Opinion of German upper house and response by the federal government – Bill to speed up public procurement – Noerr Insight No 6

The draft Act to Accelerate the Awarding of Public Contracts (Vergabebeschleunigungsgesetz) (“Procurement Acceleration Act”) approved by the German government in 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 overarching objectives of the Procurement Acceleration Act and provided an overview of the key changes to the legal protection provided under procurement law. It was already clear at this stage that the planned reforms will have a profound impact on existing structures, with the aim of making public procurement more efficient, digital and innovation-friendly.

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. These will considerably enhance the flexibility and measures available to contracting authorities.

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, boost innovation and speed up procurement 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”) and the possibilities they offer for making procurement procedures more flexible and simpler.

The fifth part of the series discusses the future amendments to the German Sectoral Regulation (Sektorenverordnung) (“Sectoral Regulation”), which are based on the corresponding amendments to the Public Procurement Regulation and, besides speeding up the procurement process, are intended to boost innovation and focus specifically on promoting young companies and SMEs.

During the further legislative process, the bill was at one stage sent to the German upper house of parliament, the Bundesrat, which subsequently called for extensive amendments in a response dated 26 September 2025, discussing these during its first reading (in German only) in the German lower house of parliament, or Bundestag, on 9 October 2025.

As the Procurement Acceleration Act is legislation requiring ratification by both houses of parliament, the consent of the Bundesrat is required for it to come into force. The sixth part of the series now provides information on the key amendments proposed by the Bundesrat (see A.), and the German government’s response (see B.), looks at how these fit into the overall framework of public procurement law and provides an outlook on how the parliamentary procedure will continue (see C.).

A. Response by the Bundesrat

Government bills must first be submitted to Germany’s upper house of parliament (Bundesrat) so that it can respond to them. In this response, the Bundesrat calls above all for greater flexibility for exceptions to the principle of awarding contracts or concessions divided into partial or trade-specific lots in section 97(4) of the Competition Act (see I. below). This is based on the original draft of the Procurement Transformation Act proposed by the previous government, consisting of the Social Democratic Party, Alliance 90/The Greens and the Free Democratic Party. Since parliament was discontinued, the draft failed to be passed in the 20th legislative period. In addition, the Bundesrat would like to significantly speed up the awarding of public construction contracts for civil defence, disaster response and fire safety (see II. below). It also recommends that special consideration to be given to cyber security-specific requirements, particularly by expanding the scope of application of the Defence and Security Procurement Regulation and the authority to enact regulations and regulations (see III. below). Finally, the Bundesrat criticises the massive restrictions on bidders’ legal protection caused by the Procurement Acceleration Act and calls for certain restrictions on legal protection to be waived (see IV. below).

I. More flexibility for principle of individual lots

The Bundesrat notes that the revision of section 97(4) of the Competition Act intended in the bill represents a step backwards compared to the draft “procurement transformation package” from the previous legislative period. It says that it is not suitable for overcoming the current challenges (especially in the infrastructure sector) and for speeding up public construction projects again.

It believes that far broader exemptions from the principle of dividing contracts and concessions into individual lots should be set down in section 97(4) of the Competition Act. In the exemption provision it proposes, several partial or specialised lots could be awarded together in whole or in part if this is “justified” on economic, technical or time-related grounds. Replacing the condition of “required” (which was proposed by the federal government) with “justified” significantly lowers the normative hurdles for applying this exemption. Besides this, the restriction to infrastructure projects from the special debt fund for infrastructure and climate neutrality as envisaged in the government bill would not apply in relation to the criterion of “time-related grounds”, meaning that there would be considerably greater flexibility when it comes to how the principle of dividing contracts into lots is structured.

The Bundesrat argues that the basic assessment that combining different lots in a procurement procedure constitutes an exemption requiring justification which has to be examined and substantiated by the contracting authority should be retained. The introduction of time-related grounds and the criterion “justified” is intended to create greater flexibility and be more practical and less bureaucratic than the government’s draft bill. The Bundesrat aims to achieve greater legal certainty and significantly greater potential for acceleration through these changes (see Bundesrat’s Opinion, p. 2).

