German procurement law is guided by rules contained in three different levels of regulation: first, in budgetary (Federal and State Budgetary Regulations – "BHO" and "LHO") and competition law (German Act Against Restraints on Competition – "GWB"); second, in delegated legislation (Procurement Ordinance, Vergabeverordnung – "VgV", Procurement Ordinance for the sectors of water, energy and transports (utility sectors), Sektorenverordnung - "SektVO", Procurement Ordinance for the sector of defense and security, Vergabeverordnung Verteidigung und Sicherheit - "VSVgV", Procurement ordinance for concessions, Konzessionsvergabeverordnung - "KonzVgV") and third, in the German Procurement Regulations for Works – "VOB/A". The provisions contained in the GWB are elaborated in the VgV, SektVO, VSVgV, KonzVgV and in the VOB/A (part 2 and 3).
Public procurement law under the GWB and the Procurement Ordinances as well as – for public works– under the VOB/A (part 2 and 3) only applies if the thresholds regarding the contract values contained in the European Directives are equalled or exceeded. Current values are €209,000 for supplies and services and €5,225,000 for works. The threshold value for all kinds of contracts in the sectors of water, energy and transport (utility sectors) is €418,000. Specific other threshold values apply for Federal authorities and specific contracts regarding the military area.
Below these threshold values the VOB/A part 1 applies for the award of works contracts. As for supplies and services the Procurement Ordinance for the procurement of supplies and service contracts which do not equal the threshold values (Unterschwellenvergabeordnung-"UVgO") which entered into force in early 2017 applies. The UVgO replaced the old Procurement Ordinance for supplies and services (Vergabe- und Vertragsordnung für Leistungen – "VOL/A").
German procurement law is based largely on the EU Directives on public procurement. These in turn are influenced by the WTO Government Procurement Agreement (GPA) as the European Union and each of its 28 Member States are signatories to the GPA. The scope of the GPA covers any law, regulation, procedure or practice regarding any procurement by any contractual means as soon as the procuring entity and the type of contract are listed in Appendix I to the GPA and the thresholds stated there are exceeded.
As German procurement law aims largely at implementing the EU Directives on public procurement, it concentrates on principles resulting from European primary law. Thus, public contracts may only be awarded on the basis of a competitive award procedure, which must be transparent and non-discriminatory and respect the principles of economic procurement and proportionality. Additionally, the promotion of small business' interests must be considered. Aspects of quality and innovation as well as social and environmental aspects have to be taken into account, too. These principles have to be observed during every step of the procurement process and are further detailed in German procurement regulation.
While, in principle, government procurement in the field of defense and security falls under the general EU procurement rules (Directive 2014/24/EU), these general rules do not accommodate the specificities of defense-related procurement contracts. Consequently, in the past, most EU Member States have opted to derogate from the general EU procurement rules for practically all defense and security related contracts by invoking Art. 346 TFEU (former Art. 296 EC Treaty), which allows for a derogation for national security reasons. The respective contracts were awarded to national rules which in many cases do not reflect European principles. Against that background EU Directive 2009/81/EC was introduced which offers tailor-made procurement rules for contracts in the defense sector and aimed at preventing derogation from procurement law based on Art. 346 TFEU. Consequently, under the regime of EU Directive 2009/81/EC derogation is only possible in very exceptional cases.
In Germany the procurement in the defense and security sector is guided by the Defense Procurement Ordinance (Verteidigungsvergabeverordnung – "VSVgV") that transposes Directive 2009/81/EC. The VSVgV sets forth procurement rules specifically tailored to the defense market. Thus, the VSVgV applies to sensitive public supply contracts and public service contracts, in the fields of defense and security and stipulates a number of specific procedural features tailored to the characteristics of sensitive public defense and security supply contracts. The applicable threshold value for this sector is € 418,000.
As for works contracts in the defense area, the regulations of the VOB/A (part 3; VOB/A-VS) apply to contracts that equal or excels the threshold value of €5,225,000.
However, reflecting Art. 346 TFEU German procurement law does not apply to the procurement of hard military equipment, civil goods and dual-use goods that are related to interests of national security.
In contrast, there are no special regulations applicable to aerospace procurement. The award of contracts in this field is governed by general German procurement laws (see above under a).