Definition and Legal Classification of Lot Awarding
Die Lot Awarding is a key instrument in public procurement law and is one of the procedures for allocating funds, particularly in public tender procedures. It is applied in the formation and awarding of so-called lots, i.e., partial contracts, within a larger public contract. The aim of lot awarding is to facilitate access to public contracts for small and medium-sized enterprises (SMEs) and to ensure the broadest possible participation in the procurement procedure. The regulations governing lot awarding are mainly codified in German procurement law in Sections 97 et seq. of the Act Against Restraints of Competition (GWB), the Procurement Regulation (VgV), the Sector Regulation (SektVO), the Procurement Regulation for Defense and Security (VSVgV), as well as in the Act Against Restraints of Competition (GWB).
Basics and Objectives of Lot Awarding
The obligation to award in lots arises from the principle of dividing a total contract into several lots to facilitate the participation of small and medium-sized enterprises in procurement procedures. This serves to promote competition and strengthen SMEs in public procurement. Lot awarding is not only relevant for construction works, but applies to all types of public contracts.
Legal Basis
According to Section 97 (4) sentence 2 GWB, public contracting authorities are obliged to divide services into technical and partial lots, insofar as this is economically and technically reasonable. An exception to this obligation exists if splitting into lots would be economically or technically unreasonable.
Definition of Lots
A lot is a definable part of the total service to be awarded, which can generally be awarded independently and is, in itself, independently executable and economically reasonable. A distinction is made between technical lots (separation by type of service), partial lots (separation by quantity or scope), and, if applicable, regional lots (separation by geographic criteria).
Types of Lot Awarding
Technical Lots
In the awarding of technical lots, a contract is divided according to different types of services. For example, in a construction project, the trades of electrical installation, heating, and sanitation are each separately put out to tender and awarded as individual technical lots.
Partial Lots
Partial lot awarding splits identical or similar services by scope or quantity and awards them separately. For example, the delivery of 1,000 computers can be divided into five partial lots of 200 devices each to enable participation by multiple bidders.
Regional Lot Awarding
Another option is the formation of regional lots, where services are divided according to geographic area or jurisdiction. This is especially important for services with a strong regional connection.
Legal Requirements and Obligations
Obligation to Split into Lots
Public contracting authorities are generally required to split contracts into suitable lots. The decision as to whether, and to what extent, forming lots is reasonable and required lies within the due discretion of the contracting authority, but requires careful consideration between economic efficiency and the goal of promoting SMEs.
Exceptions to Lot Awarding
An exception to the requirement for lot awarding can be assumed if splitting the contract would lead to economic or technical unreasonableness. In such cases, the public contracting authority must document the reasons for unified award and justify this in the procurement documents (Section 97 (4) sentence 3 GWB).
Summary, Combination, and Limitation of Lot Awarding
The public contracting authority may provide for a bidder to receive multiple or even all lots (combined awarding). It is also possible to limit the number of lots that may be awarded to a single bidder. Such a limitation must be disclosed and objectively justified in the procurement documents.
Documentation and Transparency Obligation
Every decision regarding the division into lots and any exceptions to this must be properly documented by the contracting authority. This serves to allow control and verification of the decision within the context of review proceedings.
Lot Awarding under European Public Procurement Law
The obligation to split into lots was already anchored in German law before the implementation of the EU procurement directives but was further reinforced at the European level. According to Article 46 of Directive 2014/24/EU, public authorities in all EU member states are required to divide large public contracts into lots or to state the reasons for not doing so.
Significance for Small and Medium-Sized Enterprises
Lot awarding encourages the participation of SMEs in public procurement by lowering the barriers to entry. Companies can apply for lots that match their capacities and specialized expertise.
Legal Protection in Lot Awarding
Review Procedures
Decisions regarding the division into lots can be subject to review by procurement review bodies and procurement courts, provided that the bidder concerned has had their rights infringed. Typical points of dispute involve the failure to split a contract into lots or an unjustified restriction of lot awarding to a small number of bidders.
Transparency and Equal Treatment
The basic procurement principles, in particular transparency and equal treatment, must also be observed in lot awarding. Discriminatory award criteria or preferential treatment of certain companies are prohibited.
Practical Relevance and Typical Areas of Application
Lot awarding is particularly used for larger construction, supply, or service contracts—for example, in construction projects for schools, hospitals, administrative buildings, or the procurement of extensive IT equipment. The formation of lots is guided by the requirements of each contract and the services to be provided.