With this approach, the Bundesrat is not only taking up the wording from the draft of the previous government’s Procurement Transformation Act (Vergabetransformationsgesetz), but also the original ministerial bill of the Federal Ministry for Economic Affairs and Energy (“Ministry”) on the Procurement Acceleration Act. Under this, section 97(4), third sentence of the Competition Act was also to read as follows:

“Several partial or trade-specific lots may be awarded together in whole or in part if this is justified on economic, technical or time-related grounds.”

According to its explanatory memorandum, the Ministry’s original bill also sought to reduce the degree of justification required of the contracting authority when deviating from the principle of lots, which it believed should not be subject to overly strict requirements in order to increase the authority’s room for manoeuvre during assessments. The Ministry held that the criterion “required” would give the authority more flexibility and responsibility in individual cases to ensure that a contract is divided up appropriately (see explanatory memorandum to the ministerial bill, p. 50).

Time-related grounds were also included as criteria justifying an exception, while still maintaining the “exception to the rule” relationship (see explanatory memorandum to the ministerial bill, p. 48-49).

II. Awarding of public works contracts for civil defence, disaster response and fire safety facilities

The Bundesrat also proposes inserting a section 97(4a) into the Competition Act stating that when awarding public construction contracts for civil defence, disaster response and fire safety facilities the far-reaching inapplicability of the principle of division into lots provided for in section 8 of the Federal Armed Forces Procurement Acceleration Act (“Armed Forces Procurement Acceleration Act”), to be amended by the Federal Armed Forces Planning and Procurement Acceleration Act (Bundeswehrplanungs- und Beschaffungsbeschleunigungsgesetz) (“Armed Forces Planning and Procurement Acceleration Act”), applies by analogy. This should also apply with regard to the principle of division into lots applying in the sub-threshold area pursuant to section 22(1) of the German Sub-Threshold Procurement Regulation (Unterschwellenvergabeverordnung). We provided detailed information on the Armed Forces Planning and Procurement Acceleration Act in our Noerr Insight dated 25 July 2025.

In these recommendations, the upper house is responding to the changed defence and security situation, which it believes requires robust and resilient civilian structures in addition to military defence. In particular, it sees a considerable need for construction and procurement in order to provide the necessary structures to be able to effectively protect the population from the consequences of modern armed conflict or hybrid warfare (see Bundesrat’s Opinion, p. 3-4).

The Bundesrat identifies the greatest benefit of a change in public procurement law in the area of construction services, which is why the proposed amendments are initially limited to this area (see Bundesrat’s Opinion, p. 4).

III. Consideration of cyber security-specific requirements

In view of the increasing digitalisation of administration and all areas of life, the Bundesrat sees a need for the federal government to be able to procure cyber security and information security services as quickly as possible in order to protect its key security interests. It holds the view that the current body of procurement law only provides for far-reaching exceptions for military purposes, but not explicitly for the area of cyber and information security (see Bundesrat’s Opinion, p. 6).

The Bundesrat therefore proposes extending the regulatory powers in section 113(1), second sentence, paragraph 7 of the Competition Act to cover cyber security-specific requirements. To do so, it recommends that the federal government should be authorised to also regulate cybersecurity-specific requirements with regard to protection of secrets, general rules on confidentiality, security of supply and special rules on awarding subcontracts by issuing statutory instruments with the consent of the Bundesrat. The authorisation to issue statutory instruments is intended to enable the federal government to regulate the arrangements for awarding contracts in the field of cybersecurity more quickly than in a normal legislative procedure, thereby strengthening the country’s crisis resilience and increasing levels of protection for information and cyber security of public authorities (see Bundesrat’s Opinion, p. 6).

Based on these findings, the Bundesrat also proposes that in order to pursue these regulatory objectives, the scope of the Defence and Security Procurement Regulation should be extended in section 1 and section 2(1) to (3) of the Regulation and the applicable provisions should be extended to cover contracts specifically dealing with cyber security.

