Term and Definition of the Restricted Tender
Die restricted tender is a central procurement procedure in public contracting, which is regulated in detail particularly under German and European procurement law. It represents a form of tendering in which not – as in the case of a public tender – an unlimited number of companies are invited to submit bids, but only selected companies. A restricted tender is characterized by the fact that a public contracting authority specifically selects companies and only these are invited to participate in the competition. The legal basis for restricted tenders can be found in the Act Against Restraints of Competition (GWB), the Procurement Ordinance (VgV), the Sub-Threshold Procurement Ordinance (UVgO), the Construction Contract Procedures (VOB/A), as well as other relevant regulations.
Legal Basis
Statutory Provisions
GWB, VgV and UVgO
In procurement law, public tendering generally takes precedence. Restricted tenders are only permissible as a secondary option to public competition. The requirements for choosing a restricted tender without a public competition are set out in:
- § 14 VgV (Procurement Ordinance)
- § 8 UVgO (Sub-Threshold Procurement Ordinance)
- § 3a VOB/A (Construction Contract Procedures “A”)
governed. A restricted tender with competition has also been envisaged for large portions of contracts below the EU thresholds since the legal amendments.
EU Procurement Law
In European procurement law, comparable procedures are referred to as “restricted procedures”. Under Regulation (EU) 2016/24 and Directive 2014/24/EU, public contracting authorities are to first invite companies to a competition and subsequently invite qualified companies to submit bids.
Types of Restricted Tenders
With Competition
In a restricted tender with competition an indefinite number of companies are first publicly invited to submit requests to participate. After evaluating the applications, suitable companies are invited to submit bids. This procedure serves to select the most capable bidders while ensuring competition.
Without Competition
Die restricted tender without competition takes place if direct competition is deemed unnecessary due to special reasons. Public contracting authorities directly invite selected companies, considered capable, to submit bids. The conditions for this are characterized by high legal thresholds.
Requirements and Areas of Application
Admissibility
A restricted tender is particularly permissible if:
- the service can only be reliably provided by a limited group of companies,
- a public tender does not promise an economic result, or
- the estimated contract value does not exceed certain thresholds.
The precise limitations and requirements may differ depending on the applicable legal framework and federal state. The reasons for the admissibility of the restricted tender and the selection of companies must be documented (§ 30 UVgO, § 8 VOB/A).
Threshold Values
For direct awards and restricted tenders without competition, the federal states set different threshold values in some cases. These are regularly adjusted and are based on the requirements of fiscal, competition, and transparency principles.
Below-Threshold Area
In the below-threshold area, the UVgO provides for the application of restricted tenders for supply and service contracts above certain amounts. The VOB/A (Section 1) regulates the application for construction services.
Above-Threshold Area
In the above-threshold area, i.e., upon reaching EU thresholds, the restricted procedure is the parallel to the restricted tender and coincides in many details.
Procedure
Selection of Companies
The selection of companies to be invited to submit bids is based on established criteria. The aim is to invite suitable and capable companies. In the case of repeated tenders, rotation should be ensured to consider all potential companies and avoid distorting competition.
Invitation and Submission of Bids
Only the preselected companies receive an invitation to submit bids. The deadlines for the submission of bids are based on the provisions of procurement regulations and must be set sufficiently to ensure genuine competition.
Transparency and Documentation
The contracting authority is obliged to document the selection process transparently and comprehensibly. This includes the reasons for choosing the procedure, the selection of participants, and the entire process of the restricted tender.
Legal Protection and Review Procedures
Unsuccessful companies may turn to review authorities in case of suspected legal violations in the procurement process (procurement tribunals, and for higher contract values, the Higher Regional Court). Initiating a review procedure is particularly possible if the selection of companies or the chosen procedure is considered unlawful.
Advantages and Disadvantages
Advantages
- Efficiency and time savings for manageable or specialized contracts
- Targeted selection of capable companies increases quality and prospects of success
- Safeguarding competition through regular selection procedures (with competition)
- Lower administrative effort compared to public tenders
Disadvantages
- Limited competition, risk of preferential treatment for certain market participants
- High demands for objectivity, transparency, and documentation
- Risk of monopolization through repeated selection of the same companies
Significance in Procurement Law
The restricted tender is a significant instrument in public procurement. It enables contracting authorities to procure services on the market efficiently and in a targeted manner, provided strict legal requirements are observed. Its application is closely tied to compliance with the principles of competition, transparency, equal treatment, and traceability.