Conclusion
Lot awarding is a central element of procurement law. By properly dividing public contracts into lots, competition is intensified, market opportunities for SMEs are improved, and the efficiency of public procurement processes is ensured. The statutory regulations require a careful balancing and documentation of all decisions related to lot formation to guarantee transparency, verifiability, and legal certainty.
Frequently Asked Questions
What are the legal bases for conducting lot awarding?
In Germany, the conduct of lot awarding is governed in particular by procurement law regulations found in the Act Against Restraints of Competition (GWB), the Procurement Regulation (VgV), and, for public construction contracts, in the Construction Contract Procedures (VOB/A). Lot awarding is generally not a separate procurement procedure but refers to the division of a public contract into several partial or technical lots to facilitate the participation of medium-sized enterprises in competition (Section 97 (4) GWB). Additionally, antitrust procurement law obliges public contracting authorities to always examine whether and how contracts can be divided into lots. The planned division and any reasons for refraining from splitting into lots must be thoroughly documented. Breaches of the lot awarding requirement may be challenged by competitors, for example, in review proceedings before procurement review bodies. Furthermore, the requirements of equal treatment, transparency, and the principles of cost-effectiveness and efficiency must be observed.
What are the documentation obligations associated with lot awarding?
The obligation to document in the context of lot awarding is strictly regulated by law. Public contracting authorities must record the procurement process and the decision on division or non-division into lots in detail. This includes, in particular, considerations on the type and number of lots, the weighting of technical and partial lots, and justification in the event of a partial or complete waiver of lot awarding (Section 8 VgV, Section 97 (4) GWB). The documentation must be able to show that the decision was not arbitrary, but made in compliance with procurement law principles. It serves as evidence for auditing authorities (e.g., audit offices), as well as in review procedures by companies or bidders who consider themselves disadvantaged by the method of lot awarding.
What requirements does German procurement law impose on the formation of lots in the award of public contracts?
German procurement law requires public contracting authorities to generally divide contracts into technical or partial lots, provided this is economically and technically reasonable. The purpose of this legal obligation is to improve access for small and medium-sized enterprises to public contracts. Contracting authorities have a degree of discretion but must choose a structure that is appropriate and non-discriminatory and, in particular, award distinct services as separate lots. The decision for or against division, the determination of minimum or maximum numbers per bidder, and the possibility of awarding several lots to a single bidder must all be considered and documented thoroughly (Section 97 (4) GWB, Section 22 VgV). Errors in this respect can lead to review procedures and claims for damages.
What are the consequences of incorrect or omitted lot awarding?
In the event of incorrect or omitted lot awarding, the public contracting authority faces various legal consequences. On the one hand, they risk review proceedings by disadvantaged companies who may base their claims on violations of lot awarding requirements. Procurement review bodies can require the authority to repeat the procedure correctly or to revoke already granted awards. In case of serious breaches, contracts can be declared null and void. Moreover, there is a claim for damages for businesses that suffer loss due to non-compliance with the requirements of lot formation. Oversight by supervisory authorities and audits by procurement offices increase the risk of sanctions for improper handling of lot awarding.
What applies in the case of a single award despite a requirement for lot awarding?
A single award of a contract despite an existing legal requirement to award in lots is only permissible in exceptional cases. It is a violation if a contracting authority omits to split into lots without valid economic or technical reasons. In such cases, the reasons must be clearly documented—for example, if splitting would incur significant additional costs or technical problems (Section 97 (4) GWB). An improper single award can be challenged in the context of review proceedings and force the authority to correct the process. In addition, limited access possibilities for smaller companies can be challenged, resulting in a competitive disadvantage and violations of the SME requirement.
To what extent may requirements and suitability criteria be set per lot?
Procurement law enables and often requires that suitability criteria and requirements be set separately for each lot. The requirements must always relate to the specific content of the lot and must not be unnecessarily restrictive or discriminatory. The contracting authority is obliged to examine for each lot independently which qualifications and capacities are actually required. A blanket adoption of the overall contract’s requirements to each lot is impermissible if the technical or partial lots involve different technical or economic demands. Otherwise, bidders specializing in certain areas may be excluded, which would violate the SME requirement and be subject to review.
What role does the review procedure play in the context of lot awarding?
The review procedure is a central instrument for monitoring compliance with lot awarding provisions. Companies disadvantaged in procurement law have the opportunity to have decisions by the contracting authority regarding lot formation or the lack of lot splitting reviewed before the procurement review body and, if necessary, rescinded. In the course of the review procedure, it is examined whether the requirements of Section 97 (4) GWB and other pertinent procurement law provisions have been fulfilled and whether the decision-making process has been adequately documented. Review procedures thus serve to protect bidders’ rights, transparency, and compliance with competition-promoting regulations in public procurement.
