Reducing legal protection in public procurement law ‒ Bill to speed up public procurement ‒ Noerr Insight No 1

“We will systematically optimise public procurement,” states the coalition agreement between the CDU, CSU and SPD (page 67, line 2076). This plan is now to be tackled by a bill to speed up public procurement prepared by the Federal Ministry for Economic Affairs and Energy (Bundesministerium für Wirtschaft und Energie – BMWE) (the “Ministry”) and adopted by the federal government on 6 August 2025. According to the Ministry’s press release, this reform is set to implement far-reaching measures to simplify, speed up and digitalise public procurement law. Back in 2023, the Ministry carried out an extensive public consultation, which received over 450 contributions from the stakeholders concerned. The latest draft incorporates many suggested changes from the previous bill on the transformation of public procurement law and in some cases also goes further.

The bill aims to make public procurement simpler, faster and more flexible in order to adequately support the government’s response to the current major and urgent challenges such as strengthening competitiveness, renewing and improving infrastructure and accelerating digitalisation. To this end, it provides, among other things, measures to simplify procedures, reduce bureaucracy, speed up processes and promote digitalisation as well as support SMEs and strengthen start-ups and innovation in public procurement.

Among the numerous different measures, one notable aspect is a significant reduction in the legal protection available under public procurement law. In particular, the bill provides for the following changes to the existing legal framework for review procedures:

• Extension of decisions based on the case file
  According to the planned section 166(1) (4^th sentence) of the draft amendment to the Act against Restraints of Competition ‒ ARC (Gesetzt gegen Wettbewerbsbeschränkungen ‒ Entwurf ‒ GWB-E), a decision based on the case file, i.e. without holding an oral hearing, will also be permissible in future if this serves to speed up the proceedings and the matter does not present any particular factual or legal difficulties. The consent of the parties involved will not be required for this.
• Restriction of the requirement for a board decision
  Certain decisions of the procurement review board are to be assigned solely to the chairperson or a full-time associate member. This applies, for example, to decisions on the admission of a third party, the manifest inadmissibility or unfoundedness of a review application or decisions taken on the basis of the case file.
• Removal of the suspensive effect of immediate appeals
  One of the most significant changes in the bill, within the procedural framework of the remedies system, concerns the planned removal of the suspensive effect of an immediate appeal under section 173(1) of the ARC. The bill provides that an immediate appeal will no longer have a suspensive effect on the decision of the procurement review board if it has rejected an application for review.
  
  Under the current legal framework, such an appeal loses its suspensive effect only two weeks after the expiry of the appeal period and may be extended by the appeal court upon application. In practice, such an application for an extension is regularly filed and often succeeds.
• Shortening of the contract award prohibition
  As a consequence of the removal of the suspensive effect of an appeal, the bill provides the consequential amendment that the prohibition on awarding a contract will no longer apply – as it does at present – until the expiry of the appeal period under section 172(1) of the ARC, but instead only until the decision of the procurement review body. Where the review application has been upheld by prohibiting the award, the bill still provides for the continued application of the prohibition on awarding the contract until the expiry of the appeal period under section 172(1) of the ARC.
• Advance permission to award a contract ‒ reversal of the balancing decision
  Under the intended amendment to section 176 of the ARC, advance permission to award a contract before the conclusion of appeal proceedings may in future be granted where the advantageous effects of delaying the award until the appeal decision is issued do not outweigh the associated disadvantages.
  
  Under the current rules, it’s the other way round, i.e. advance permission to award the contract may be granted only if the disadvantages of delaying the award until the decision on the appeal outweigh the associated advantages. In effect, this reversal means that advance permission to award will be easier to obtain since in cases of evenly balanced interests, the balancing decision must be made in favour of a prompt award of the contract.
• Waiver of invalidity of the contract award in cases of unlawful de facto procurement
  Under the current legal framework, a successful review application of an unlawful de facto procurement leads to a mandatory determination that the contract is invalid (section 135(1)(1)or (2) of the ARC). The bill provides that the review bodies may by way of exception refrain from applying this legal consequence and instead impose alternative penalties- such as a financial penalty or a shortening of the contract term. Such a deviation will only be permitted for compelling reasons of public interest and will require a comprehensive balancing of interests. The bill specifies, in particular, services of general interest that must not be interrupted and security or defence policy interests of the Federal Republic of Germany as examples of such reasons.

These amendments to the provisions governing the review procedure are, particularly in their cumulative effect, highly questionable from a legal‑policy perspective. The planned reductions could result in legal protection in public procurement no longer meeting the standards required under the rule of law.

To appreciate this risk, one must consider what the combination of the different measures could mean in a specific case:

A serious breach of procurement law, for example, the discriminatory exclusion of a newcomer from the procurement procedure, becomes the subject of review proceedings. As the procurement review board considers that the case does not present any particular factual or legal difficulties, it is decided solely by a full‑time associate member without judicial qualification, on the basis of the case file. If this decision rejects the application, the excluded bidder is left without any judicial primary protection because the contract can be awarded immediately despite an immediate appeal.

This constitutes a serious – and, in the authors’ view, unacceptable – restriction of bidders’ legal protection. It must remain possible for companies to defend themselves in court against legal violations. In this respect, the present bill refers bidders to the option of claiming damages: the interests of the participants are, it is argued, sufficiently protected because the complainant can obtain a declaratory decision and, if necessary, bring an action for damages.

However, this secondary legal protection usually does not meet the interests of the companies concerned. In particular, young businesses and newcomers seeking to establish themselves on the German market are often reluctant to pursue a claim for damages. Moreover, such damages can only inadequately compensate for the loss of a contract award. In particular, companies miss out on references gained through the performance of a public contract, which can be of considerable importance for future tendering opportunities. They also lose the opportunity to gain experience and build trust with public contracting authorities.

The planned curtailment of legal protection in public procurement also contradicts the express objectives of the bill, namely to increase the participation of young and innovative companies in public tenders. It is precisely newcomers, capable of offering new and innovative solutions, who require the possibility of effective judicial protection. In case of doubt, it is these young and innovative companies that are disadvantaged in the procurement process compared with “established and proven” suppliers.

A reform of procurement law that enables more efficient purchasing is, in the authors’ view, entirely desirable. However, a reduction in legal protection – and thus in competition – ultimately does not serve this goal. It is therefore to be hoped that judicial protection in public procurement will be preserved during the parliamentary process.

This article is the first in a series of articles on the planned reform of public procurement law.