Concept and definition of the individual bid
Das Individual bid is a central concept in procurement law as well as in construction contract law, and refers to the separate, independent tendering of individual partial services or trades within the framework of a comprehensive project, especially when awarding public contracts. In contrast to the overall or lot bid, the award of individual bids involves the separate tendering and awarding of individual service positions, trades, or specialized lots. This approach enables a detailed and clear separation of the respective tasks and is frequently used in construction, service, and supply contracts.
Legal basis for the individual bid
Individual bid in procurement law
Public procurement law in Germany, significantly shaped by the Act Against Restraints of Competition (GWB), the Procurement Regulation (VgV), as well as the Construction Contract Procedures (VOB), recognizes the individual bid as an instrument to promote competition and ensure efficient use of resources by public contracting authorities. The provisions concerning the formation of lots pursuant to Section 97 (4) GWB require that services must generally be awarded in partial or specialist lots where it is economically reasonable to do so.
The individual bid serves, in particular, to subdivide lots and make it easier for small and medium-sized enterprises (SMEs) to access public contracts. The separate tendering is carried out at the level of the respective service positions, thereby increasing the contracting authority’s overview and control over the award of individual components of an overall project.
Individual bid in construction contract law
According to the provisions of the VOB/A, the individual bid is the customary way to describe and tender construction services. In a service specification with individual bids, the individual partial services are listed in detail and are assessed and awarded independently of each other. The awarding of individual bids ensures that construction companies are only liable for the respective positions they have bid on.
The individual bid fundamentally differs from global lot units in which several services are awarded together (global or overall awarding). The service specification for individual bids is generally made by position, with quantity units and specific service requirements, allowing for differentiated calculation and submission of tenders.
Individual bid and antitrust law
The separate awarding of individual bids also has relevance under antitrust law. Through as small-scale an allocation as possible, the formation of bid cartels is to be prevented by distributing the award among several bidders. This also helps to prevent manipulation in awarding contracts and increases equal opportunities.
Practice of awarding individual bids
Process of tendering with individual bids
Within the framework of a public procurement procedure, the contracting authority prepares a detailed service specification in which the tasks to be performed are listed individually. Companies can then submit bids for individual advertised positions (individual bids) or for multiple positions. The contract is awarded separately based on the respective individual bids and depends on the evaluation of their respective cost-effectiveness according to the applicable award criteria.
Advantages and disadvantages of the individual bid
Advantages:
- Increased competition, especially for small and medium-sized enterprises
- Possibility of targeted awarding of specialized trades
- Greater transparency and control over the individual services to be provided
- Reduction of dependencies on general contractors
- Easier auditability within the framework of review procedures
Disadvantages:
- Coordination effort for the contracting authority when awarding several individual bids simultaneously
- Risk of interface problems between different contractors
- Increased administrative effort for tendering, reviewing, and awarding multiple contracts
Distinction from other forms of awarding
The individual bid must be clearly distinguished from the overall bid or the general contractor awarding While the individual bid allows for the execution of individual services by different contractors, the overall or general contractor model provides the contracting authority with a central contractual partner. In each case, procurement procedures must determine whether, for reasons of economic efficiency or practicality, division into individual bids or an overall award is preferable.
Individual bid in case law
The procurement review bodies and courts regularly emphasize the obligation of public contracting authorities to award contracts in lots and thus to carry out individual bids, unless economic or technical reasons prevent this. Exceptions must be sufficiently documented and justified in the procurement process. An unlawful combination of several lots or excessive bundling of services may lead to successful review applications in public procurement law.
Summary
The individual bid is a significant instrument of German procurement and construction contract law. It ensures the transparent, targeted, and competition-promoting award of individual service positions in public and private contracts. The precise separation of individual services creates legal clarity for the parties involved, increases flexibility in awarding contracts, and helps to strengthen competition. The legal requirements for the creation and tendering of individual bids are extensive and serve both the effective legal oversight and the practical implementation of a fair and efficient procurement procedure.
Frequently asked questions
When is an individual bid legally permissible?
An individual bid is legally permissible if it complies with the requirements of procurement law, particularly pursuant to Section 97 et seq. GWB and the procurement regulations (VgV, VOB/A, SektVO). The decision whether to form individual or specialist lots basically lies within the discretion of the contracting authority. However, procurement law obliges public contracting authorities to generally split contracts into lots to promote the participation of medium-sized companies (Section 97 (4) GWB). An individual bid—that is, awarding the entire contract as a single lot—is allowed when economic or technical reasons justify it. The contracting authority must document these reasons and include them in the procurement record. If an adequate justification is lacking, there is a risk of a procurement law challenge and possibly a review procedure.
What legal obligations does the contracting authority have in the case of an individual bid?
The most important obligation is the careful documentation and justification of why the principle of lot awarding is deviated from. According to Section 22 VgV, the decision to provide for an individual bid must be understandable and capable of being reviewed. The contracting authority is obliged to create structures that are friendly to SMEs and to provide for lot awarding as far as possible. A violation of the obligation to split into lots can be considered a serious procurement error. In addition, the contracting authority must ensure that the design of the individual bid does not unlawfully discriminate against smaller bidders.
What risks do public contracting authorities face when choosing an individual bid?
Failure to comply with the lot principle can have significant legal consequences. If the contract is awarded as an individual bid without sufficient economic or technical reasons being documented, there is a risk that disadvantaged companies will raise an objection or initiate a review procedure. The procurement review body could find that the award of the contract was unlawful under procurement law, which can lead to the annulment of the procurement process. Claims for damages by companies that did not receive the contract are also not excluded in individual cases.
How must the justification for an individual bid be legally structured?
The justification must address the specific circumstances of the respective procurement project. General references to supposed economic advantages or simplified processes do not meet legal requirements. The contracting authority must set out specifically why a division into lots—e.g. due to warranty interfaces, technical consistency, or economic reasons—is not practical or expedient in the individual case. The documentation must be drafted so that it withstands scrutiny by the procurement review body or courts; it is part of the procurement file and is a decisive basis for decisions in the event of a dispute.
Is an individual bid legally problematic for construction services?
The principle of awarding by lots is particularly important in construction services (Section 5 (2) VOB/A). VOB/A expressly requires the division by partial services and specialist lots insofar as this is economically and technically feasible. An individual bid is only permissible in well-justified exceptional cases. Public contracting authorities must carefully check and document why, for example, splitting into lots would result in unreasonable coordination obligations or disproportionate costs. Otherwise, there is a risk of violating the principle of SME-friendly procurement and thus rendering the award unlawful.
Can bidders legally contest the decision to award a contract as an individual bid?
Yes, bidders can contest the decision to provide for an individual bid instead of a lot-based procedure. They have the right to raise an objection (Rüge) in the procurement process (Section 160 (3) GWB). If the objection is unsuccessful, a review application can be filed with the responsible procurement review body. The panel will examine whether the procurement decision met the legal requirements, particularly the obligation to award contracts by lots. If a violation is found, the award can be annulled or adjusted.
Are there exceptions where individual bids are strictly required?
There is no mandatory legal provision strictly requiring individual bids in procurement law. Rather, the lot concept is the general rule, from which a deviation is possible if it is factually and plausibly justified. Individual bids are especially permissible if the service to be awarded is technically indivisible or if unified coordination is strictly necessary for a functional overall contract. In such cases, the documentation must clearly show that and why an individual bid is factually mandatory; the law does not, however, provide for a general exception.
