German parliament passes law to speed up the awarding of public contracts – Bill to speed up public procurement – Noerr Insight No. 7

The draft German Act to Accelerate the Awarding of Public Contracts (Vergabebeschleunigungsgesetz) (“Procurement Acceleration Act”) approved by the German cabinet on 6 August 2025 is intended to be a significant step towards adapting public procurement processes to the current requirements of the economy and society. We explain the most important aspects of this bill and the planned changes to public procurement law in detail in a series of news articles.

In the first part of this series, we outlined the political background and objectives of the Procurement Acceleration Act and provided an overview of the key changes to the legal protection provided under procurement law. The Act aims to speed up review proceedings largely by restricting procedural safeguards, for example through decisions delivered without an oral hearing or by removing the suspensive effect of immediate appeals in review proceedings. This results in a substantial reduction in effective primary legal protection.

The second part of our series of articles highlights the planned amendments to the German Act Against Restraints of Competition (Gesetz gegen Wettbewerbsbeschränkungen) (“Competition Act”) with regard to how procurement procedures are structured. The focus is on far-reaching measures to increase flexibility, such as making it easier to dispense with division of contracts into lots, streamlining the rules on in-house awards and simplifying eligibility criteria and evidential requirements.

In the third part of our series, we presented the intended changes to the German Public Procurement Regulation (Vergabeverordnung) (“Public Procurement Regulation”), which are mainly intended to promote young companies and small and medium-sized enterprises by amending suitability criteria and evidential requirements. At the same time, new guidelines on market consultation and the treatment of alternative bids are designed to strengthen the innovative potential of the procurement process. In future, the “simplified evaluation process”, or assessing tenders before verifying their suitability, will be the default legal approach in open procedures.

The fourth part of our series presents the amendments to the German Concession Procurement Regulation (Konzessionsvergabeverordnung) (“Concession Procurement Regulation”) and the German Procurement Regulation for Defence and Security (Vergabeverordnung Verteidigung und Sicherheit) (“Defence and Security Procurement Regulation”). While the amendments to the Concession Procurement Regulation aim to reduce documentation requirements and take greater account of young companies and small and medium-sized enterprises when establishing suitability criteria and evidence of suitability, the rules on evidence and further requests for information are being made more flexible in the defence and security sectors and in defence-related areas. In addition, the amendments provide for the use of central purchasing bodies.

The fifth part of the series discusses future amendments to the German Sectoral Regulation (Sektorenverordnung) (“Sectoral Regulation”). These are based on the amendments to the Public Procurement Regulation. Notably, the simplified evaluation procedure is being strengthened by making it the standard approach to assess tenders before assessing the suitability of bidders, while at the same time seeking to strike a balance between speeding up the process and taking small and medium-sized enterprises into account.

In the sixth part of our series, we analyse the opinion of the German upper house of parliament, the Bundesrat, issued as part of the preliminary parliamentary procedure on the draft bill, and the federal government’s response to it. While the Bundesrat is chiefly calling for further-reaching flexibility regarding the principle of dividing contracts into individual lots and for adjustments to review procedures in order to ensure effective primary legal protection, the federal government is largely keeping to its original draft and rejecting key proposed amendments, making the main lines of conflict in the legislative process clearly visible. The Bundesrat’s opinion is especially relevant since the Procurement Acceleration Act is legislation requiring the Bundesrat’s consent, meaning that, in addition to a resolution by Germany’s lower house of parliament, the Bundestag, the statute also requires the approval of the Bundesrat in order to be adopted.

After the draft bill had been further discussed in an amended version, modified by an amendment motion tabled by the governing Christian Democratic Union/Christian Social Union and Social Democratic Party parliamentary groups, in the lead committee, the Committee on Economic Affairs and Energy (in German only), that committee recommended that the German Bundestag adopt the revised draft. The Bundestag then approved the bill in its amended form in its second and third readings on 23 April 2026 (in German only). At the same time, in a resolution accompanying this draft bill, the German Bundestag affirmed that the new public procurement rules governing the use of funds from the Special Fund for Infrastructure and Climate Neutrality (Sondervermögen Infrastruktur und Klimaneutralität) should take account of their intended purpose of accelerating development and investment in procurement practice.

This Noerr Insight focuses on the key substantive amendments made in the current version of the bill as compared to the original draft bill. We begin by providing a structured overview of the main amendments to the relevant public procurement regimes (see A.). We then explain the rationale and calls to action contained in the motion for a resolution (see B.). Finally, we place the legislative amendments in context and consider which desirable changes are missing from the Bundestag’s decision and what consequences this has for businesses (see C.).

