Link­ing of pro­cure­ment pro­ce­dures and sup­ple­men­tary con­tract­ing — warn­ing shot for silent-inac­tive bid­ders!*

Com­ment on High­er Region­al Court of Celle, judg­ment of Novem­ber 20th, 2019, 14 U 191/13

Facts of the case

The plain­tiff applied for the con­tract for road con­struc­tion work. Soil and rock had to be removed from the exca­va­tion area and dis­posed of. The plain­tiff is now claim­ing addi­tion­al costs from a sup­ple­ment because a dif­fer­ent soil qual­i­ty was found dur­ing the exe­cu­tion of the work than that spec­i­fied in the award doc­u­ments.

As is so often the case, the start­ing point was a con­tra­dic­to­ry per­for­mance spec­i­fi­ca­tion. In the con­struc­tion descrip­tion, it was stat­ed with regard to the soil prop­er­ties and geo­log­i­cal con­di­tions that the exist­ing soils could not be assigned to any par­tic­u­lar instal­la­tion class in accor­dance with LAGA M 20 (Code of Prac­tice 20 of the Ger­man Waste Man­age­ment Asso­ci­a­tion). Accord­ing­ly, the defen­dant pub­lic con­trac­tor did not make any clas­si­fi­ca­tion in the reg­u­la­to­ry part of the bill of quan­ti­ties. It also stat­ed: “soil not requir­ing mon­i­tor­ing”. In con­trast, the like­wise enclosed expert opin­ion pro­posed to treat “the soil anal­o­gous to the instal­la­tion class Z 1.1 of the rec­om­men­da­tions of the LAGA”. In addi­tion, there were con­spic­u­ous­ly high heavy met­al con­tents in the elu­ate.

When the lat­er con­trac­tor or plain­tiff (at that time still a mere par­tic­i­pant in the award­ing process) point­ed out that the expert opin­ion and the spec­i­fi­ca­tions did not match, the client amend­ed the spec­i­fi­ca­tions. Name­ly, he clas­si­fied the soils to be solved and recy­cled in the reg­u­lat­ing part of the spec­i­fi­ca­tions, which he amend­ed quick­ly before the sub­mis­sion, in LAGA Z.1.1. It also now said: “Soil requir­ing spe­cial mon­i­tor­ing”. Fur­ther­more, the soils were to be “dis­posed of”.

After receiv­ing the order, the plain­tiff con­tact­ed an expert office direct­ly and had the soils exam­ined. The new expert opin­ion came to the con­clu­sion that two mixed soil sam­ples were to be assigned to an instal­la­tion class >Z 2 and one mixed soil sam­ple to instal­la­tion class Z.1.2 of the LAGA rec­om­men­da­tions.

This was the begin­ning of the dis­pute. The lat­er plain­tiff claimed addi­tion­al costs, which the client reject­ed. The plain­tiff then filed a claim for obstruc­tion, which was also reject­ed by the client, who was lat­er the defen­dant.

A few months lat­er, the mine oper­a­tor refused to accept the deliv­ered exca­vat­ed soils. The soils fell under the LAGA Z.1.2. instal­la­tion class; this was the result of a fur­ther expert opin­ion, this time prob­a­bly obtained by the mine oper­a­tor.

The plain­tiff then again report­ed con­cerns, obstruc­tion and addi­tion­al costs to the defen­dant client. It was then agreed to obtain a joint expert opin­ion. This came to the con­clu­sion that the recy­cling could take place in the sand pit of the mine oper­a­tor. This was actu­al­ly good news for the defen­dant client. But, of course, this did not meet with much approval from the plain­tiff, who — with a new expert opin­ion — con­tin­ued to reject the instal­la­tion in the pit.

In fact, instal­la­tion in the pit occurred to the extent of 89%. The instal­la­tion is said to have been treat­ed dif­fer­ent­ly in part on site, which is said to have caused addi­tion­al costs. A con­sid­er­able part was installed else­where; the client paid for this sep­a­rate­ly.

Legal Appraisal

The court reject­ed the claims for reim­burse­ment of addi­tion­al costs and dam­ages. The plain­tiff was right inso­far as the clas­si­fi­ca­tion in instal­la­tion class LAGA Z.1.1 had been wrong. How­ev­er, the rel­e­vant item in the bill of quan­ti­ties had been rec­og­niz­ably incor­rect. In this case, the plain­tiff had vio­lat­ed its duty to check and point out. It could not claim any trust wor­thy of pro­tec­tion.

