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30.03.2015 | KPMG Law Insights

Study on Public Pricing Law – Ruling on TFEU Principles in Public Contracts

Dear Readers,

Not only public procurement law, but also public price law is to be modernized.

These reforms are always accompanied by laborious incorporation of new regulations into procurement contracts. However, if one gives the modernization effort and the envisaged measures a chance, it quickly becomes apparent that they are intended to facilitate the design of procurement procedures and pricing, price calculation and determination when drawing up procurement contracts.

We have also summarized the main findings recorded by the ECJ in its recently published decision on the application of the basic rules and general principles of the TFEU in public procurement. This concerns those contracts which – for example because of their low contract value – do not fall under EU procurement law, but in which there are cross-border interests. The ECJ sets clear limits for these contracts, which contracting authorities must observe. Surely an exciting topic for you.

We wish you interesting reading.

Sincerely yours

Public Sector Team of KPMG Rechtsanwaltsgesellschaft mbH

Mathias Oberndörfer Dr. Anke Empting

Lawyer Attorney

EU STATE AID/PROCUREMENT LAW

TFEU to be observed in contracts with cross-border interests

The basic rules and general principles of the TFEU must be observed in public contracts with a cross-border interest. This applies even if these contracts do not fall under EU procurement law because they do not exceed the threshold values. This was the decision of the European Court of Justice in its ruling of April 16, 2015.

Accordingly, public contracts – in this case, the supply of computer systems and hardware – cannot be made bird’s-eye even if they are not covered by the European Union Directive on the coordination of procedures for the award of public contracts (2004/18). Rather, according to the European Court of Justice, the general principles of the TFEU, in particular the principles of equal treatment and non-discrimination as well as transparency, must be observed.

This applies in any case if there is a clear cross-border interest in the public contracts in view of certain objective criteria. Such criteria would include a “certain” volume of the contract, possibly in conjunction with the place of performance, and technical characteristics of the contract. Any complaints from economic operators established in other Member States may also be used to justify the cross-border interest.

In the “margins” of its decision, the Court also made exciting statements for universities and research institutions regarding equal treatment and non-discrimination of bidders, such as:

  • Technical specifications relating to components of a tender may not be changed after publication of the contract notice;
  • a tender that meets the requirements of the invitation to tender may not be rejected on grounds that are not provided for in the invitation to tender.

PRICE LAW/PROCUREMENT LAW

VO PR 30/53 on the test bench

The Federal Ministry for Economic Affairs and Energy has commissioned a study on the discussion about the weal and woe of the public price law – specifically the PR No. 30/53. It was intended to clarify whether – since the enactment of the Price Regulation in 1953 – there is still a need or justification for sovereign price regulations for public supply and service contracts.

The study came to these conclusions, among others:

  • Price law is still necessary; sovereign price law requirements including a neutral auditing authority as an external control body are justified;
  • the public price law is legally compliant; however, changes to the price law are recommended with regard to the basic regulatory structure and its linkage with public procurement law;
  • the price law – Regulation PR No. 30/53 – is often not observed by public purchasers during the procurement process.

The study also identifies potential for improvement in SMEs, market pricing, CSP cost elements, service contracts, price review organization, and subcontracting.

Conclusion:

Universities and those research institutions that are classified as public clients should be prepared for a reform of the price law and an associated increase in expenditure. However, the solutions emerging from the study also promise a simplification in the application of price law.

 

RIGHT OF DISTRIBUTION

Public procurement modernization law passes federal cabinet

On July 8, 2015, the German Cabinet approved the draft law on the modernization of public procurement law. The legislative process in the Bundesrat and Bundestag is scheduled to begin in fall 2015. At the heart of the reform is the amendment of Part 4 of the Act against Restraints of Competition (GWB). The aim is to modernize the legal framework for public procurement, simplify it and make it more user-friendly.

One of these simplification measures is considered to be the Uniform European Self-Declaration (EEE), which in the future is to pre-structure the suitability test in the award of public contracts in the upper threshold range. It is planned that the EEE will provisionally replace the proof of suitability with a self-declaration in the award procedure. After a transition period, the EEE is to be available only in electronic form.

The draft implementing regulation submitted by the EU Commission for the introduction of the EEE still requires coordination with the EU member states.

UNIVERSITY LAW

AStA versus student – action for injunction unsuccessful

The Osnabrück Administrative Court has strengthened the powers of the AStA. A law student had filed injunctive relief against the student body. It, or rather its representation, the AStA, had arrogated to itself a general political mandate to which it was not entitled and should instead confine itself to issues directly specific to the university.

In its ruling of July 21, 2015 (Ref.: 1 A 4/15), the Osnabrück Administrative Court dismissed the action. It is true that some of the AStA’s activities (such as a call for counter-demonstrations) exceeded the limits of what is permissible. However, these are not sustainable or there is no threat of recurrence.

SHORT MESSAGES

News in brief

Record sums for research and development

According to the BMBF press release of July 24, 2015, the federal government is providing a total of 14.9 billion euros for research and development (R&D) in the current year 2015. This is an increase of around 261 million euros compared with the previous year. Funding is to be provided primarily for research topics related to the digital economy and society, sustainable business and energy, innovative working environments, healthy living, intelligent mobility and civil security.

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Contact

Mathias Oberndörfer

Geschäftsführer
Mitglied des Vorstands Service Tax - KPMG AG Wirt­schafts­prüfungs­gesell­schaft

Theodor-Heuss-Straße 5
70174 Stuttgart

tel: +49 711 781923410
moberndoerfer@kpmg-law.com

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