IV. Ensuring effective legal protection for bidders

Finally, in its Opinion, the Bundesrat expressly points out that the draft Act would significantly reduce legal protection for unsuccessful bidders whose suitability appears doubtful (see Bundesrat’s Opinion, p. 9-10). These include the amendments provided for in the government’s draft Act to extend possibilities for deciding without oral proceedings, for individual decisions by chairpersons or full-time assessors of public procurement review boards, for eliminating the suspensive effect of an immediate appeal by unsuccessful applicants before the public procurement review boards and overturning the mechanism used for evaluating the facts during preliminary rulings on whether to permit an award under section 176 of the Competition Act, thereby eliminating the legal consequence in section 177 of the Competition Act of the possible end of the procurement procedure if the contracting authority loses during such a preliminary ruling.

As the Bundesrat correctly points out, these changes entail serious restrictions on effective primary legal protection. Those participating in a procurement process will often have to rely on secondary legal protection at the second instance in connection with a procurement review procedure. This means that they will only be able to bring a claim for damages against the public contracting authority because the authority is able to award the contract immediately due to the suspensive effect of the immediate appeal being removed and the prohibition on awarding contracts in section 169(1) of the Competition Act being adjusted as a result. As the Bundesrat notes, such a claim for damages does not sufficient make up for the disadvantages suffered by the contract being awarded to a competing economic operator (see Bundesrat’s Opinion, p. 10).

We outlined the planned changes to review procedures and their classification under public procurement law in our Noerr Insight dated 29 July 2025.

In addition, in a welcome move the Bundesrat makes it clear that the government’s bill is inconsistent: on the one hand, it emphasises the nature of the procurement boards as court-like appeal bodies with regard to primary legal protection and, on the other, emphasises the proximity to administrative proceedings for procedural rules such as decisions made on the basis of the files (see Bundesrat’s Opinion, p. 11).

Against this background, the Bundesrat expressly requests that the possibility of waiving certain restrictions is considered. As an alternative to eliminating the suspensive effect of immediate appeals, the Bundesrat proposes replacing the wording of the provision on the possibility of extending the suspensive effect of immediate appeal in section 173(1), third sentence of the Competition Act with a provision that guarantees the desired exceptional nature. It adds in relation to individual decisions of members of the public procurement board that consideration could be given to enshrining the element of eligibility for judicial office for the responsible individual decision-makers in law, which has not yet been established in the draft law with binding effect (see Bundesrat’s Opinion, p. 10).

B. Response by the federal government

The federal government rejects the proposals by the Bundesrat to provide additional flexibility for the principle of dividing contracts into individual lots set out above (see I), the lack of applicability of the principle of individual lots when awarding public construction contracts in the fields of civil defence, disaster response and fire safety (see under II), the extension of the authorisation to issue regulations and regulations, and the scope of application of the Defence and Security Procurement Regulation to include contracts specifically covering cyber security (see III) and amendments to the current bill to guarantee effective primary legal protection in its response of 1 October 2025 (see IV).

I. More flexibility for principle of individual lots

The federal government agrees with the Bundesrat’s proposal to make the principle of individual lots more flexible. It agrees that regulatory proposals providing for an extension of the general exceptions to the principle of individual lots in section 97(4), third sentence of the Competition Act do not comply with the procurement law principle that procurement should favour the Mittelstand, consisting of small and medium-sized businesses, and should therefore be rejected due to this policy of supporting the Mittelstand sector (see Federal Government’s Response, Bundestag Document 21/1934, p. 103).

The government emphasises that while accelerating and simplifying procurement procedures is a major concern, it is also committed to the principle requiring contracts to be divided into lots in the interests of Mittelstand-friendly procurement (see Federal Government’s Response, Bundestag Document 21/1934, p. 103).

II. Awarding public construction contracts in the fields of civil defence, disaster response and fire safety

Similarly, the federal government does not agree with the Bundesrat’s proposal that when awarding public construction contracts for civil defence, disaster response and fire safety facilities far-reaching inapplicability of the principle of individual lots provided for in future in section 8 of the Armed Forces Procurement Acceleration Act, as amended by the Armed Forces Planning and Procurement Acceleration Act, should apply by analogy.

The government also emphasises on this point that civil defence and defence as a whole, including disaster response and fire safety, are crucial issues. But it states that exceptions to the principle of individual lots must be carefully weighed up alongside the principle of SME-friendly procurement and participation of SMEs in public contracts (see Federal Government’s Response, Bundestag Document 21/1934, p. 103).

