In the process of negotiations, some issues may be non-negotiable
In the realm of public procurement, the Procurement Chamber Westphalia recently made a resolution (VK 3-30/23) on October 27, 2023, adding to the ongoing discourse on setting minimum requirements in contracts under the EU procurement directive and the German VgV regulation.
The EU procurement directives and the VgV regulation emphasise the importance of transparency, fairness, and non-discriminatory practices. When setting minimum requirements, contracting authorities must ensure they are necessary, proportionate, and clearly defined from the outset to avoid ambiguity and ensure equal treatment of all bidders.
The Most Economically Advantageous Tender (MEAT) criterion, which combines price and quality factors, is allowed under the directives. However, there is a concern that many contracts are awarded based on the lowest price alone, which can undermine quality objectives. The EU directives require that any suspiciously low bids be scrutinized to ensure compliance with legal and environmental obligations.
Introducing new requirements after the contract has been awarded is generally not permissible unless explicitly allowed for in the contract. Any changes should be handled through formal procedures like contract amendments, which require justification and sometimes new procurement procedures.
Similar rules apply under the VgV regulation. Any post-contract amendments must adhere to strict conditions to maintain the integrity of the procurement process.
The Higher Regional Court of Düsseldorf, a court in Germany, made a ruling (Verg 54/17) on March 28, 2018, that does not necessarily mean that minimum requirements must be set at the beginning or at a later stage of the negotiation procedure. It is questionable whether new minimum requirements can be justified by an exceptionally good justification and documentation.
Negotiations can cover various aspects of the advertised services, including quality, quantity, business terms, social, environmental, and innovative aspects. However, introducing new minimum requirements after the first offers have been submitted may violate the principle of equal treatment, as it could advantage some participants over others.
The North Rhine-Westphalia procurement senate interprets the EU law provision, stating that the "should be specified in advance" does not obligate minimum requirements to be set before negotiations. Paragraph 17, subsection 10 of the VgV regulation suggests that the contracting authority is obliged to set minimum requirements. A retroactive abandonment of originally established minimum requirements is certainly impermissible.
In essence, the EU procurement directive encourages negotiations to tailor public contracts to the needs of the contracting authority. Public contracting authorities set minimum requirements, which include physical, functional, and legal conditions, and essential features that every offer must meet. Offers that do not meet the minimum requirements must be excluded from public contracts.
The Higher Regional Court of Düsseldorf's ruling underscores the flexibility in the negotiation process, allowing for a balanced approach that prioritises the needs of the contracting authority while maintaining fairness and transparency.
In the ongoing discussion about setting minimum requirements in contracts, it's crucial to consider the role of Economic and Social policy in shaping business practices and finance, especially within the context of public procurement. The flexibility allowed in the negotiation process under both the EU procurement directives and the VgV regulation should encourage a balanced approach, ensuring the needs of the contracting authority are met while maintaining fairness and transparency.
