Nego­ti­at­ed pro­ce­dure with­out a call for com­pe­ti­tion only with mar­ket explo­ration!

On March 21, 2025, our lawyer Anne Grahl dealt with the deci­sion of the High­er Region­al Court (OLG) Ham­burg of April 6, 2023 (Ref.: 1 Verg 1/23) in an abante live on pub­lic pro­cure­ment law.

When there can (alleged­ly) only be one… In pub­lic pro­cure­ment law, it hap­pens time and again that con­tract­ing author­i­ties believe that a cer­tain ser­vice can only be pro­vid­ed by a sin­gle com­pa­ny. How­ev­er, the deci­sion of the High­er Region­al Court of Ham­burg shows how impor­tant it is to care­ful­ly exam­ine this assump­tion and empha­sizes once again how impor­tant a com­pre­hen­sive mar­ket inves­ti­ga­tion is in this con­text.

Click here for the video of the dis­cus­sion of this deci­sion:

The case: Ham­burg’s desire for inte­gra­tion

The Free and Hanseat­ic City of Ham­burg intend­ed to pro­cure a new elec­tron­ic pro­cure­ment man­age­ment sys­tem (VMS) that was to be ful­ly inte­grat­ed into an exist­ing ERP sys­tem. The aim was to cre­ate a stan­dard­ized, com­pre­hen­sive solu­tion for all rel­e­vant busi­ness areas. Pri­or to pro­cure­ment, the City of Ham­burg car­ried out an ini­tial mar­ket sur­vey. Oth­er pub­lic clients were asked about their expe­ri­ences and nine providers were invit­ed to answer a struc­tured list of ques­tions and present their prod­ucts. One of these providers was the sub­se­quent appli­cant in the review pro­ce­dure.

Sur­pris­ing twist — award with­out com­pe­ti­tion: Although a ten­der was ini­tial­ly announced, this did not take place. Instead, in Decem­ber 2021, the con­tract­ing author­i­ty ver­bal­ly announced that it want­ed to com­mis­sion the sys­tem of a spe­cif­ic com­pa­ny — Provider A — direct­ly, as only this com­pa­ny had the nec­es­sary unique tech­ni­cal posi­tion. How­ev­er, a final deci­sion had not yet been made and the mar­ket explo­ration was still ongo­ing, so that an ini­tial com­plaint from the lat­er appli­cant ini­tial­ly came to noth­ing. This was fol­lowed in June 2022 by an ex ante trans­paren­cy announce­ment by the City of Ham­burg, in which the planned direct award was made offi­cial with the jus­ti­fi­ca­tion of the unique posi­tion of bid­der A with regard to the nec­es­sary com­plete inte­gra­tion of its soft­ware solu­tion into the clien­t’s exist­ing sys­tem. The appli­cant object­ed to this; the appli­ca­tion for review fol­lowed.

The legal frame­work: Accord­ing to Sec­tion 14 (4) No. 2 lit. b VgV, a con­tract can be award­ed in a nego­ti­at­ed pro­ce­dure with­out a call for com­pe­ti­tion if only a spe­cif­ic com­pa­ny can ful­fill the con­tract — for tech­ni­cal rea­sons. How­ev­er, Sec­tion 14 (6) VgV clear­ly restricts this: such an award is only per­mit­ted if there is no rea­son­able alter­na­tive or sub­sti­tute solu­tion and the con­tract para­me­ters have not been arti­fi­cial­ly restrict­ed.

The argu­ments of the par­ties involved: The appli­cant dis­agreed with the assump­tion of a unique tech­ni­cal posi­tion. It referred to its own pro­posed solu­tions to the inter­face prob­lem and empha­sized that oth­er providers could also pro­vide com­pa­ra­ble sys­tems. It also crit­i­cized the mar­ket sur­vey as incom­plete, as essen­tial require­ments — in par­tic­u­lar for full inte­gra­tion — had not been asked at all. The client, on the oth­er hand, main­tained its posi­tion. Only provider A met the require­ments. The pro­cure­ment cham­ber fol­lowed this rea­son­ing and reject­ed the appli­ca­tion for review. The appli­cant lodged an appeal against this with the High­er Region­al Court of Ham­burg.

The deci­sion: a return to open com­pe­ti­tion

The High­er Region­al Court of Ham­burg did not fol­low the deci­sion of the pro­cure­ment cham­ber. The judges empha­sized that the require­ments for a direct award pur­suant to Sec­tion 14 (4) No. 2 lit. b VgV in con­junc­tion with Sec­tion 14 (6) VgV were not met. § Sec­tion 14 (6) VgV were not met. Even if bid­der A had had an exclu­sive posi­tion at the time of the invi­ta­tion to ten­der, fur­ther evi­dence would have been required that no oth­er rea­son­able alter­na­tive or sub­sti­tute solu­tion exist­ed — and this was pre­cise­ly what had not been pro­vid­ed. Par­tic­u­lar­ly clear: The OLG crit­i­cized the fact that the orig­i­nal mar­ket inves­ti­ga­tion only con­sid­ered sys­tems that could be con­nect­ed, but not sys­tems that were ful­ly inte­grat­ed — as ulti­mate­ly required. This require­ment only became appar­ent to all bid­ders from the ex-ante trans­paren­cy notice. The actu­al pro­cure­ment require­ments had not even been spec­i­fied at the time of the mar­ket explo­ration. Rather, this only emerged from the first mar­ket explo­ration. A sec­ond, more pre­cise mar­ket explo­ration would have been nec­es­sary in order to deter­mine whether there were sup­pli­ers on the mar­ket who could meet the actu­al, now spec­i­fied pro­cure­ment require­ments or who had suit­able alter­na­tives or sub­sti­tute solu­tions ready. The OLG clar­i­fies: A con­tract­ing author­i­ty may only dis­pense with a call for com­pe­ti­tion and award the request­ed ser­vice to a spe­cif­ic com­pa­ny in accor­dance with Sec­tion 14 (4) No. 2 lit. b VgV if it can be proven that no oth­er provider is suit­able. The bur­den of pre­sen­ta­tion and proof lies entire­ly with the con­tract­ing author­i­ty. In this spe­cif­ic case, this was not ful­filled — in par­tic­u­lar due to the lack of a sec­ond mar­ket inves­ti­ga­tion. The con­tract may there­fore not be award­ed with­out com­pe­ti­tion.

Con­clu­sion: Pre­cise mar­ket research is manda­to­ry in this case

The deci­sion once again under­lines how cru­cial a care­ful and com­pre­hen­sive mar­ket inves­ti­ga­tion is — espe­cial­ly if a nego­ti­at­ed pro­ce­dure with­out com­pe­ti­tion is planned. Any­one claim­ing a unique tech­ni­cal posi­tion must not only be able to prove this in a com­pre­hen­si­ble man­ner, but also objec­tive­ly and ver­i­fi­ably. Even if an exclu­sive posi­tion could be affirmed at the time of the award of the con­tract, it must also be pos­si­ble to prove that the ser­vice offered has no alter­na­tive. A mere feel­ing or the unproven assump­tion that there is no alter­na­tive is not suf­fi­cient.

You can find fur­ther insights and detailed expla­na­tions of var­i­ous deci­sions in our oth­er videos on the YouTube chan­nel abante Recht­san­wälte. Feel free to take a look!