Vorlesung 7 Sales at Üublic Sector

Public clients (Öffentliche Hand) is a collective term for the public sector, covering :

• Budget-oriented federal corporations (Körperschaften), such as states, cities and local governments

• State or federal institutions under public law, such as clinics, federal agencies for education, agriculture and forestry etc.

• Social insurances that fulfil public tasks as organizationally independent institutions, such as health insurance, unemployment insurance, pension insurance

• Other institutions or companies subject to public procurement law, e.g. energy provider, water provider, public transport provider

• Public contracts are contracts advertised and awarded by contracting authorities for the procurement of goods or services

• According to §99 of the Act against Restraints of Competition (Gesetz gegen Wettbewerbsbeschränkungen GWB), public contracts are contracts for pecuniary interest between contracting authorities and enterprises

• Procurement law regulates the award of public contracts to companies

• The aim is to ensure that public contracting authorities can procure the required material and personnel resources at the most favourable and best conditions

• In addition, calls for tender are intended to ensure transparency and competition on the market and to prevent corruption

Call for tenders

Public, written invitation to submit tenders for the supplies or services specified in the invitation to tender

Public contracting authorities are legally obliged to issue invitations to tender

(increasing use of private industry / opportunities to reduce tendering costs)

Content of a tender

• Commissioner

• Period of execution

• Location of execution

• Job description

• Performance criteria

• Evaluation criteria

• Procurement process

  
  

Since January 1996: if the value of public contracts exceeds a certain threshold, they must be put out to tender throughout the EU in accordance with European Union public procurement law.

The threshold value is the anticipated total value of the supplies and services put out to tender, including options and contract extensions - excluding VAT.

Part of German public procurement law and regulates the tendering and awarding of public contracts in the Federal Republic of Germany.

Part A: (VOL/A)

General conditions for the award of services

• Calls for tenders under German law below the thresholds

• Calls for tenders under European law (EC invitations to tender) above the thresholds

• Calls for tenders under European law for specific sectors

Part B: (VOL/B)

General conditions of contract for the execution of services

• General terms and conditions of public contractors

• Prescribed components of the contract to be concluded

• A set of rules drawn up by experts, not a law or legal ordinance

• A set of rules commissioned by the German Award and Contract Committee for Construction Work

• The public sector is obliged to award construction works and conclude contracts in accordance with VOB

Part A: (VOB/A)

General conditions for the award of construction works (by contracting authorities)

Part B: (VOB/B)

General conditions of contract for the execution of construction work

Part C: (VOB/C)

General technical terms of contract for construction work with specific technical regulations on the execution and invoicing of the respective construction work

Obligation for publication in Germany according to §12 VOL/A and VOB/A

Federal Government and states

Announcement in daily newspapers, official gazettes, internet portals of the Federal Government (www.bund.de) or own portals of the states

Communal level

Individual forms of publication. Common practice: local press with "tender notices" (shortened publication text) with reference to public trade journals and portals.

In addition to official publication media

Trade journals and portals dedicated to the publication of tenders and offering services

• e.g. support in searching for tenders and submitting offers with formal processes

• e.g.: https://www.bi-medien.de/, www.vergabe24.de

UVgO regulates types of procedure for invitations to tender in the sub-threshold area (§8 UVgO):

1. Public tenders

2. Restricted tenders With and without competitive bidding / multiple bidders

3. Contracting with negotiation (Verhandlungsvergabe) With and without competitive bidding / multiple bidders

A contracting authority can freely choose between the tender variants public tender and restricted tender with competitive bidding. Contracting with negotiation (formerly known as private treaty awards) is only possible if the UVgO stipulates or permits it.

Since January 1996: if the value of public contracts exceeds a certain threshold, they must be put out to tender throughout the EU in accordance with European Union public procurement law.

The threshold value is the anticipated total value of the supplies and services put out to tender, including options and contract extensions - excluding VAT.