References
- Act Against Restraints of Competition (GWB)
- Procurement Ordinance (VgV)
- Sub-Threshold Procurement Ordinance (UVgO)
- Construction Contract Procedures (VOB/A)
- Directive 2014/24/EU
Note: The legal content presented is for general informational purposes only regarding the restricted tender and does not replace individual legal advice.
Frequently Asked Questions
What legal requirements must be met to conduct a restricted tender?
Under German procurement law, especially according to the Procurement Ordinance (VgV), the Sub-Threshold Procurement Ordinance (UVgO), and applicable budgetary requirements, the restricted tender is regulated as an exception to the public tender. It is legally permissible, among other cases, when the service by its nature can only be performed appropriately by a limited group of companies, or when a public tender is not economically reasonable, for example, for particularly urgent projects or for very small contracts. In such cases, thorough documentation of the reasons for restricting the competition is mandatory. The selection of companies must follow a transparent and non-discriminatory procedure. In addition, strict examination and justification requirements apply to the choice of a restricted tender so that any possible review by supervisory authorities or review bodies can withstand scrutiny.
To what extent must the principles of transparency and equal treatment be observed in a restricted tender?
The principles of transparency and equal treatment also apply to restricted tenders in accordance with the Act Against Restraints of Competition (GWB) and the VgV or UVgO. This means that all invited companies must receive the same information regarding the tender conditions, technical specifications, and evaluation criteria. The selection of companies to be invited to submit bids must be based on objective, comprehensible, and documented criteria. If contracting authorities violate these principles, for example through arbitrary selection or preferential treatment of certain companies, disadvantaged bidders have the option of requesting a review procedure.
What documentation obligations exist when conducting a restricted tender?
For a restricted tender, procurement law requires careful written documentation to ensure the traceability of all procurement decisions (see § 8 VgV, § 6 UVgO). This particularly includes the justification for the choice of procurement procedure, the selection and qualification criteria, the reasons for selecting individual bidders, and the procedure for evaluating and awarding bids. The documentation must be designed so that both internal review bodies and, if necessary, external review bodies can obtain a comprehensive overview of the procurement process. Errors or gaps in the procurement documentation may result in the contract’s ineffectiveness and claims for damages.
What legal remedies are available to businesses within the restricted tender process?
Companies that feel disadvantaged by the selection decision or by the process of the restricted tender have various legal remedies depending on the contract value. For EU-wide contracts, they may submit a review application to the procurement tribunal under § 160 GWB. In the below-threshold area, companies can regularly file a complaint with the contracting authority, and, depending on state law, take further steps if needed. Legal remedies are only promising if a violation of procurement regulations can be credibly demonstrated; for example, inadequate documentation, incorrect bidder selection, or breach of the principle of equal treatment.
Which deadlines must be observed in connection with restricted tenders?
In restricted tenders, deadlines for submitting bids, supplementing documents, and notifying the award decision must be observed. The minimum deadlines are determined by the applicable regulations, such as the VgV, UVgO, or VOB/A. Generally, deadlines for restricted tenders are shorter than for public tenders but must always be reasonable to allow bidders to prepare their offers carefully. In addition, deadlines apply to possible complaints and legal remedies. Failure to observe deadlines can result in exclusion of the bid or loss of legal remedy.
How are the companies selected that are invited to submit bids?
The selection of companies in the context of a restricted tender is subject to legal requirements intended to ensure fair competition. In principle, the contracting authority must address as broad a circle of bidders as possible, for example by maintaining bidder databases or evaluating expressions of interest. The selection must be based on objective, pre-documented suitability and selection criteria, such as the companies’ experience, references, or capabilities. A non-discriminatory and transparent selection is mandatory and must be proven. Arbitrary or subjectively controlled selection of individual companies violates current procurement law and may lead to review procedures.
Are restricted tenders subject to special public law control mechanisms?
Yes, restricted tenders are subject to specific control mechanisms by internal and external authorities. Internal audits are carried out by the respective procurement agencies, which monitor the proper conduct of the procedure and compliance with legal requirements. External audits may be conducted by audit offices, procurement tribunals, and courts. These authorities particularly review the correct application of exceptional circumstances, proper documentation, and compliance with competition and equal treatment principles. Violations may be sanctioned, e.g., by review orders or claims for damages.