A. Key changes

The main substantive changes relate to the German Act Against Restraints of Competition (Gesetz gegen Wettbewerbsbeschränkungen) (the “Competition Act”) (see I. below) and the recently enacted Armed Forces Procurement Acceleration Act (Bundeswehrbeschaffungsbeschleunigungsgesetz) (“Armed Forces Procurement Acceleration Act”) (see II. below). In addition, specific amendments have been made to procurement regulations (see III. below).

I. Amendments to the Competition Act

The amendments to the Competition Act adopted on the motion of the Christian Democratic Union/Christian Social Union and Social Democratic Party parliamentary groups concern a core fundamental principle of public procurement law designed to protect small and medium-sized enterprises – the principle of dividing tenders into individual lots (see point 1 below). In line with the Bundesrat’s opinion (see our Noerr Insight No. 6 of 20 October 2025), particular attention is also being paid to digital sovereignty (see point 2 below). Finally, the requirements for climate-friendly procurement of low-emission materials are set out in detail (see point 3 below). The editorial adjustment of the provisions on the temporary derogation from the principle of division into lots for defence‑ and security‑related contracts is likewise to be welcomed, although it contains a minor drafting error (see point 4 below).

1. Reorganisation of the provisions on the principle of division into lots (section 97a of the Competition Act)

The main new feature is a transferral of the provisions on the principle of division into lots from section 97 of the Competition Act to a new section 97a, while the general principle of SME‑friendly procurement according to which the interests of small and medium-sized enterprises must be given special consideration when awarding public contracts remains enshrined as a procurement principle in section 97(4) of the Competition Act. In substantive terms, the obligation to divide contracts into partial lots and trade-specific lots and the possibility allowing exemptions on economic or technical grounds remain unchanged.

The original draft bill only provided for an additional possibility of derogation for projects financed from the Special Fund for Infrastructure and Climate Neutrality where such projects reached two and a half times the relevant EU threshold and if required on time-related grounds. This sector-specific exemption makes time sensitivity and funding cumulative conditions. According to the explanatory memorandum, and despite criticism from the Bundesrat, it was deliberately preferred to generally weakening the principle of division into lots by allowing low‑threshold derogations so as not to jeopardise the politically desired promotion of SMEs.

The text of the Procurement Acceleration Act as now adopted extends this exemption to projects in the field of certain transport infrastructures (including rail, federal trunk roads, waterways and airports). In this second case too, the project must reach twice the relevant EU threshold. The aim is to tangibly speed up complex infrastructure projects by making it easier to pool lots. At the same time, an obligation to carry out an evaluation by September 2027 is intended to ensure that the effects on SME policy are monitored and corrected where necessary. The approach is clear: greater flexibility for major projects combined with subsequent monitoring.

2. Cyber security and digital sovereignty also included as interests worthy of protection (section 107 of the Competition Act)

The definition of essential security interests in section 107(2), third sentence, paragraph 2(d) of the Competition Act justifying an exemption from application of procurement law is expressly extended to include services relating to cyber security and digital sovereignty. Digital sovereignty refers to the ability of the state and public authorities to use digital infrastructures, data and key technologies independently, securely and in a controlled manner, while avoiding strategic dependencies. It is essentially about ensuring the state’s capacity to act in the digital sphere, especially in relation to critical IT and infrastructure services.

The amendment makes clear that relevant procurement projects may fall under the exemption provided for in Article 346(1)(b) of the Treaty on the Functioning of the European Union (“TFEU”) where this is necessary to ensure a high level of protection (confidentiality, integrity, availability). Under Article 346(1) TFEU, a Member State may take the measures necessary to safeguard its essential security interests. Section 107(2) of the Competition Act provides for an exemption to application of public procurement law for this purpose.

This amendment is in response to the Bundesrat’s opinion, which called for cyber and information security services to be procured as quickly as possible in order to strengthen the state’s crisis resilience in the light of increasing digitalisation of public authorities (see our Noerr Insight No 6 of 20 October 2025).

The practical significance of this change is less in extending the exemptions than in the legal clarification that contracts for security-critical IT and digital projects can be awarded just as flexibly. At the same time, case-by-case reviews will exist as a corrective measure.

3. Power to issue statutory instruments regarding climate-friendliness requirements (section 113 of the Competition Act)

In future, the intention is that the German government will be able to set down requirements regarding climate-friendly procurement. The changes resolved on this aspect are designed to make clear that such requirements can relate in particular to the use of low-emission raw materials such as steel and cement.

“Low carbon” materials are to be used as a lever for transformation to give climate-related procurement policy a clear industrial focus. This amendment paves the way for the European Commission’s legislative proposal for the Industrial Accelerator Act (IAA) to strengthen industrial competitiveness and speed up the decarbonisation of industry, which sets out requirements for low-carbon production (low-carbon standards).