Starting at exceeding threshold values: Government Procurement Agreement (GPA)

• Agreement of the EU and 14 WTO members (Armenia, Canada, Hong-Kong-China, Iceland, Israel, Japan, Korea, Liechtenstein, the Dutch Caribbean island of Aruba, Norway, Singapore, Switzerland, Taiwan, USA). Active since 1 st of January 1996

• Bidders from all GPA countries may participate in tender procedures and their bids must be evaluated in a nondiscriminatory manner (§ 5 EU Directive 2004/18/EC)

• EU has called for harmonization to EU member states within the framework of the GPA agreement - national states must adapt their national procurement procedures to the GPA

• Each EU country is obliged to notify the European Commission of public tenders and awarded within the European Union

• Only national law applies to tenders below the thresholds - Bidders from the entire "European Economic Area" (EEA) EU+ Iceland, Norway, Liechtenstein + Switzerland may participate via a separate agreement (EFTA)

• Tender publication via the Official Journal of the EU - translation in all official languages of the EU

• Publication via the EU tender portal "Tenders Electronic Daily" (TED) http://ted.europa.eu/TED/main/HomePage.do

• Below thresholds: publication via TED indicating that the contract is not covered by the Government Procurement Agreement (GPA)

• To simplify the search for contracts on the internet and to avoid translation errors: Assignment of a numerical code for each service plus check digit (CPV codes; Common Procurement Vocabulary)

• CPV codes are issued and updated by the EU.

What is TED?:

• TED (Tenders Electronic Daily) is the online version of the 'Supplement to the Official Journal' of the EU, dedicated to European public procurement.

• TED publishes 676 thousand procurement award notices a year, including 258 thousand calls for tenders which are worth approximately €670 billion.

How can I benefit from TED?

• TED provides free access to business opportunities from the European Union, the European Economic Area and beyond.

• Every day, from Monday to Friday about 2,600 public procurement notices are published on TED.

• You can browse, search and sort procurement notices by country, region, business sector and more.

• Information about every procurement document is published in the 24 official EU languages. All notices from the EU's institutions are published in full in these languages.

Due to increasing harmonization at European level mostly identical to national procedure in Germany

• Public tender comparable with public invitation to tender

• Restricted tender comparable with restricted invitation to tender with competition)

• Contracting with negotiation with or without a call for tenders (comparable to German Verhandlungsvergabe)

Complementary procedures in the EU Competitive dialogue

• Application for very complex projects

• Mandatory: Competitive bidding and selection of suitable companies in advance.

• No solicitation of bids, but intensive dialogue on the required service with various bidders and subsequent award of contract

  
  

  Innovation partnership

• Application for solutions that do not yet exist on the market

• Discussion / development of a solution with potential innovation partners

• Obtaining proposals for solutions and commissioning of one or several companies

National procurement procedures:

German legal opinion: Bidders have no enforceable legal claim to a flawless award procedure Less formal legal requirements

No rigid, but reasonable deadlines

• No special legal protection system (possibly in individual cases Land procurement laws)

• Awarding is regulated by budgetary law and administrative regulations

• Supplemented by regulations without or limited legal norm (e.g. VOL, VOB)

  More free approach to bid evaluation

European procurement procedures:

Bidder has a right of action before an independent court for compliance with the procurement rules Strict procedural form with strict regulations

Minimum deadlines for the invitation to tender, time limits for the processing of tenders.

• Regulated system of legal protection

• Modalities of tender publication

• Exclusion of bidders for corruption, money laundering or support of a terrorist organization

  Clear evaluation criteria for tenders.

Differences in distribution between private industry and the public sector

• In dealing with public sector contacts, there are basically no differences to private industry • The better the supplier-customer relationship, the better the orientation towards upcoming tenders

• The customer's contact persons must comply with the procurement regulations. They are (mostly) public officials and must comply with administrative regulations, VOL guidelines, UVgO guidelines and GPA

• Published regulations and bid evaluations are (mostly) to be regarded as irrevocable

Paragraphs, regulations and forms to be observed are complex! This applies to both, providers and customers

• If formal regulations are not observed, a bidder will be excluded from the bidding process, even by given suitability and most favorable offer

• There are very limited possibilities to apply own GTCs or separate contract conditions. A deviation from or suspension of VOL/B is almost impossible

• In bidding consortia, all members become contractual partners and are liable as joint and several debtors (Gesamtschuldner)

• Unlimited liability is often required, e.g. EVB-IT

• Due to the low threshold value, almost all relevant tenders take place Europe-wide, the circle of competitors is thus expanded accordingly and the price pressure is increased

• The increased rights of bidders under the GPA have led to an increase in objection procedures. Award procedures are stopped or completely suspended as a result. Awarding authorities are trying to avoid this with increased formalities

• For planners: own turnover depends on the contract award sum according to VOB/B