The government refers to the intended amendment provided in the draft Act relating to section 117(2) of the Competition Act under which section 97(4), second to sixth sentences will not apply to defence or security-specific public contracts pursuant to section 104 of the Competition Act up to the end of 31 December 2030 (see Federal Government’s Response, Bundestag Document 21/1934, p. 103). This is intended to enable security agencies to meet the significantly increased demand for security-specific supplies, construction and services as rapidly as possible given the changed security situation and to give them greater freedom when awarding contracts (see explanatory memorandum to the draft Act, p. 62).

Finally, the government has announced that it is already planning further measures designed to simplify procurement for civil defence and other security agencies. In particular, the value limits for direct contracts for security agencies are to be significantly increased before the end of this year (see Federal Government’s Response, Bundestag Document 21/1934, p. 103).

III. Cyber security-specific contracts

The federal government sees no need for regulation with regard to the supplementary rules proposed by the Bundesrat in the area of cyber security-specific requirements. Likewise, with regard to the scope of application of the Defence and Security Procurement Regulation and defence and security-specific public contracts, it does not see any need for the authority to issue regulations, meaning that it also disagrees with this proposal.

It maintains that amending the definition of defence and security-specific contracts and the scope of the Defence and Security Procurement Regulation, which are based on the wording of the Defence Procurement Directive 2009/81/EC, would infringe EU law, as these do not provide for “cyber security-specific contracts” (see Federal Government’s Response, Bundestag Document 21/1934, p. 104).

Nevertheless, the federal government emphasises that it also treats cyber and information security as a very important issue. Yet it believes that there is no need for regulation because if the relevant conditions are met cyber security-specific contracts often fall under the more general term “security-specific” within the meaning of section 104 of the Competition Act, meaning that the provisions of the Defence and Security Procurement Regulation are to be applied (see Federal Government’s Response, Bundestag Document 21/1934, p. 104).

IV. Retention of existing provisions to ensure effective primary legal protection

Finally, the federal government also rejects the Bundesrat’s request to refrain from imposing certain restrictions on primary legal protection envisaged in the Procurement Acceleration Act up to now.

The government underlines that speeding up and simplifying public procurement is a major issue, meaning that review procedures should also be made more efficient and accelerated. To ensure this, it is explicitly adhering to abolition of the suspensive effect of immediate appeals (see Federal Government’s Response, Bundestag Document 21/1934, p. 105). The coalition partners from the CDU, CSU and SPD had also expressly agreed to abolish this suspensive effect in the coalition agreement (in German only) (coalition agreement between the CDU, CSU and SPD, 21st legislative period, p. 67, from line 2084). Considering that review proceedings can potentially last several months, and in some cases years, the government wishes to prevent investments from being put on hold and contracts not being awarded for the duration of an immediate appeal against a decision by a public procurement board that is disadvantageous to a participant (see Federal Government’s Response, Bundestag Document 21/1934, p. 105).

In the view of the federal government, secondary legal protection offers sufficient protection for unsuccessful contractors if the procurement division decides differently to the procurement at second instance (also in view of the broad interpretation by the European Court of Justice), with compensation also being available for the loss of a chance to be awarded a contract (see Federal Government’s Response, Bundestag Document 21/1934, p. 105). The government is obviously referring to the decision of the ECJ, judgment of 6 June 2024, here, C 547/22 – INGSTEEL (more on this point under C.).

In addition, the federal government is also sticking to the other provisions. It says that the option of deciding without oral proceedings is only intended for cases that do not present any particular difficulties. Similarly, it believes that flexibility in the composition of the public procurement boards is necessary in order to meet the needs of both complex and straightforward cases and to ensure swift legal protection (see Federal Government’s Response, Bundestag Document 21/1934, p. 105).

C. Classification and outlook

All in all, the Bundesrat’s proposed amendments were overwhelmingly rejected by the federal government. While the legislative added value of the amendments proposed by the Bundesrat remain questionable where cyber-specific contracts are involved, its other proposals outlined above are welcome since they would promote investment by speeding up and simplifying procurement procedures while at the same time ensuring a high level of legal protection under procurement law.

