Politics & Laws

Public Procurement Act 2006: A first Review

The Public Procurement Act 2006 is almost double the size of its 2002 forerunner. Some interesting pitfalls reveal the downside of giving quantity priority over quality

While some weak spots are already contained in the EU Public Procurement Directives underlying the Austrian Public Procurement Act 2006 (BVerG2006), in the latter it is mostly the inaccurate or incomplete terminology that causes confusion.

Some examples:

No clear boundary between modified and alternative tender

According to the definition provided in § 2 Z 1 BVergG, modified tenders are in particular distinguished by the fact that they “deviate from the tender specifications to a lesser extent than an alternative tender”. However, it would be a mistake to deduce from this wording that the law also regulates the extent to which alternative tenders deviate from the relevant specifications. The only definition provided with respect to an alternative tender is that it is “an offer regarding an alternative proposal submitted by the tenderer” (§ 2 Z 2 BVergG). Moreover, it is now possible to exclude alternative tenders without giving reasons.

Threshold reduction needs to be inferred

According to § 12 Abs. 1 BVergG, EU procurement thresholds are € 236,000 and € 154,000 for supply and service contracts and € 5,923,000 for works contracts. In the utilities sector, these thresholds are € 473,000 for supply and service contracts and € 5,923,000 for works contracts (§ 180 BVergG). The reduction of thresholds (taking immediate effect) to € 211,000 for supply and service contracts and to € 5,278,000 for works contracts by Commission Regulation (EC) No. 2083/2005 of 19. 12. 2005 already prior to BVergG promulgation is something that needs to be inferred.

Who knows years with more than twelve months?

§ 15 (2) Z 2 and § 183 Abs. 2 Z 2 BVergG: In the case of regular, repeated orders or long-term contracts, an alternative method of calculating the contract value is to use as a reference the estimated total value of subsequent contracts, which are awarded during the financial or budget year following the first supply, in the event that “the latter has more than twelve months”…

"Weighting" fosters arbitrary decisions

§ 80 Abs. 3 BVergG: The contracting authority shall indicate the award criteria in proportion to the relevance it attributes to them ("weighting"). This can also be done by defining a margin whose maximum spread must be deemed appropriate. From a legal perspective, however, such weighting is at best questionable and gives the contracting authority leeway to make arbitrary decisions (also compare the Administrative Court decision 2002/04/0036 of 1st March 2005).

Another peculiarity is that in the corresponding special provision for below-threshold contracts the possibility of defining a margin is not explicitly provided (compare § 100 BVergG).

Do all tender specifications have to be negotiated?

In negotiated procedures with only one tenderer the contracting entity may, in negotiated procedures involving several tenderers it shall negotiate the full range of tender specifications (§ 105 Abs. 1 BVergG). It would be interesting to know how the lawmaker thinks such a comprehensive obligation to negotiate can possibly be put into practice in the case of negotiated procedures involving several tenderers. Is it really necessary to negotiate everything?

Capacity demonstration also for bid and work communities?

§ 76 Abs. 1 BVergG implements the conventional legal practice of third-party procurement. In this context, a tenderer is entitled to prove his eligibility with reference to the capacity of other companies (sub-contractors) if he can prove that he can in fact avail of the necessary means of the other enterprise. § 76 Abs. 2 yet somewhat overshoots the mark by also requiring bid and work communities to demonstrate such procurement capacity for their members.

Such obligation to produce evidence is hard to understand as in bid and work communities each individual member is directly obliged to the contracting entity in the performance of this service (solidarity principle).

Remuneration of planners quite peculiar

According to § 16 Abs. 1 Z 3 and § 184 Abs. 1 Z 3 BVergG, in planning contracts the estimated contract value shall be indicated as “fees, commissions and other types of remuneration”. This wording is also adopted from the relevant directives. Architects and other civil engineers will nevertheless be surprised at the new form of payment (in BVergG 2002 the term “Honorar” {~ professional charge} was used).

Confusion about direct awards

According to § 41 Abs. 1 BVergG, direct awards shall be governed “exclusively by part one and parts four to six of this federal act, the provisions regarding §§ 3 Abs. 1, 4 – 6, 9, 10, 13 – 16, 19 Abs. 1, 25 Abs. 10 and 78 as well as the provisions included in paragraphs 2 – 4”. § 42 Abs. 2 BVergG, however, requires that “in case of a direct award, provided that documentation is economically justified, the object and value of the contract as well as the contractor’s name shall be indicated.” The question arises: Is this provision also applicable to direct award procedures even though no mention of it is made under § 41 Abs. 1 BVergG?

"Genuine competition" with only one remaining tenderer?

§ 105 Abs. 2 BVergG provides for a scoring option in negotiated procedures where in the course of several phases the „number of tenders is reduced with reference to the specified award criteria”. Yet in the final phase of a negotiated procedure, in the event that an adequate number of qualified tenderers remains, a sufficient amount of tenders must still be available to ensure “genuine competition”. This suggests that in the final phase basically several offers must remain for an ultimate assessment (to guarantee genuine competition). But then it is confusing to read: “In the event that on account of the reduction of the number of tenders only one qualified tenderer remains, negotiations with only one tenderer in the final phase of a negotiated procedure are permissible.”

Different appeal and standstill periods

  The periods for raising complaints contained in the BVergG 2006 are partly longer or shorter than the corresponding standstill periods. It may therefore happen that contracting authorities have to put the award of contract on hold even though all appeal periods have expired, or appeals to nullify an award decision are entered “on time” although the respective contract has already been awarded.

Classical contracting entities granted more flexible minimum deadlines

Classical contracting entities are entitled to establish a ten-day period for submitting applications in two-stage negotiated procedures and non-open (restricted) procedures exceeding the thresholds if for reasons of urgency the regular or shortened periods cannot be observed and the announcement is drafted and transmitted by electronic means (§ 63 Z 2). It is somewhat peculiar that contracting authorities in the utilities sector cannot avail themselves of this instrument (yet it needs to be noted that the 15-day period generally granted to the utilities sector is fairly short anyway). Moreover, the BVergG ‘06 requires only contracting authorities in the utilities sector to introduce a minimum deadline for tender submissions: they shall determine a minimum submission deadline of 10 days unless a shorter period is negotiated with the selected tenderers (§ 226 Abs. 3).

Useless preliminary assessment in electronic auctions

To award contracts by way of electronic auction, government authorities are required to conduct a prequalification procedure (§ 146 Abs. 1 BVergG). This prequalification procedure always ends with a preliminary assessment of the submitted tenders. Yet it would be false to conclude that the purpose of a preliminary assessment is to select only the best bidders for participation in the auction. The idea rather is to invite all bidders that have submitted a permissible tender to participate in the auction (§ 147 Abs. 1 BVergG).
(Source: aqua press Int. 4/2006, Mag. Martin Schiefer, Mag. Gunter Estermann)

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