The court derives the rec­og­niz­able defec­tive­ness of the bill of quan­ti­ties from sev­er­al cir­cum­stances. First, it empha­sizes the gen­er­al prin­ci­ples. In the inter­pre­ta­tion of the build­ing spec­i­fi­ca­tion, the word­ing, the spe­cial cir­cum­stances of the indi­vid­ual case, the cus­tom of the trade and the prin­ci­ples of good faith are to be tak­en into account. Pur­suant to Sec­tions 133, 157 of the Ger­man Civ­il Code (BGB), the inter­pre­ta­tion must always be made accord­ing to the objec­tive hori­zon of the poten­tial bid­ders. It is true that in the spec­i­fi­ca­tions a clas­si­fi­ca­tion accord­ing to LAGA Z.1.1. is express­ly made — in the opin­ion of the court expert: incor­rect­ly. How­ev­er, this alone was not impor­tant: The rest of the item text and the oth­er ten­der doc­u­ments had to be tak­en into account just as much as the his­to­ry, i.e. how this clas­si­fi­ca­tion had come about in the reg­u­lat­ing part of the bill of quan­ti­ties. Thus the changed posi­tion text con­tained ref­er­ences (e.g. “par­tic­u­lar­ly in need of super­vi­sion”), which could not be clas­si­fied legal­ly beyond doubt, but which had to be inter­pret­ed as a warn­ing. Fur­ther­more, the word “dis­pose of” in the amend­ed ver­sion of the bill of quan­ti­ties indi­cat­ed, accord­ing to the gen­er­al under­stand­ing of the lan­guage, that it was about recy­clable soils in the sense of LAGA Z.1.2 — and pre­cise­ly not about cas­es of LAGA Z.1.1. In addi­tion, accord­ing to the OLG, the amend­ment of the bill of quan­ti­ties that took place short­ly before the sub­mis­sion was based pre­cise­ly on a request by the plain­tiff. The plain­tiff had ulti­mate­ly brought about the changes in the word­ing itself and must have rec­og­nized them accord­ing­ly. Fur­ther­more, the clas­si­fi­ca­tion accord­ing to LAGA Z.1.1. could not be rec­on­ciled with the expert opin­ion which had been attached to the bill of quan­ti­ties and which itself explained why such a clas­si­fi­ca­tion was not pos­si­ble. Trans­lat­ed with www.DeepL.com/Translator (free ver­sion)

The court derives the rec­og­niz­able defec­tive­ness of the bill of quan­ti­ties from sev­er­al cir­cum­stances. First, it empha­sizes the gen­er­al prin­ci­ples. In the inter­pre­ta­tion of the build­ing spec­i­fi­ca­tion, the word­ing, the spe­cial cir­cum­stances of the indi­vid­ual case, the cus­tom of the trade and the prin­ci­ples of good faith are to be tak­en into account. Pur­suant to Sec­tions 133, 157 of the Ger­man Civ­il Code (BGB), the inter­pre­ta­tion must always be made accord­ing to the objec­tive hori­zon of the poten­tial bid­ders. It is true that in the spec­i­fi­ca­tions a clas­si­fi­ca­tion accord­ing to LAGA Z.1.1. is express­ly made — in the opin­ion of the court expert: incor­rect­ly. How­ev­er, this alone was not impor­tant: The rest of the item text and the oth­er ten­der doc­u­ments had to be tak­en into account just as much as the his­to­ry, i.e. how this clas­si­fi­ca­tion had come about in the reg­u­lat­ing part of the bill of quan­ti­ties. Thus the changed posi­tion text con­tained ref­er­ences (e.g. “par­tic­u­lar­ly in need of super­vi­sion”), which could not be clas­si­fied legal­ly beyond doubt, but which had to be inter­pret­ed as a warn­ing. Fur­ther­more, the word “dis­pose of” in the amend­ed ver­sion of the bill of quan­ti­ties indi­cat­ed, accord­ing to the gen­er­al under­stand­ing of the lan­guage, that it was about recy­clable soils in the sense of LAGA Z.1.2 — and pre­cise­ly not about cas­es of LAGA Z.1.1. In addi­tion, accord­ing to the High­er Region­al Court, the amend­ment of the bill of quan­ti­ties that took place short­ly before the sub­mis­sion was based pre­cise­ly on a request by the plain­tiff. The plain­tiff had ulti­mate­ly brought about the changes in the word­ing itself and must have rec­og­nized them accord­ing­ly. Fur­ther­more, the clas­si­fi­ca­tion accord­ing to LAGA Z.1.1. could not be rec­on­ciled with the expert opin­ion which had been attached to the bill of quan­ti­ties and which itself explained why such a clas­si­fi­ca­tion was not pos­si­ble. Trans­lat­ed with www.DeepL.com/Translator (free ver­sion)

“How­ev­er, the plain­tiff was not allowed to cal­cu­late with a soil accord­ing to LAGA Z 1.1 with­out clar­i­fi­ca­tion, since already from the expert opin­ion of I. Inge­nieurge­sellschaft mbH of 09.04.2009 — which was also tak­en note of by the plain­tiff — and the afore­men­tioned notes in the con­struc­tion descrip­tion and in the spec­i­fi­ca­tions, it results oth­er­wise, as stat­ed.”

With­out fur­ther ado, the High­er Region­al Court of Celle con­clud­ed that claims for addi­tion­al com­pen­sa­tion should be ruled out. This was because the geo­log­i­cal con­di­tions found and those ten­dered did not dif­fer at all. Nor could the plain­tiff have relied on the fact that the soils com­plied with LAGA Z.1.1. Ulti­mate­ly, for the same rea­son, claims for “cul­pa in con­tra­hen­do due to faulty ten­der­ing” failed, as the High­er Region­al Court of Celle describes it. The plain­tiff had a “duty to check and inform” and could not “claim any dis­ap­point­ed trust wor­thy of pro­tec­tion”.

