Worth knowing

Vulnerability of old contracts

Based on a contract from 1978, a district has always awarded the rescue services to the same service provider. When it now wanted to extend this contract, it also did so without inviting tenders. Instead, it simply changed the scope of the existing contract.

A competing private company is objecting to this. It considers the extension to be an inadmissible de facto award. In the review proceedings, it sought a declaration of nullity, but was unsuccessful because the exclusion period under Section 101 b II GWB had already expired.

With the immediate appeal, the company is pursuing its request further. The current service provider also argues that this increase was already included in the 1978 contract, meaning that it was not a new contract that could be challenged independently. This assessment is also followed by the Higher Regional Court of Schleswig (decision of 14. 11. 2014, 1 Verg 1/14), which also sees the extension of services as being based on the old contract.

Nevertheless, the exercise of an option from this old contract is by no means irrelevant under public procurement law. It is true that the validity of the old contracts, which were concluded long before the entry into force of the Services Coordination Directive 92/50/EEC, must be assumed. At the time of the conclusion of the contract, the contracts were therefore neither immoral nor prohibited under public procurement law. Even if, with the aid of recital 13 of Directive 2007/66/EC, one wanted to consider the invalidity of the contract because it contains (from today’s perspective) serious violations of public procurement law, the invalidity of the contract could not be established. This would require a review procedure, which, however, is precluded by the time limit in Section 101 b II GWB, which only permits a review procedure within six months of the conclusion of the contract. Accordingly, there is no unlimited vulnerability of old contracts. At most, this absolute limit of reviewability could be overcome in the event of a deliberate abuse of law (Section 826 BGB) between the awarding authority and the current contractual partner. (see OLG Munich, decision of 13. 6. 2013, Verg 1/13)

The ECJ (judgement of 18. 7. 2007, C-503/04), on the other hand, recognizes a continuing breach of law in a current old contract that no longer complies with today’s public procurement law requirements, which must be terminated. It has therefore obliged the member states to terminate contracts that have become effective but are in breach of public procurement law. This leads to a certain dilemma: the protection of legitimate expectations due to the expiry of the deadline in Section 101 b II GWB only applies to the two contracting parties, but not to the member state. This contradiction between the requirement under European law to rescind the contract and the national protection of legitimate expectations of the contracting parties must now be resolved.

A nullity of the contract in violation of public procurement law is out of the question. This would contradict the protection of legitimate expectations. This leaves the solution of extraordinary termination in accordance with Section 314 I BGB or the next possible ordinary termination. Whether a competitor can enforce such a termination of an old contract, however, depends on the individual case and could not be decided by the procurement senate here due to a lack of jurisdiction. The new Public Procurement Directive 2014/24/EU no longer provides for a tendering obligation for emergency rescue and medically qualified patient transport. The fact that the obligation to tender is now no longer applicable raises doubts as to whether a contract that was concluded before the introduction of the obligation to tender can still be rescinded on the grounds of a continuing breach of public procurement law.

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About the author

Dr. Rainer Noch is one of the leading experts in tendering and review procedures and has earned an outstanding reputation as the author of numerous specialist publications on public procurement law. During his studies, he deepened his knowledge by working for six months in the public procurement department of the Federal Ministry of Economics and Climate Protection. His doctorate on the subject of “Legal protection in public procurement law” marked the beginning of his specialization and the foundation for his successful career as a specialist lawyer.

Dr. Noch has been a partner in the prestigious law firm “Oppler Büchner Rechtsanwälte PartGmbB” in Munich since 2002. The law firm advises institutions and companies on public procurement and offers first-class legal expertise. Dr. Noch has made a significant contribution to the specialist literature through his extensive publications, in particular the handbook “Vergaberecht kompakt”, now in its 8th edition. This standard work has accompanied experts for years and is often used as an indispensable basis.

In addition to “Vergaberecht kompakt”, Dr. Noch is the author and co-author of other relevant works that are considered groundbreaking in the professional world. His publications cover a broad spectrum, from practical handbooks to academic treatises, and offer both beginners and experts sound guidance in the complex field of public procurement law.

His achievements have been recognized several times, including the “Best Lawyer Award” (2020-2024). In addition, Dr. Noch passes on his knowledge to the next generation as a lecturer in specialist lawyer courses on construction and public procurement law. With his deep understanding of the challenges of public procurement and his extensive writing, he shapes the standards in public procurement law and sets benchmarks in legal advice.

Dr. Rainer Noch
Specialist lawyer for public procurement law