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17.08.2023 | KPMG Law Insights, KPMG Law Insights

Transformation of public procurement law: this is how the consultation went

The Federal Ministry of Economy and Climate Protection (BMWK) is working on a procurement transformation package and has held a public consultation. These are the key points and highlights of the discussion.

“Dare to make more progress” – This is the slogan of the coalition agreement between SPD, Bündnis 90/Die Grünen and FDP. According to the government parties, the idea of progress should also be reflected in public procurement. For this reason, the BMWK has conducted a public consultation.

The BMWK describes the goal of the procurement transformation package as follows: “The aim is to simplify, professionalize, digitize and accelerate public procurement procedures. Public procurement and contracting should be economically, socially, environmentally and innovatively oriented and binding strengthened, without jeopardizing the legal certainty of award decisions or raising barriers to entry for small and medium-sized businesses.”

As part of the public consultation, organizations, companies and associations, both on the contractor and client side, as well as interested citizens were invited to contribute their assessments and ideas on procurement transformation in five fields of action:

  • Strengthening green and climate-friendly procurement,
  • Strengthening socially sustainable procurement,
  • Digitization of procurement,
  • Simplification and acceleration of procurement procedures,
  • Promotion of medium-sized businesses, start-ups and innovations.

By June 2023, a total of 444 comments had been received by the BMWK.

The written comments were followed by an opening plenary with State Secretary Sven Giegold and an initial summary. Subsequently, discussions were held with various stakeholders on the five fields of action. In addition to the presentations of the results and the evaluation of the written comments, the participants had the opportunity to reveal their suggestions and to enter into an exchange.

KPMG Law also took the opportunity to comment and participate in the discussion rounds.

Here’s a summary of the highlights from the roundtable discussions.

Key findings from stakeholder comments

The findings and results from the evaluation of the written comments can be viewed in consolidated form on the BMWK website.

The following are the most concise findings from our point of view as guiding principles:

  1. Topic area “Simplification” had the highest priority for participants in the public consultation with 75%.
  2. “Uniform procurement regulations” followed by “adjusted value limits and thresholds” and a “more extensive use of previous possibilities in procurement practice” were identified as the most promising approaches.
  3. Behind the top impulse “Uniform procurement regulations” lies a very differentiated opinion regarding the practical design. Opinions range from “equal law for equal facts” to “abolition of state procurement regulations” to merely “creation of uniform terminology.”
  4. Participants agreed that “complexity” should be reduced and “legal fragmentation” should be fundamentally curbed.
  5. A large majority in the consultation was in favor of at least full interoperability of existing platforms.
  6. The participants in the consultation agreed that simplification of public procurement law is particularly necessary to promote SMEs, start-ups and innovation more effectively, and that reducing bureaucracy is a key prerequisite for the success of such a funding strategy.
  7. Participants from the construction sector (30%) and mobility sector (~18%) see the greatest potential for sustainable procurement.

Ten important impulses from the discussion rounds

In the discussion rounds, the representatives from politics and business held controversial discussions with representatives from the authorities and interest groups. These ten impulses from the discussion rounds either met with great approval or led to conflicting opinions:

Impulse #1: Standardize and increase value limits

Value limits for formal invitations to tender should be standardized nationwide in order to give contracting authorities the same design options nationwide. In addition, the value limit for direct purchase should be increased.

Impulse #2: Uniform procurement law

A procurement law for all services.

Impulse #3: Uniform terminology

The discussion revealed that the common denominator on the topic of “standardization” is at least to align the terminology between the upper and lower thresholds and the sector-specific sets of rules.

Impulse #4: Standardize award platforms

The function and documents of the different award platforms should be standardized.

Impulse #5: Mandatory introduction of virtual negotiation in review proceedings

Acceleration through virtual or hybrid oral proceedings in review procedures.

Impulse #6: Mandatory application of sustainability criteria

Sustainability criteria should be applied on a mandatory basis, either in the suitability requirements, the award criteria or in the performance specifications.

Impulse #7: Sustainability leads to additional costs and excessive demands

Strict regulation in the area of sustainability would lead to additional costs and overburden public clients. The implementation of the sustainability criteria would have to be extensively checked by the client.

Impulse #8: Simplified application of functional performance specifications

Communicative form of tendering is demanded by market participants especially for procurement of innovative services.

Impulse #9: Reduce formalism

Too many and too extensive forms and requirements between contracting authorities.

Impulse #10: Flexible lot formation

Lot splitting important for start-up participation, but also lot bundling for complex procurements.

Conclusion

Following the fruitful discussions, it now remains to be seen how and whether the insights and impulses developed in the public consultation will be incorporated into the draft bill. In any case, the transformation of procurement law will significantly change public procurement.

 

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