Thus even with the increased flexibility of the principle of individual lots advocated by the Bundesrat, which reflects the draft German Procurement Transformation Act (Vergabetransformationsgesetz) and the ministerial bill of the Procurement Acceleration Act, the “exception to the rule” relationship between application of the principle of individual lots and use of options for flexibility would remain in place. As the Bundesrat expressly clarifies in its Opinion, this proposed amendment maintains the emphasis on the interests of SMEs and the principal of division of lots. The fact that the contracting authority must always justify any deviation from the principle of individual lots and is only authorised to do so in cases where there are economic, technical and time-related grounds ensures that the principle of SME-friendly policies is not disregarded. Compared to the considerably more restrictive criterion of “requiring”, the criterion of “justifying” is expected to accelerate the process to a greater extent.

On top of this, the removal of the exclusive binding nature of time-related grounds for implementation of infrastructure projects financed from the special fund set up for infrastructure and carbon neutrality results in a much broader field of application, which can benefit from the increased flexibility and offers significantly greater potential for accelerating such processes.

The complete exemption for awards of public construction contracts for civil defence, disaster response and fire safety facilities by reference to section 8 of the Armed Forces Procurement Acceleration Act planned under the Armed Forces Planning and Procurement Acceleration Act appears appropriate considering that this exemption expires on 31 December 2030 under the planned section 20, first sentence of the Armed Forces Procurement Acceleration Act. This is due to the significant need for investment in the fields of civil defence, disaster response and fire safety and the current security-related situation. Besides this, the principle of SME-friendly policies contained in section 97(4), first sentence of the Competition Act remains in place, meaning that the interests of SMEs must still be given special consideration in such contracts.

The proposed amendment to section 117(2) of the Competition Act, which provides for an exception to the principle of individual lots for defence and security-specific contracts, as highlighted by the federal government, is also limited to 31 December 2030. However, it only covers defence and security-specific contracts, meaning that large areas of the above public construction contracts would not be covered by it.

With regard to legal protection under public procurement law in review proceedings, the right to an effective remedy under Article 47(1) of the Charter of Fundamental Rights already requires effective primary legal protection. This is significantly impaired by the elimination of the suspensive effect of the immediate appeal under section 173(1), first sentence of the Competition Act. Applicants and bidders who lose in review proceedings before a public procurement board will often have to revert to secondary legal protection. This is because the amendment to the prohibition on awarding contracts in section 169(1) of the Competition Act that is also intended means that if the contracting authority wins before the board, the ban on awarding the tender would already cease to apply once the board’s review ruling is announced and the authority would be able to award the tender immediately.

When referring to the considerable length of proceedings before the procurement divisions, to which the principle of acceleration equally applies, the federal government fails to sufficiently appreciate that under the current legal situation the suspensive effect of the immediate appeal under section 173(1), second sentence of the Competition Act already ends two weeks after the end of the (two-week) period for appeals. For suspensive effect of the immediate appeal to be extended, a separate application must be made in accordance with section 173(1), third sentence of the Competition Act. When deciding whether this application is permissible, an examination on the prospects of success of the immediate appeal plays a major role. In cases where the immediate appeal has no prospect of success, an extension of the suspensive effect will not normally be appropriate, meaning that the barrier to investments feared by the federal government will not occur.

The Bundesrat suggests compensating the planned elimination of the suspensive effect of the immediate appeal by tightening the wording in the provision in section 173(2) of the Competition Act, which sets out the criteria for weighing up the decision on whether to extend the suspensive effect of the immediate appeal, ensuring the exceptional nature desired by the federal government (see explanatory memorandum to the draft Act, p. 79). This is clearly preferable for legal reasons.

