Contracting authorities that have to observe the procurement provisions include all classic public authorities (bound to budgetary law), especially the Federal Government, the State Governments and municipalities, as well as co-operations thereof.

Additionally, other legal entities under public law which are established for the specific purpose of meeting non-commercial needs in the general interest are subject to German procurement law if they are controlled by the aforementioned classic public authorities. Control in this sense is executed if the entity is mainly financed or supervised by a public authority or associations of such. An entity is mainly financed by a public authority if it is for the most part individually or jointly through participation or in some other way financed by classic public authorities and their special funds or associations of such authorities. Supervisory control is executed if public authorities supervise the management or appoint more than half of the members of one of the management or supervisory boards of the entity. Examples of entities covered by the procurement laws are universities and public insurance funds.

Procurement provisions also apply to legal entities under private law which are established for the specific purpose of meeting non-commercial needs in the general interest if they are controlled by classic public authorities. Control in this context has the same meaning as described under a. above.

Furthermore, other private entities have to observe public procurement law if their activities are funded by a public authority by more than 50 percent. Covered activities are e.g. construction and operation of hospitals, construction and operation of sport facilities sports, schools, leisure facilities, universities, waste management or regional development.

Additionally, public procurement law applies to any natural or legal person which executes activities in the sectors of water, energy and transports (utility sectors) if the execution of this activity is based on special or exclusive rights granted by a competent public authority or if a public contracting entity individually or together with others may exercise a dominant influence over the private entity.

Co-operations between contracting authorities are exempted from public procurement law if certain legally defined conditions are met. That is the case if the contract is awarded to an entity that is predominantly controlled by the contracting authority awarding the contract (or controls the contracting authority), the contractor carries out the essential part of its activities for the controlling contracting authority and no private equity investment in the contractor's entity exists.

Furthermore, the procurement law does not apply to public-public co-operation on provision of public services governed solely by considerations relating to the public interest.

German procurement law only covers public contracts which are defined as contracts for pecuniary interest concluded between contracting authorities and undertakings regarding supplies, works or services. Thus, German law distinguishes between supply, works and service contracts, specified in paragraphs 2 to 4 of section 103 GWB:

• Supply contracts are contracts for the procurement of goods involving in particular a purchase or hire purchase or leasing, or a lease with or without a purchase option. The contracts may also include ancillary services.
• Works contracts are contracts either for the execution or the simultaneous design and execution of works or a work which is the result of civil engineering or building construction work and is to fulfil a commercial or technical function, or for the execution of a work by a third party corresponding to the requirements specified by the contracting entity.
• Service contracts are contracts for performances which do not fall under supply or works contracts.

Transposing the EU Directives 2014/24/EU and 2014/25/EU, framework agreements and design contests are now included in the scope of public procurement law. Design contests are procedures which enable the contracting public authority to acquire a plan or a design selected by a jury after being put out to competition with or without the award of prizes.

For framework agreements please refer to f. below.

For concession contracts please refer to h. below.

Section 132 GWB that transposes Art. 72 of the Directive 2014/24/EU differentiates between changes which require a new procurement procedure and those which do not.

According to paragraph 1 of section 132 GWB a new procurement procedure is required if the change to the contract is substantial. This is the case if new conditions are introduced under which:

• different bidders could have been admitted to the procurement procedure; or
• a different bid could have been accepted; or
• if the new conditions could have attracted more bidders.

A new procurement procedure is further required if:

• the change modifies the contractual economic balance in favour of the bidder; or
• the contract is substantially extended; or
• the contractor is replaced.

However, the transfer to a new contractor does not require a new procurement procedure where a new contractor replaces the one to which the contracting authority had initially awarded the contract as a consequence of:

• an unequivocal review clause or option; or
• universal or partial succession into the position of the initial contractor, following corporate restructuring, including takeover, merger, acquisition or insolvency, of another economic operator that fulfils the criteria for qualitative selection initially established and it is provided that the transfer does not entail other substantial modifications to the contract; or
• in the event that the contracting authority itself assumes the main contractor's obligations towards its subcontractors.

