Austria: Recent Public Procurement Law Introduces A New Award Procedure While A Last-Minute Regulation Dispels Confusion On Threshold Values

An amendment to the Austrian Public Procurement Act (PPA), in force since 1 April 2012, introduced, inter alia, a new direct awarding with prior notice and simplification measures in the sub-threshold area. However, these novelties were initially outshone by the confusion on contradicting threshold values. The latter was caused by a conflict between the amendment to the PPA and the Austrian Threshold Values Regulation (TVR).

Confusion on Threshold Values ‒ PPA versus TVR

The temporal scope of the TVR had been extended several times since it introduced increased threshold values in 2009. The TVR 2011, which was published on 20 December 2011, maintained the increased threshold values until 31 December 2012. Consequently, it came as a surprise when the 2012 amendment to the PPA stipulated contradicting threshold values. Opinions on whether the "old" TVR thresholds values held precedence over the new PPA ones diverged, thus, the respective confusion was both unprecedented and considerable. This lack of clarity concerned, in particular, direct awards, which are of utmost relevance to general practice. According to the TVR 2011, direct awards are admissible up to a contract value of EUR 100,000. In contrast, the new PPA sets the respective threshold at just EUR 50,000. Another significant divergence referred to works contract awarded in restricted procedures without prior notice. For these contracts the new PPA stipulates a threshold of EUR 300,000, whereas the TVR drew the respective line at generous EUR 1 million. All the more, the new TVR 2012, which was published on 28 March 2012 and, therefore, merely four days prior to the entry into force of the new PPA, was welcomed by all sides, as it dispelled the confusion on contradicting threshold values by confirming the extension of the TVR threshold values until 31 December 2012.

The new direct awarding with prior notice

Initially aimed at compensating the potential non extension of the TVR and, in particular, its direct award up to EUR 100,000, the PPA 2012 introduced the "direct award with prior publication of the contract notice". This new award procedure is admissible for supply and service contracts not exceeding the threshold of EUR 130,000 and for works contracts below EUR 500,000. The new award procedure is characterized by a widely eased award regime and restricted remedies. Essentially, the contracting authority may conduct the award procedure at its discretion, decide whether to enter into negotiations or not, to solicit offers or not or to award the contract directly. However, the contracting authority must publish a contract notice providing certain minimum information enabling economic operators to participate in the direct award and determine objective, non-discriminatory selection criteria pertaining to the proposed award. As to remedies, economic operators may merely challenge the choice of the award procedure and the contract notice. In contrast, the selection criteria, the selection of the successful tenderer, the withdrawal of the award or the award decision cannot be contested. However, also under the new direct award procedure, the purchasing authority may award contracts solely to qualified, capable and reliable economic operators.

Simplification measures in the sub-threshold area

The PPA 2012 introduced a few measures designed to simplify procurement procedures and reduce costs. For instance, the contracting authority is no longer obligated to demand any evidence from the candidates and tenderers in order to establish their suitability, not even from the successful tenderer. Under the restricted procedure, contracting authorities were bound to invite at least five economic operators; henceforth, three suffice. Moreover, the procedure of the in-depth evaluation of tender prices is facilitated. The contracting authority no longer has to require an explanation in written form. Another easement introduced by the PPA 2012 concerns references in order to establish the required technical capacity. The candidates and tenderers may now present references obtained during the last ten years, if the contracting authority so decides. Previously, the relevant timeframes for references were three years for supply and service contracts and five years for works contracts. Moreover, the PPA 2012 explicitly allows obtaining binding offers under the direct award procedure. Formerly, the contracting authorities were merely allowed to solicit non-binding price quotations. However, the gathering of binding offers had already been common practice previously. Finally, it should be mentioned that the sub-thresholds for works contracts under the restricted procedure without notice and for direct awards have been raised by the PPA 2012, namely from EUR 120,000 to EUR 300,000 and from EUR 40,000 to EUR 50,000, respectively. This extension of the sub-thresholds will be all the more significant if the TVR 2012 will not be extended beyond 31 December 2012.

Other important changes

A ruling of the European Court of Justice (case C-314/09) required an amendment to the provisions on the claim for damages. The former requirement of culpable action was substituted by a sufficiently serious infringement of the law. Moreover, the PPA 2012 stipulates the implementation of electronic publication media at the federal level and in the nine provinces (Bundesländer). The PPA 2012 also provides for additional provisions on non-priority services, in particular with regard to the obligation to notify the award decision. As a simplification measure not limited to the subthreshold area, subcontractors are now entitled to rely on their self-declaration with regard to their suitability and exempt from providing respective evidence. Last but not least, the PPA 2012 introduces the opportunity for foreign (EU) contracting authorities to act as central purchasing bodies within the meaning of the PPA.

Conclusion

There is no doubt that the unprecedented confusion on threshold values which went along with the entry into force of the new PPA was untoward. So much the better was the clarification, albeit last-minute, brought by the new TVR. The new direct award procedure with prior notice should serve the call by both the contracting authorities and the economic operators for more simplification and cost effectiveness. The same should be true for the simplification measures introduced, especially, in the sub-threshold area. Though rather limited in its scope, the effects of the new PPA will be significant. However, with the EU proposals on new Procurement Directives currently on the table, new amendments are already on the horizon.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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