German court demonstrates balance between flexibility and fairness in public contracting

The decision saw the Administrative Court of Darmstadt affirm the right – and in some cases, the obligation – of public authorities to apply public procurement law in broadband infrastructure, even when EU procurement rules do not formally apply.

Dr Lars Hettich, procurement expert at Pinsent Masons, said: “The decision exemplifies how natural courts maintain a balance between flexibility and fairness in public contracting.”

The case arose after a contracting authority launched a tender for the expansion of a fibre optic network, funded by a federal broadband subsidy. Although EU procurement law typically exempts such projects, the funding notice required adherence to national procurement regulations and core European principles such as transparency, equal treatment and non-discrimination.

Dr Marc Salevic, digital infrastructure expert at Pinsent Masons, said: “Choosing the right procedure and implementing it properly throughout the project is a typical challenge in subsidised fibre optic rollout projects under sector-specific EU procurement rules and state aid regulations.”

The authority opted to conduct the selection process as a negotiated procedure with competition under Germany’s Regulation on the Award of Public Contracts (VgV). During bid evaluation, one bidder submitted an unusually low offer. Upon further scrutiny, the authority discovered the bid included a retroactive “safety surcharge” and was based on an incorrect calculation method. Citing these issues, the authority excluded the bid under the VgV.

The bidder challenged the exclusion in an emergency proceeding, but the Administrative Court rejected the application for interim relief. The court referenced prior case law from the Higher Administrative Court of Saxony, affirming that the authority was not only permitted but required to apply the VgV due to the funding conditions.

The court ruled that the authority had sufficiency communicated the applicability of the VgV in its tender documents. It rejected the argument – previously supported by the Public Procurement Chamber of Southern Bavaria – that individual exclusion criteria needed to be explicitly listed.

The decision reinforces that, while such authorities are not bound to follow the VgV, they may choose to do so to ensure procedural clarity and legal certainty.

Hettich said: “The case law reinforces the recommendation to public authorities to generally conduct formalised procedures. Even when EU procurement law is not mandatory, such procedures provide a reliable framework for both the authority and the bidders. In subsidised projects, authorities are usually required to follow such procedures due to conditions in the funding notices.”

“In these cases, authorities must comply with applicable procedural rules – otherwise, they risk having to repay the subsidies. Bidders should strictly adhere to all requirements set by the contracting authority. Otherwise, they risk exclusion. In case of doubt, they should ask questions early and insist on clear answers to avoid misunderstandings and unnecessary disputes during bid evaluation,” he said.