Additionally, a new procurement procedure is not required under paragraph 2 of section 132 GWB if:

• the original procurement documents contain unequivocal review clauses or options which provide information regarding the conditions, the scope and the type of admissible changes and do not modify the overall economic characteristics of the contract; or
• unforeseen additional supplies, works or services become necessary and the current contractor cannot be replaced for economic or technical reasons and if the costs of the original procurement are not increased by more than 50%; or
• the change becomes necessary due to unforeseeable events, the overall characteristics of the contract are not modified and the costs of the original procurement are not increased by more than 50%;

Under paragraph 3 of section 132 GWB a change in the existing contract does not require a new procurement procedure if the overall characteristics of the contract are not modified and the value of the contractual change:

• does not equal the threshold values contained in the European Directives; and
• does not exceed 10% of the original supplies and services, or – in case of works – does not exceed 15% margin.

The contracting authorities has the right to terminate the contract with immediate effect in case a contractual change has been made without a new procurement procedure in violation of section 132 GWB.

Framework agreements are contracts designed to set out the general conditions for future procurements during a given period of time and especially the cost of those procurements. According to paragraph 5 of section 103 GWB, framework agreements are subject to public procurement law. The contracting authority has to conduct a competitive award procedure to award a framework agreement. The contracting authorities that are parties to a specific framework agreement from the outset should be clearly indicated, either by name or by other means, such as a reference to a given category of contracting authorities within a clearly delimited geographical area, so that the contracting authorities concerned can be easily and unequivocally identified. As a general rule, the length of a framework agreement is limited to four years. Framework agreements with multiple suppliers are admissible. Contracts based on a framework agreement can only be awarded under the conditions laid down in the framework agreement. The contracting authority may conduct a competitive procedure for the award of single orders under the framework agreement with multiple suppliers if this possibility has been stipulated by the contracting authorities in the procurement documents for the framework agreement. The award decision should be based on objective reasons that have been set out in the procurement documents for the framework agreement.

Public procurement law applies if a PPP is conducted based on an operating or a concession agreement. As a general rule, operating agreements will be considered as services contracts, which are subjected to public procurement law. Consequently, the selection of the private partner for the PPP requires a bid procedure in order to prevent avoidance of the public procurement laws according to German public procurement law or in case of a concession pursuant to specific rules under KonzVgV (for further details on concessions please see under h. below).

As a general rule, a PPP is awarded in a negotiated procedure under the conditions set out by the contracting authority in the procurement documents. Usually, the contracts are awarded based on price and quality criteria. An award based solely on the price criterion is uncommon.

In case of an institutional PPP, i.e. the formation of a separate legal entity in which the contracting authority holds shares, procurement law applies on the formation of the legal entity if from an economic perspective with the formation the contracting authority simultaneously awards the procurement contract e.g. by providing the newly formed company the right to provide certain works on the property of the contracting authority. Accordingly, the award of the actual works or service contract does not require a second award procedure if the formation of the legal entity was conducted pursuant to procurement law and the scope of the contract to be awarded to this legal entity was disclosed in said procedure.

On 26 February 2014 the European Parliament and the Council adopted an all new directive creating specialized procurement law provisions on the award of concessions (Directive 2014/23/EU). This directive has been transposed into national German law on 12 April 2016. Concessions are now submitted to the separate regime of the KonzVgV if the estimated contract value equals or exceeds EUR 5,225,000. Accordingly, contracting authorities are obliged to address the award of a concession by way of publication of a concession notice (which is an equivalent to a contract notice) in the Official Journal of the European Union and have to comply with a differentiated procurement regulation. However, the contracting authority has some discretion regarding the organization of the procedure leading to the choice of concessionaire as far as this procedure is transparent, non-discriminatory and proportionate. For concessions lasting more than five years, the maximum duration of the concession shall not exceed the time that a concessionaire could reasonably be expected to take to recoup the investments made in operating the works or services together with a return on invested capital taking into account the investments required to achieve the specific contractual objectives.

The awarding of contracts is also subject to the provisions of antitrust law which prohibits agreements between competing enterprises that would effect the prevention, restriction or distortion of competition. Consequently, bidders are excluded from procurement procedures who are party to anti-competitive agreements regarding bidding. Anti-competitive agreements in this context are all practices capable of restricting or distorting competition. The term anti-competitive agreement is therefor not restricted to illegal practices, but also includes any other agreements and practices which do not comply with the principles of competition.

Furthermore, bid rigging (including taking and giving bribes in the context of public procurement) may also result in criminal charges according to German criminal laws.