Expanding Babylon of Nations
In a bid to address the ongoing fragmentation of procurement law regulations across German federal states, North Rhine-Westphalia (NRW) has announced plans for a fundamental reform of municipal procurement law. The current state of unity and uniformity remains limited, with significant developments primarily occurring at the federal level rather than through harmonized state regimes.
The proposal, set to be implemented as early as January 1, 2026, aims to bring about changes in NRW by abolishing all state-level value limits for municipal procurement procedures. This move is expected to simplify procurement processes and promote economic efficiency within the region. However, it is important to note that the federal government has so far missed opportunities to make the Under-threshold Award Ordinance (UVgO) binding for all states in 2017.
The UVgO, developed in 2017 as a reaction to the need for reform in German procurement law for public supply and service contracts below the EU threshold values, has been a non-binding recommendation given among the states. The core of the bill is the abolition of all state-level value limits, allowing municipalities to decide for themselves, based on the principle of economic efficiency, at what threshold they trust their own employees to conduct a procurement procedure and award contracts.
The increase in value limits is politically and legally controversial, with many experts criticizing direct awards for posing risks to competition, transparency, and equal opportunities. The different regulations of the states are resulting in an increasingly confusing patchwork in procurement law. For instance, procurement authorities in Hamburg can award contracts up to 5,000 euros directly, while in Baden-Württemberg this is permissible up to a contract value (net) of 100,000 euros.
The federal government is focusing heavily on accelerating and simplifying procurement law specifically for national defence purposes, as evidenced by the recent draft law for the Bundeswehr Planning and Procurement Acceleration Act (BwPBBG). This new federal legislation bundles numerous special rules into a stand-alone law tailored for Bundeswehr contracts and related defence procurements, extending its scope and allowing more direct contract awards based on broad security interests.
However, the BwPBBG sets a lex specialis applicable only in the defence sector and does not represent a uniform approach that applies across all public procurement activities or all federal states. Instead, it selectively modifies procurement rules for Bundeswehr-related contracts through 2035. There is no recent indication of a comparable unified reform effort or uniform federal procurement law simplification for other public sectors or for multi-state federal procurement agreements.
The complex state competencies and constitutional distribution of powers continue to influence the pace and scope of uniform procurement regulation. Some uniformity has been seen in regulatory adaptations during the COVID-19 pandemic, such as the federal emergency brake policy that sought to establish some uniform measures among the states. However, such emergency coordination exposed challenges to parliamentary and federal-state balance rather than resolving procurement law uniformity.
Martin Schellenberg, a specialist lawyer for procurement law, has expressed concern about the increasing volume of regulations in procurement law. Procurement law experts have long called for more uniformity in the nationwide patchwork, but the path towards a unified procurement law framework remains challenging due to the federal structure of Germany.
[1] Bundesgesetzblatt (Bundesanzeiger) 2022, I, S. 3167 [2] Bundesgesetzblatt (Bundesanzeiger) 2020, I, S. 3408 [3] Bundesgesetzblatt (Bundesanzeiger) 2021, I, S. 2387
Municipalities in NRW are anticipated to experience a shift in financial management with the implementation of the proposed reform, as all state-level value limits for municipal procurement procedures are set to be abolished by January 1, 2026. This measure aims to foster business efficiency by simplifying procurement processes within the region.
Despite the federal government's inaction in making the Under-threshold Award Ordinance (UVgO) binding for all states in 2017, the UVgO has been influential in encouraging municipalities to make decisions based on economic efficiency regarding procurement procedures and awarding contracts.
