Public procurement law prescribes, for example, how the state may allocate construction contracts.
(Photo: dpa)
Berlin Government contracts are extremely important for many companies – after all, the public sector awards contracts between 280 and 360 billion euros every year. However, awarding the contracts is often complicated and a bureaucratic annoyance for companies and administration.
The Ministry of Finance now wants to change that and significantly simplify and streamline procurement law. This emerges from his so-called non-paper of the ministry, which State Secretary Steffen Saebisch (FDP) wrote and is available to the Handelsblatt.
Public procurement law stipulates how the state may award contracts. It affects all major areas, from construction contracts to the procurement of armaments and the awarding of concessions. The rules are intended to prevent corruption and make public contracts accessible to all companies.
Over the years, however, public procurement law has been regulated in ever greater detail. The federal government had therefore decided in its coalition agreement to simplify procurement law. At the end of 2022, the lead Ministry of Economics launched a public consultation.
There was great interest, around 400 comments were received. A positioning of the ministry is not yet known. But Secretary of State for Finance Saebisch wants to use his paper to introduce his house’s positions at an early stage. Specifically, Saebisch proposes:
- to set uniform value limits for awards,
- to come to a standardization of the award thresholds, which are not regulated by the EU, in order to mitigate the existing differences in the federal states,
- to achieve improvements in digitization,
- to change important procedural regulations, which relate, for example, to the promotion of small and medium-sized enterprises or sustainability criteria, in order to achieve simplifications.
Above the award threshold, a contract must be advertised. The paper now states that the state should award contracts without tenders, “if the contract value without sales tax does not exceed EUR 100,000”.
Associations put pressure on the federal government
For certain construction projects, it should be possible to award up to EUR 250,000 without a call for tenders. From the point of view of the Ministry of Finance, these “concrete formulation aids” represent “important starting points” for a reform, writes Saebisch in a letter to the Ministry of Economic Affairs, which is available to the Handelsblatt.
The State Secretary in the Federal Ministry of Finance wants to achieve less bureaucracy when awarding government contracts.
(Photo: Federal Ministry of Finance)
Associations are putting pressure on the federal government to present a reform as quickly as possible. The general manager of the Central Association of the German Construction Industry, Felix Pakleppa, warns that small and medium-sized companies should be comprehensively involved in the award of public construction contracts. Without small and medium-sized businesses, the “immense building tasks in housing and infrastructure” could not be managed.
The German Association of Cities warns that there is a risk that public procurement law will become an obstacle to the necessary acceleration of infrastructure projects. The Association of Cities therefore urges the federal government to “work towards simplification and acceleration,” according to a resolution by the association.
To do this, the thresholds for the award of construction services would have to be increased to ten million euros and the EU thresholds for supplies and services to 750,000 euros. In addition, public procurement law should not become the sole framework for making sustainability goals even more binding, warns the city council.
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Just a few days ago, Federal Labor Minister Hubertus Heil (SPD) presented a draft law that aims in precisely this direction. According to Heil’s proposal, the federal government should only be able to award contracts to companies that pay their employees according to collective agreements. Heil wants to set the threshold for the order value at 10,000 euros.
More: Federal orders from 10,000 euros only to companies bound by collective bargaining agreements