The High­er Region­al Court now gives legal rea­sons why this must be the case from its point of view. It is true that in prin­ci­ple there is no oblig­a­tion on the part of the bid­der at the ten­der and offer stage to point out errors con­tained in the spec­i­fi­ca­tions. How­ev­er, the prin­ci­ple of the require­ment for cor­rect con­duct in con­tract nego­ti­a­tions implies an oblig­a­tion on the part of the con­trac­tor to check and point out errors if the con­tract doc­u­ments are obvi­ous­ly incor­rect. Thus, the con­trac­tor may not sim­ply accept a list of ser­vices which is obvi­ous­ly incom­plete or incor­rect. He must clar­i­fy any doubts aris­ing from this before sub­mit­ting his bid and, in par­tic­u­lar, obtain suf­fi­cient infor­ma­tion about the intend­ed con­struc­tion method (type and scope). If the con­trac­tor fails to pro­vide the required infor­ma­tion in such a case, he is pre­vent­ed from mak­ing addi­tion­al claims in accor­dance with the prin­ci­ple of good faith.

The plain­tiff was also aware of its duty to check and inform, since it had asked. Pre­cise­ly because the appli­cant had inquired, it was oblig­ed to car­ry out a par­tic­u­lar­ly thor­ough exam­i­na­tion. The fact that the plain­tiff had doubts about the clas­si­fi­ca­tion is also shown by the fact that it com­mis­sioned a soil exper­tise imme­di­ate­ly after the award of the con­tract. At the same time, the defen­dant could not be said to have act­ed in bad faith. It had want­ed to rem­e­dy the sit­u­a­tion, so it could not be accused of a delib­er­ate­ly incor­rect invi­ta­tion to ten­der.

Con­clu­sion

If one asks what was the bidder’s undo­ing, it is still a lit­tle too ear­ly. It is not yet clear whether and how the BGH will take a posi­tion. How­ev­er, a few inter­est­ing obser­va­tions can be made:

The High­er Region­al Court of Celle rec­og­nizes an oblig­a­tion on the part of the bid­der and sub­se­quent con­trac­tor to pro­vide infor­ma­tion and car­ry out checks, even dur­ing the award pro­ce­dure pri­or to sub­mis­sion of the bid. If he vio­lates this, the High­er Region­al Court wants to cut off “addi­tion­al claims”. I.e., sup­ple­ments.

The High­er Region­al Court of Celle rec­og­nizes an oblig­a­tion to pro­vide infor­ma­tion in the case of rec­og­niz­able errors. The Celle High­er Region­al Court affirms rec­og­niz­abil­i­ty in the case of obvi­ous errors or obvi­ous gaps in the spec­i­fi­ca­tions.

It is not entire­ly clear whether the High­er Region­al Court applies a sub­jec­tive or an objec­tive stan­dard for the obvi­ous­ness or rec­og­niz­abil­i­ty. On the one hand, it argues very indi­vid­u­al­ly. The bid­der had already inquired dur­ing the award pro­ce­dure, and had also com­mis­sioned an expert opin­ion imme­di­ate­ly after the con­tract was award­ed. This proves his “doubts”. On the oth­er hand, nor­ma­tive con­sid­er­a­tions are also men­tioned.

Against this back­ground, the deci­sion of the Celle High­er Region­al Court is ambiva­lent from the bidder’s point of view. It can be inter­pret­ed as an appeal for max­i­mum restraint; where­by this view is asso­ci­at­ed with con­sid­er­able risks if the case law falls back on a mixed, objec­tive-sub­jec­tive stan­dard and/or even the ear­ly sub­mis­sion of sup­ple­men­tary offers, which even the bid­der who remains silent in the award pro­ce­dure will hard­ly be able to avoid, is regard­ed as suf­fi­cient evi­dence. The deci­sion could there­fore also be seen as an incen­tive to speak up in the award pro­ce­dure.

One thing the deci­sion is cer­tain­ly not: an out­lier or an iso­lat­ed case. It is the third deci­sion of the Celle High­er Region­al Court, with which the bid­der and lat­er con­trac­tor is to be assigned more respon­si­bil­i­ty in the award pro­ce­dure (see Celle High­er Region­al Court, judg­ment of 02.10.2019, 14 U 171 / 18; Celle High­er Region­al Court, judg­ment of 31 Jan­u­ary 2017, 14 U 200/15). This may indi­cate a par­a­digm shift.

*This legal tip is not a sub­sti­tute for legal advice in indi­vid­ual cas­es. By its very nature, it is incom­plete, nor is it spe­cif­ic to your case, and it also rep­re­sents a snap­shot in time, as legal prin­ci­ples and case law change over time. It can­not and does not cov­er all con­ceiv­able con­stel­la­tions, serves enter­tain­ment and ini­tial ori­en­ta­tion pur­pos­es and is intend­ed to moti­vate you to clar­i­fy legal issues at an ear­ly stage, but not to dis­cour­age you from doing so.