4. New classification of the exemption for defence- or security-specific contracts

Another amendment involves transferring the special provision in section 117(2) of the Competition Act previously set out in the Public Procurement Acceleration Act under which the principle of individual lots is to be suspended for defence or security-related contracts until 2030. According to the version now adopted by a motion for amendment, this exemption is to be transferred to a new subsection 2 of section 147 of the Competition Act for systematic reasons.

Such an adjustment preserves the systematic differences between sections 117 and 147 of the Competition Act. Section 147 governs the specific provisions relating to defence and security-specific contracts, while section 117 governs the specific provisions for public contracts and competitive bidding processes which are not defence or security-specific contracts but nevertheless touch upon defence or security aspects. However, this does not entail any changes to the contents of the law, and the substantive requirements and legal consequences remain in place. As long as the time limit applies, the responsible contracting authorities will be able to deviate from the principle of lots for defence/security-specific contracts.

The new section 147(2) of the Competition Act erroneously refers to the originally planned amendment to section 97(4), second to sixth sentences of the Competition Act, rather than to the newly created section 97a of the Competition Act concerning the principle of division of lots. The reference is therefore meaningless. This editorial error becomes even more apparent when viewed in conjunction with section 10(1) of the Procurement Regulation for Defence and Security, which sets out the principles for procurement procedures in the defence and security sectors and itself refers to the principle under section 97a of the Competition Act and the exemption in section 147(2) of the Act for the purpose of taking account of the interests of SMEs and applying the principle of separate lots. As this error is clearly of an editorial nature, it has practically no impact on the application of the temporary exemption.

II. Amendments to the Armed Forces Procurement Acceleration Act

The main purpose of the amendments to the Armed Forces Procurement Acceleration Act is to harmonise it with the reforms in the Competition Act.

For this reason, section 1(2) of the Armed Forces Procurement Acceleration Act, which previously stipulated that senior federal authorities or comparable federal institutions within the remit of the Federal Ministry of Defence were not required to apply the threshold value applicable to central government authorities, is thus repealed. As the decision was made in the Procurement Acceleration Act to abolish this distinction in the Competition Act anyway, the relevant provision in the Armed Forces Procurement Acceleration Act becomes obsolete.

In addition, the current provision in section 2(2) of the Armed Forces Procurement Acceleration Act stating that in the case of defence and security-specific contracts, “intelligence activities” may also affect essential security interests of the Federal Republic, leading to an exemption from public procurement law pursuant to section 107(2), third sentence, paragraph 2(b) of the Competition Act, is repealed. Due to the extension and clarification in section 107 of the Competition Act to the effect that services relating to cyber security and digital sovereignty may affect essential security interests in individual cases, the provision in section 2(2) of the Armed Forces Procurement Acceleration Act becomes superfluous.

Furthermore, the provisions on legal protection (sections 15 and 16 Armed Forces Procurement Acceleration Act) are being adapted to the new requirements of the Competition Act. Section 15(5) of the Armed Forces Procurement Acceleration Act currently provides that the prohibition on awarding contracts during the review proceedings ends as soon as the decision of the procurement review board on the application for review is announced if the contracting authority prevails. This is closely linked to the removal of the suspensive effect of immediate appeals against a negative decision by the procurement review board in review proceedings according to section 16(1), first sentence of the Armed Forces Procurement Acceleration Act. The same curtailment of effective primary legal protection is provided for in the Competition Act in relation to general procurement procedures; as a result, when the Procurement Acceleration Act enters into force in the form adopted by the Bundestag, the need for special provisions on this in the Armed Forces Procurement Acceleration Act will cease to apply (see our Noerr Insight No. 1 of 29 July 2025). This also concerns the deletion of the legal consequence under section 177 of the Competition Act regarding possible termination of the procurement procedure if the contracting authority loses during the process for authorising an award although review proceedings are ongoing, which has not applied to procurement by the German Armed Forces up to now as stated in section 16(4) of the Armed Forces Procurement Acceleration Act.

Finally, references to the Competition Act and now identical exemption clauses in the new Procurement Acceleration Act are being removed or adapted to the new framework. Overall, this leads to streamlining and better integration of the Armed Forces Procurement Acceleration Act into general public procurement law.

III. Changes to procurement regulations

A key substantive change to the procurement regulations is the explicit inclusion of “digital sovereignty” as an award criterion in section 58 of the Public Procurement Regulation. This enables public authorities to consider use of interoperable and open IT systems, traceability and monitoring of data processing procedures, enhanced security measures, localisation of data, and legal, organisational and technical safeguards against unauthorised access when assessing bids.

