How foreign tenderers benefit from public contracts from Germany

With an estimated 2.5 million public tenders worth a total of 360 billion euros, Germany is an economically attractive country for private companies from Germany and abroad. Owing to its geographical proximity, the participation of the surrounding neighbouring countries in public contracts is already commonplace. However, tenderers from non-EU states also have access to the German procurement market under German public procurement law. Public contracting authorities in Germany are interested in the broadest possible range of tenderers in order to handle the purchase of goods and services at the best possible conditions.

In the German Tender Portal (Deutsches Vergabeportal, DTVP), foreign companies (tenderers) may also find numerous lucrative contracts from all branches of the construction, supply or even service sector as well as participate in them electronically regardless of their location. More than 5,000 contracting and procurement entities as well as more than 300,000 companies are already working with the basic technology of DTVP: from federal government institutions and state administrations to municipalities and owner-operated municipal enterprises, health insurance companies and hospitals, sectoral contracting entities, beneficiaries of funds and many more.

Due to the language restrictions, the use of DTVP-Professional is particularly interesting for international companies, as this only requires the one-time effort of setting up the search profile, which eliminates the cumbersome manual search for predominantly German-language announcements.

Rules for the award of public contracts to foreign tenderers

  • Companies (tenderers) can participate in public tenders in Germany regardless of their nationality or place of business
  • All tenderers have equal access to all tender information, regardless of the country of origin
  • Tenderers may submit proof of suitability and other documents (certificates, diplomas, etc.) issued in their country
  • Tenderers have access to the review procedures
  • Above the EU thresholds, the public procurement directives of the European Union apply
  • National award procedures are governed by German law

Who can participate in public tenders in Germany?
Under German public procurement law, any interested company is entitled to participate in an award procedure for a public contract – regardless of its nationality or place of business. This applies to EU states and members of the GPA (Government Procurement Agreement) as well as third countries – reciprocity is not a prerequisite. Discrimination against tenderers on the basis of nationality is prohibited under the Equal Treatment Act as set out in German public procurement law.

The explanatory memorandum to the 2016 amendment safeguards the possibility of foreign companies to participate in state awards: Accordingly, it is not allowed to oblige the companies participating in the award procedure to exclusively or predominantly use products manufactured in Germany or to employ domestic labour. Furthermore, it is impermissible to demand certificates that can only be issued by German authorities or to set appointments in such a way that they can only be attended by local participants.

What do foreign tenderers have to be aware of regarding German public procurement law?

The German Public Procurement Directives are structured according to the threshold values of the award procedure. Above the EU thresholds, the directives of the European Union apply. Below the thresholds, German law applies.

German law primarily prescribes the open procedure and, accordingly, most awards are carried out according to this procedure. When participating in public tenders, companies must comply with the requirements set out in German public procurement law and in the respective invitation to tender with regard to the form and content of the tender documents. This includes, in particular, the indication of the required prices as well as the enclosure of the required declarations and proof of suitability with regard to the expertise, capability and reliability of the contractor.

An important factor for successful participation in public tenders in Germany is compliance with the tender deadline specified in the invitation to tender. For example, the length of the deadline for construction projects is based on the VOB/A (Vergabe- und Vertragsordnung für Bauleistungen – Teil A, Part A of the German Construction Contract Procedures). This must be sufficiently long for the submission of the tender and may not be less than 10 days.

When providing construction services for example, the corresponding registrations with the local authorities must also be observed: If the construction project of a foreign company in Germany lasts more than 6 resp. 12 months, the construction must be registered as a permanent establishment with the competent tax office. Consequently, the profits from this permanent establishment must be taxed in Germany. Furthermore, employees who are posted to Germany to perform the service must be registered in writing with the competent authority of the customs administration before the beginning of the employment.

As global events (e.g. the COVID-19 pandemic or the Ukraine war) have an impact on the procurement process of government institutions, German procurement law is regularly updated. Efforts are always made to take into account the impact of such influences in order to ensure a smooth procurement process.

Proof of suitability and prequalification

The proof of suitability is a declaration that the tenderer fulfils the suitability criteria required by the contracting authority and can submit the specified evidence without delay upon request. The proof of their suitability and reliability required in the award procedure can be provisionally demonstrated by companies with the help of the European Single Procurement Document (ESPD). The ESPD also applies in other EU Member States. This proof of qualification can also be provided by means of a self-declaration – if this is provided for in the invitation to tender by the competent contracting authority.

In addition, construction companies, suppliers and service providers have the option of registering in a prequalification database. This helps to reduce the effort for providing and testing the proof of suitability, as the contracting authority can dispense with individual suitability tests when awarding the respective contract. Exceptions to this are special powers and regulated activities (e.g. for engineers) if they are necessary for the execution of the contract. In such case, the company must have the professional qualification recognised in Germany – depending on the recognition procedure of the respective federal state.

Can a foreign company be excluded from a procurement procedure?

The following applies to both foreign and German companies: Participation in a procedure can be refused to tenderers if you or your company are not trustworthy. The individual reasons for excluding a tenderer can be found in the tenderer’s national procurement law as well as in the tender documents of the respective contracting authority. Possible reasons for excluding tenderers are:

  • If the tendering company does not pay its taxes or social security contributions, is involved in corruption or has ties to a criminal organisation
  • If the tendering company is under a bankruptcy procedure or has demonstrably committed serious misconduct in the course of its professional activities.

How do international companies benefit from the German Tender Portal (DTVP)?

  • DTVP is one of the leading providers of an e-tendering platform in Germany in the publication of public tenders
  • High tender volume in the German market for public contracts
  • Ongoing state subsidies in Germany (economic stimulus packages)
  • Calls for tenders mainly in German (except Gesellschaft für internationale Zusammenarbeit – GIZ, German Agency for International Cooperation)
  • Projects (places of fulfilment) partly also possible abroad
  • DTVP product consultation mainly in German
  • Particularly interesting for location-independent services such as the IT sector
  • Proximity search in Germany is useful for neighbouring countries
  • Cost savings, as only relevant announcements are sent via e-mail notification service, so the time-consuming and cost-intensive effort for translation or a German-language consultant is only required for eligible orders.

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