The key regulations and the burden of proof for product and manufacturer preferences in public tenders
Written By
Associate
Germany
As an associate in our regulatory and administrative Practice Group in Munich, I advise private companies as well as the public sector with a focus on public procurement law as well as in the field of EU state aid law and the law on public grants.
In public procurement law, manufacturer- and product-specific tenders are permitted only under strict conditions. The public contracting authority must prove that the choice of a manufacturer- or product-specific description is objectively justified by the nature of the procurement and is free from arbitrariness. Constant jurisprudence highlights the importance of product neutrality to keep market access open and to ensure equal opportunities. Manufacturer-specific conditions must not lead to a disproportionate restriction of competition and are justified only in exceptional cases, such as when system security and compatibility necessarily require it. A critical examination of the decisions of procurement chambers and senates shows that the justification for such tenders must meet a high burden of proof.
The key regulations for product- and manufacturer-specific tenders
The discussion on manufacturer- and product-specific tenders touches on central procurement law principles of fair competition, equality, and innovation in public procurement. This discussion, embedded in European legislation, especially Article 42 of Directive 2014/24/EU and the associated recital 74, gains an additional dimension that directly affects the competition for the best technological solution.
Directive 2014/24/EU lays the foundation for a modern procurement law and emphasises in recital 74 the importance of technical specifications reflecting the diversity of technical solutions, standards, and specifications on the market. This requirement aims to avoid an artificial narrowing of competition that could occur if requirements were set that favor a particular company by focusing on essential characteristics of the goods, services, or works typically offered by that operator. Instead, defining technical specifications in terms of functional and performance requirements is seen as the best measure to achieve the goal of an open competition and the promotion of innovations.
Par. 31 (6) of the German Public Procurement Ordinance (VgV), implementing Article 42(4) 2014/24/EU, addresses whether, within a competition conducted according to the rules of the VgV, specifications in the performance description may favor or exclude certain companies or products.
The German jurisprudence, especially by the Higher Regional Court of Düsseldorf, has clarified the requirements for the burden of proof on the public contracting authority. They must prove that their decision for a manufacturer- or product-specific tender is justified by the nature of the procurement and that no alternative solutions exist that could meet the requirements of the contract equally well. This requires a detailed examination of the market and available technological solutions to ensure a well-founded and transparent decision-making process.
The necessity of comprehensive market survey is another essential aspect that underscores the importance of preparation and planning in the procurement phase. A careful market survey can help unlock the market's innovative potential by providing contracting authorities with an overview of the range of available solutions and technologies. This not only broadens the perspective of potential procurement options but can also help reduce dependence on individual suppliers and promote the development of open and interoperable solutions. The jurisprudence and decisions of the procurement chambers require public contracting authorities to base their decisions on a detailed analysis and a comprehensive understanding of the market situation.
Conclusion
In summary, the discussion on product-specific tenders raises profound questions about the public sector's role in economic life. The strict application of procurement law and the careful examination of each manufacturer-specific tender are essential to ensure fair and equal competition. At the same time, public contracting authorities must have the flexibility to procure innovative and specialised solutions that best serve public interests. Finding the balance between these goals requires an in-depth examination of the actual need for a product or manufacturer reference and a targeted market survey to promote innovation, equal treatment, and competition in public procurement.