Further amendments to the Public Procurement Regulation, Sectoral Regulation and Procurement Regulation for Defence and Security are primarily intended to ensure consistency and relate in particular to editorial adjustments to the references to the Competition Act and the name of the ministry.

B. Resolution

The resolution also adopted by the Bundestag sets out the political objectives of the legislation and creates clear guidelines for applying them in practice.

The focus is on the expectation that the funds from the Special Fund for Infrastructure and Climate Neutrality will be deployed efficiently and swiftly in practice. The intention is that the new rules should therefore be interpreted in a way designed to speed implementation and keep bureaucratic evidential requirements to a minimum. At the same time, it is emphasised that the rules should be applied in a manner that is as local authority-friendly as possible.

The German government is specifically called on to closely align the national reforms in public procurement law with the local content requirements (LCRs) planned in the Industrial Accelerator Act. These are requirements defining how high the proportion of value added within Europe has to be for certain products or projects. This aims to achieve coherent integration of “made with EU” criteria and standards for low-emission production.

The intention is to prevent European requirements being made even stricter than necessary at a national level (referred to as “gold-plating”). At the same time, market access is to be restricted for companies that can be shown to be engaging in dumping, or offering their products at artificially low prices in order to gain a competitive advantage. Similarly, measures are to be taken to prevent circumvention strategies that could undermine these requirements.

Finally, the German government is tasked with establishing binding minimum standards for the use of low-emission raw materials by 30 June 2027, using public procurement specifically as a tool to support industrial transformation in favour of climate-friendly production methods.

C. Assessment and outlook

The amendments outlined above expand the scope for flexibility when awarding large-scale public contracts and concessions for both public contracting authorities and businesses. To some extent, they provide the systematic consistency that has been urgently needed since the enactment of the Armed Forces Procurement Acceleration Act.

At the same time, critical aspects of the bill remain unchanged.

The reduced protection under public procurement law provided for in the bill remains in place. In particular, it provides for faster review proceedings through shorter time limits, simplified decisions without oral hearings, and significant restrictions on the suspensive effect of an immediate appeal it an applicant loses before the procurement review board. This leads to a noticeable reduction in effective legal protection at the expense of bidders and raises significant concerns under EU and constitutional law regarding the guarantee of effective legal protection.

The Bundesrat expressly criticised these restrictions during the parliamentary preliminary proceedings and called for an amendment to ensure a balanced relationship between acceleration of proceedings and legal protection. In its response, however, the government largely adhered to the proposed provisions and, as outlined above, did not address these objections in its motion for amendment. As a result, public contracting authorities face the prospect of extensive and protracted damages proceedings, as legal protection will now more frequently shift to the secondary level.

In addition, strict conditions remain in place for any possible deviation from the principle of separate lots. Like now, grouping partial lots or trade-specific lots together is only to be possible where this is “required” on economic or technical grounds. The newly added exemption for major projects also maintains that this must be “required” on time-related grounds. This requirement leads to a disproportionately high burden of justification and documentation. By replacing the stricter criterion of “require” with “justify”, the requirements for a single award would be deliberately lowered and the contracting authorities’ discretion and flexibility would be increased. This was already envisaged in the draft Public Procurement Transformation Act (Vergabetransformationsgesetz) from the previous 20th legislative period, which was not passed due to parliament being discontinued.

The Bundesrat also called for practical arrangements for separating awards into lots its opinion during the preliminary parliamentary proceedings. At the same time, it criticised the fact that the proposed rules ultimately did not allow for sufficient flexibility to implement complex infrastructure projects efficiently. The government also failed to heed the Bundesrat’s concerns in this respect.

However, as the Public Procurement Acceleration Act is a statute requiring the Bundesrat’s consent, not all opportunities for amendments have been exhausted yet. As such, it cannot be ruled out that the Bundesrat may make its consent conditional on amendments to the provisions on legal protection and the principle of division into lots.

Companies should therefore keep close tabs on the steps towards enactment of the Procurement Acceleration Act and adapt their procurement and tendering strategies to the new legal and economic framework conditions at an early stage.

This applies especially to the reduction in effective primary legal protection during review procedures set down in the statute, featuring limited procedural options and a generally weaker effect in preventing contracts from being awarded, making it necessary to think more strategically and obtain procurement law advice at a much earlier stage. Moreover, aspects of digital sovereignty are becoming increasingly important, especially against the backdrop of increasingly strategic procurement decisions in the fields of critical infrastructure and IT services, where dependencies and possible access by third parties must be given more consideration. Parallel to this, SMEs should increasingly rely on forming tailor-made consortia and targeting partners who meet the suitability criteria so that they can offset the tendency towards market concentration arising from relaxation of the principle of lots (especially where large-scale and complex infrastructure projects are involved) and remain competitive.