit their requests to participate and tenders in text form pursuant to Section 126b of the German Civil Code by electronic means pursuant to Section 7, by post, by fax or by another suitable means or by a combination of these means. The same shall apply to other communication pursuant to Section 7, insofar as it does not concern the transmission of contract notices and the provision of procurement documents. (2) As of January 1, 2019, the contracting authority shall accept the submission of requests to participate and tenders in text form pursuant to Section 126b of the German Civil Code by electronic means in accordance with Section 7, even if it has specified transmission by post, fax or another suitable means or by a combination of these means. The same applies to other communication pursuant to Section 7. (3) From January 1, 2021, companies shall submit their requests to participate and tenders in text form pursuant to Section 126b of the German Civil Code exclusively by electronic means pursuant to Section 7. The same applies to other communication pursuant to Section 7. (4) The contracting authority is not obliged to accept or specify electronically submitted requests to participate or tenders pursuant to paragraphs 2 and 3 if 1. the contract value excluding VAT does not exceed EUR 25,000 or a restricted invitation to tender without a call for competition or a negotiated award without a call for competition is carried out.”
This provision will, as is already the case in the upper threshold area (Section 53 I VgV), accelerate the administrative processes in favor of electronic tender submission. The tender in “text form” is sufficient, so that a tender submission with a simple electronic signature (e.g. scanned signature in a pdf document) is sufficient.
Section 42 UVgO only regulates “abnormally low tenders” “(1) If the price or costs of a tender to which the contract is to be awarded appear to be abnormally low in relation to the service to be provided, the contracting authority shall request clarification from the tenderer.” There are no regulations on how to deal with excessively high tenders.
Another positive aspect is the adoption of the upper-threshold regulation on contract amendments following the award of a contract. § Section 47 I UVgO reads: “(1) Section 132 (1), (2) and (4) of the Act against Restraints of Competition shall apply accordingly to the amendment of a public supply or service contract without conducting a new procurement procedure.” Even if Section 132 ARC certainly takes over a rule from the upper threshold area that can become complicated in individual cases, this is also a step forward for the lower threshold area.
The provision in Section 48 I UVgO “Otherwise, the contracting authority is generally not obliged to award the contract” confirms the legal principle that not even an awarding chamber in the upper threshold area may “order” the awarding authority to award the contract. This results from the principle of freedom of contract, which also applies to public authorities. Unfortunately, however, there have also been repeated decisions by awarding chambers that have disregarded this principle.
Finally, the simplified regulatory code for the award of contracts for social and other special services is correctly adopted in Section 49 UVgO.
Brief conclusion:
The discussion draft of the Sub-Threshold Procurement Regulations (UVgO) represents progress in some respects, particularly through the reference to upper-threshold law. However, it also leads to a clear, further legalization of the procurement system in the sub-threshold area. In addition, we would like to see more courage to adopt innovative regulations in more places, particularly with regard to small-scale awards, which are the hardship of everyday procurement.
