On April 23, 2025, the Lower Saxony Public Procurement Chamber (VK) ruled in its decision (Ref.: VgK-10/ 2025) that internal reasons can also justify the annulment of an award procedure. These internal reasons must also be documented in detail in order to rebut the accusation of misrepresentation, for example.
Our video discussing the judgment:
Facts of the case
A local authority (AG) in Lower Saxony put project management services out to tender across Europe. Parallel to this award procedure, job advertisements for a construction technician and a civil engineer ran from mid-2024. The client was only able to fill these positions in January 2025.
As a result, the client canceled the ongoing award procedure for project management. The reason given for this was that the new hires had eliminated the need for procurement, as the new staff could now perform the project management tasks in-house. The later applicant (ASt.) criticized this procedure as arbitrary and pretextual, as personnel were not hired “on the off chance” and the cancellation only served to award the contract to another company.
Key point of the decision
In its decision, the VK Niedersachsen shed light on two key aspects of public procurement law:
The annulment was deemed unlawful, but nevertheless effective. According to the VK Niedersachsen, contracting authorities may also cancel a procedure for “internal reasons”. However, the change in the basis must not be the fault of the contracting authority itself (in the sense of being responsible). As the client had deliberately recruited the personnel, it brought about the change in circumstances itself. Due to a lack of sufficient documentation, it could not prove that the recruitment had led to the discontinuation of the procurement requirement by chance. The client was therefore unable to dispel the corresponding doubts of ASt., so that the VK Niedersachsen assumed that the client was responsible.
Despite being unlawful, the annulment remained effective. The court emphasized that a contracting authority cannot, in principle, be forced to award a contract due to the lack of an obligation to contract (see Section 62 (1) sentence 2 VgV). As the procurement requirement was effectively eliminated due to the internal execution and fiscal savings were achieved, the contracting authority had an objective reason to terminate the procedure.
The annulment effectively ended the proceedings, but exposed the client to the risk of claims for damages and costs.
Tips for public clients:
- Documentation is key: If you want to cancel a procedure for internal reasons (e.g. due to new hires), you must document that this development was not foreseeable when the procedure was initiated. A mere reference to the discontinuation of the requirement is often not sufficient without “in-depth documentation”.
- Be careful with “self-made” reasons for termination: Bear in mind that an annulment may be unlawful if you have actively brought about the reasons for it yourself (such as personnel recruitment). This can lead to cost consequences in the review procedure as well as claims for damages, even if you do not (want to) award the contract.
Tips for bidders and funding recipients:
- Differentiation between effectiveness vs. legality: Be aware that a successful objection to an annulment does not necessarily lead to an order. Courts often only establish illegality (which is important for damages), but do not oblige the client to continue the proceedings if the need has actually ceased to exist.
- Exception “sham annulment”: An annulment is exceptionally ineffective if it is merely a sham. This is the case if the annulment only serves to end the procedure in order to subsequently award the contract to the company with the (supposedly) most economical bid.
- Take a close look: If a termination occurs very suddenly and in parallel with other personnel decisions, it is often worth checking for arbitrariness or discrimination, as these limits are relevant for an effective termination.
