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03 July 2018

The time has come: Federal Procurement Act 2018 just around the corner in Austria

Find the text in German here 

More than four years after the entry into force of the new EU Public Procurement Directive (2014/24/EU), more than two years after the deadline for transposition and more than one year after publication of the first transposition draft, the time has come. Following the respective resolutions of the Council of Ministers and the Federal Council in March and April 2018, it can be assumed that the Federal Procurement Act 2018 will enter into force by July 2018, thus finally replacing the Federal Procurement Act 2006.

The new Federal Procurement Act heralds a new era in public procurement law in Austria. Mandatory electronic procurement, new procedures and procurement methods and the compelling best-bidding principle are just a few examples of the numerous innovations that will fundamentally change the procurement process and practice.

However, due to the considerable delay in the implementation of the Public Procurement Directive it is expected that the new Federal Procurement Act will come into force 'overnight'. Clients and bidders should therefore urgently and intensively familiarise themselves with the new legal framework.

Changes and innovations

More procurements without public procurement law
The catalogue of services whose procurement is not subject to the Federal Procurement Act will be expanded. In addition to the exceptions for loans, special lawyer and notary services and certain rescue services, the extended exceptions for internal group procurement (ie, 'in-house procurement') and public-public cooperation are especially relevant in practice.

End of (non-)priority services
The previous distinction between so-called priority services and non-priority services (which are only partially subject to the Federal Procurement Act) will be cancelled. In future, all services will be subject to the full scope of application of the Federal Constitutional Court, and the full scope of the Federal Procurement Act. The only exceptions to this are so-called 'special and social services'; these include, for example:

  • health and social services;
  • restaurant and accommodation services; and
  • various municipal services.

The assignment of such services is considerably easier and more flexible, thanks to a considerably higher threshold value (€750,000) and the largely free choice and arrangement of processes. However, in its judgment of 19 April 2018 the European Court of Justice recently emphasised that the fundamental principles of public procurement law must be complied with (C-65/17).

New and extended catalogue for exclusion
The catalogue of reasons for mandatory exclusion of candidates or bidders from procurement procedures has been considerably expanded. In addition to the necessary exclusion in case of conflicts of interest or the attempted improper exertion of influence on the decisions of the contracting authority, exclusion due to significantly imperfect performance in the fulfilment of earlier contracts is consequential for bidders. Poor or non-performance of public contracts can therefore lead not only to the regular contractual consequences (eg, damages, contractual penalties or termination), but also to the exclusion of invitations to tender for the procurement of future contracts.

Simplified suitability test
The introduction of the 'only once' principle (ie, that bidders need not submit identical certificates in each procurement) and the mandatory acceptance of the European Single Procurement Document will considerably reduce the effort for companies regarding the provision of aptitude certificates.

Shortening and simplification of procurement procedures
The handling of procurement processes will be simplified and shortened by:

  • significantly shorter minimum deadlines (by approximately one-third) for participation and tendering in procurement procedures;
  • easier use of the negotiated procedure;
  • the absence of mandatory formal tender opening in open and restricted procedures; and
  • the possible replacement of notices by prior information.

Innovation partnership
Innovative procurements are strengthened. An important instrument for this is the innovation partnership. This procedure links the research and development process with the subsequent procurement process in a procurement procedure, so that it should become considerably easier to carry out innovative procurement projects and establish cooperation with start-ups. However, in order to enable start-ups to participate in procurement procedures, several additional activities must be considered, including:

  • applying functional service descriptions;
  • applying reasonable suitability criteria; and
  • allowing variants.

Mandatory e-procurement
From 18 October 2018 at the latest (ie, almost three months after the law's expected entry into force) the procurement procedure will have to be carried out electronically. This includes:

  • electronic communication between the client and the company;
  • electronic availability or provision of the tender documents (these must in future be completely available free of charge to all interested parties as soon as the announcement is made); and
  • electronic submission of participation documents and offers.

This is accompanied by specific commitments regarding, for example, data integrity, communication requirements and electronic signatures.

Easing the mandatory best-bidder principle
The mandatory best-bid principle introduced and intensely debated in the Federal Procurement Act Amendment 2016 is being relaxed. The award of the contract for the "most economically and technically advantageous bid" is therefore only mandatory when:

  • using a functional service description;
  • choosing the negotiation procedure and the innovation partnership;
  • awarding construction contracts in excess of €1 million; or
  • awarding cleaning and security services.

More leeway in amending and adapting existing contracts
Existing contracts can be adapted to changed conditions by altering or adjusting the subject matter and scope of the service or the remuneration regulations, or even – under certain circumstances – exchanging the contractual partner without running the risk of a new tendering obligation. This not only provides the necessary flexibility in the order processing stage (especially for long-term or complex procurement), but above all more legal certainty in a formerly considerable grey area.

Enhanced documentation requirements
Clients in particular must disclose future contracts with a value of €50,000 or more and make detailed information (ie, metadata of the core data) available on for five years.

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