It remains exciting: The recast of the EU framework on state aid (“Union framework”) is available, but – contrary to the original schedule – still not in its final version. Nevertheless, the question for universities and research institutions is whether the changes will bring the clarity they have been longing for regarding the classification of university/research activities as part of the economic or non-economic sphere. Is there a chance to say goodbye to full cost and separation accounting?
There were also many new developments in procurement law at the turn of the year: The Karlsruhe Higher Regional Court ruled in favor of public-sector customers, allowing them to base their procurement on existing technology. For IT procurement, a long-awaited decision. You will find more details on this and the latest developments in public procurement case law on the evaluation of prizes in this newsletter.
The NRW Higher Education Act is in “amendment mode”: first there was the Higher Education Act, then freedom was added and it became the Higher Education Freedom Act. But that’s not all. In the future, there will be a Higher Education Future Act in NRW, which is currently in draft form and is already subject to some criticism.
We wish you an exciting read.
Public Sector Team of KPMG Law Firm
Dr. Anke Empting
Attorney at Law
On December 20, 2013, the EU Commission published a draft of the new “Union Framework” for public consultation. It sets out the conditions under which member states may in future grant state aid for research, development and innovation activities (R&D&I) without having to notify and approve the measure with the EU Commission. The final version of the revision of the Union Framework is scheduled to enter into force on July 1, 2014.
It was hoped that the new version would eliminate significant ambiguities. According to the current draft status, this has only been partially fulfilled. In particular, there is still a lack of clear definitions.
Nevertheless, the new Union Framework contains some innovations that point to an easier and more legally secure handling of R&D&I aid in the future. These innovations include:
On January 22, 2014, the EU Commission extended its 2008 approval of the “Directive on the Promotion of Innovative, Technology-Oriented Collaborative Projects, Networks and Clusters” and at the same time made an important statement on how to deal with the EU Framework for State Aid, which expired at the end of 2013.
The measure aims in particular to promote cooperation within the framework of alliances, networks and clusters, mainly through a joint R&D project in the categories of industrial research and/or experimental development.
In its above-mentioned decision, the EU Commission approved an increase in funding to EUR 145 million and an extension of the term until December 31, 2014. This is in line with one of the EU Commission’s key objectives, which it recently set out in its “Horizon 2020” communication.
In its decision of November 15, 2013 – 15 Verg 5/13 – the Higher Regional Court of Karlsruhe ruled that it is not an irrelevant consideration if public contracting authorities align their procurement object with an already existing technology. This also applies if the original contract was awarded in violation of procurement law.
In the case to be decided by the court, the applicant unsuccessfully objected to the de facto award of a contract for the software expansion of an existing operational control system. This had been acquired by the state of Baden-Württemberg from the applicant’s competitor in 2011 by way of a direct award – which later turned out to be illegal. In the opinion of the state, the software extension now required should also be carried out by the competitor originally commissioned on the basis of existing exclusive rights. The court supported this view.
If the award is to be made to the most economically advantageous bid and the contracting authority specifies as sub-criteria 95 percent price and 5 percent scheduling, the principle of economic efficiency relevant under procurement law and the contracting authority’s self-binding obligation to the award criterion specified in the notice are violated (OLG Düsseldorf, 27.11.2013 – VII-Verg 20/13).
According to the Düsseldorf Higher Regional Court, the award criterion of the most economically advantageous bid downgrades the “scheduling” criterion, which applies in addition to price, to an insignificant level of 5 percent. The decision to award the contract is in fact based solely on the bid price. The other criteria would only have an “alibi function”.
Until mid-January, universities in North Rhine-Westphalia had the opportunity to comment on the draft of the Higher Education Future Act presented on November 12, 2013. Among other things, the law is intended to create transparency in economic management, for example through uniform regulations in budget management from 2017.
However, the amendment is highly controversial from the higher education side. Major criticisms include:
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