The other restrictions on legal protection for bidders provided for by the federal government in the draft Act should also be subject to scrutiny, as these may reinforce each other:

In its response, the federal government stresses that the option of deciding without oral proceedings, i.e. on the basis of the files, is only intended for cases that are not particularly difficult. However, as expressly stated in the explanatory memorandum to the Act, following the amendment to section 157(2) of the Competition Act the decision on whether to decide on the basis of the files may also be taken by the presiding judge or the full-time assessor alone as a procedural decision. This is despite it not being stipulated by law (it is only intended in the explanatory memorandum) that they must be qualified to hold a judicial office (see explanatory memorandum to the draft Act, p. 76). And according to the planned section 157(3), second sentence of the Competition Act, the case may be transferred to a single judge if the case does not present any particular difficulties in terms of fact or law and the decision is not of fundamental importance. By contrast, in the current version of the above sentence of the Competition Act, transferring cases is only possible if they do not present any significant difficulties. According to the explanatory memorandum, transferring matters to a single judge will also be permitted in future if the case involves factual or legal issues that are significant in the individual case. The hurdles for decisions by a single judge have thus been drastically lowered, opening up the door to this option in the future.

Contrary to the federal government’s assessment, and as the Bundesrat correctly states, secondary legal claims for damages cannot sufficiently compensate applicants and bidders. The companies concerned lose out on references that arise from executing a public contract and may be of vital when contracts are awarded in the future. They also miss out on the opportunity to gain experience with such contracts when taking part in tenders in the future.

In the ECJ’s Ingsteel decision mentioned by the federal government, the ECJ ruled that the loss of the mere chance of being awarded a contract can constitute a legal position capable of giving rise to damages. However, this cannot compensate for the references or experience referred to above or for lost profits. Besides this, the loss of a mere chance as a position capable of giving rise to damages is completely foreign to German tort law. It therefore remains to be seen how the national courts will implement these requirements in accordance with EU law or whether the legislature will take action on this. This legal uncertainty would affect above all the companies involved.

The ability to claim for lost profits from a contract or concession is also linked to strict evidential requirements. Companies have the burden of presentation and proof that they would have been awarded the contract if the procurement procedure had been carried out lawfully. If, for example, a company’s application to participate in a two-stage procurement process such as a competitive negotiated procedure is unlawfully excluded from the subsequent procurement procedure before the negotiation phase without the applicant even being able to submit a bid, the company will generally not be able to provide this reliable evidence. Although it could be determined at second instance that excluding a company’s application to participate was unlawful and that the company's rights had been infringed, the contracting authority could nevertheless already award the contract without the company being able to claim compensation for lost profits. This is because the company seeking compensation would be adversely affected by the inability to prove that it would have been awarded the contract.

In practice, damages proceedings can take several years, and above all young companies and SMEs may be deterred from bringing such proceedings. These involve considerable risks in terms of evidence and costs, even if the contracting authority’s infringement of their rights has already been established.

Given this, the German government’s intention to promote young, innovative companies, newcomers and SMEs would be thwarted. Hence it is to be expected that significant revisions will be made in the further parliamentary process in order to carefully balance the need to speed up the award procedure with the guarantee of effective primary legal protection.

Following the first reading of the bill in the German Bundestag on 9 October 2025, it was referred to the relevant committees for further deliberation. On 10 November 2025, a consultation will be held in the Bundestag’s Committee on Economic Affairs and Energy, which is responsible for this bill, and the bill will be discussed in more detail. The second and third readings and the decision in the German Bundestag are currently scheduled for November 2025.

After the Bundestag has passed the bill, the Bundesrat must also approve it. In view of the fact that the Bundesrat’s key amendments were rejected by the federal government, it remains to be seen how the legislative process will proceed.

A recent publication by the Federal Ministry for Economic Affairs and Energy dated 2 October 2025 reports that the Procurement Acceleration Act is planned to come into force in early 2026. At the same time, the Ministry is working on other projects in the area of procurement law. These include a reform of the German Sub-Threshold Procurement Regulation, which is to be developed together with the federal states shortly after the Procurement Acceleration Act. There is also an intention to assertively incorporate the German perspective into the process to reform the European procurement directives.

At this point in time, companies should already be keeping close tabs on the expert consultations in the Committee on Economic Affairs and Energy, the Committee’s recommendation for a decision and the further readings in the German Bundestag. We are continuously monitoring the future parliamentary proceedings and possible amendments to the Procurement Acceleration Act and will be reporting on them in another article in this series.