Austria: Centralised Purchasing Bodies / Do Austrian Courts Have Jurisdiction Over German Procurement Procedures?

Cross border procurement via centralised purchasing bodies

In light of a general shortage of budget funds in the public sector, contracting authorities intend to bundle and pool their purchasing quantities to gain positive efficiency and pricing effects. According to Austrian procurement law (not having implemented procurement Directives 2014) contracting authorities have different tools allowing them to bundle their purchasing volume by cooperating with other purchasing bodies, such as the establishment of centralised purchasing bodies ("CPB") which acquire supplies or services for (other) contracting authorities, or award public contracts intended for contracting authorities. CPBs can either act as wholesaler/reseller by conducting a procurement procedure in order to buy supplies or services and subsequently resell the services / products to other contracting authorities or acting as intermediaries. The legal consequences are significantly different when acting as a "reseller" or as an "intermediary". While resellers act using their own names and on their own behalf, "intermediaries" act in the name and on behalf of the contracting authorities; CPBs act as agent for the contracting authorities, which become the principal parties of the contract. Therefore CPBs who act as intermediaries have to follow the respective material and procedural rules applying to the respective contacting authorities.

Even if the Austrian procurement law expressly provides for the possibility to rely on purchasing activities of CPBs in different Member States, the law does not - contrary to the 2014 Directive – provide for more specific rules in relation to the applicable (national) provisions in case of a joint award of contract by authorities from different Member States. Hence, in situations where CPBs conduct a procurement procedure on behalf of several contracting authorities from various Member States (in their function as intermediary), the identification of the applicable procurement regime becomes a core issue.

The ruling of the Administrative Court of Vienna

In its decision of 9 February 2016, the Administrative Court of Vienna ("Court") found itself in a situation where it had to rule on a contestation against a tender procedure conducted by a German CPB under German (public procurement) law.

In the case at hand, a German (hospital) purchasing group initiated a tender procedure for the supply of medical devices to its member hospitals. Since at least one member of the purchasing group was an Austrian hospital operator the tender covered the supply of medical devices to Austria (lot 1) and the supply of medical devices to Germany (lot 2). The volume of the German lot exceeded the volume and value of the Austrian lot significantly. The hospital purchasing group expressly stipulated in the tender documentation that the procedure would be conducted under German public procurement law and the competent court in Germany shall be the court of jurisdiction. A potential bidder filed an appeal against the tender and took the case to the Administrative Court of Vienna in Austria ("Viennese Court") by claiming - besides the illegality of the choice of a negotiated procedure - that the tender was discriminatory and would lead to a circumvention of the Austrian appeal mechanism. The claimant argued that the Viennese Court had jurisdiction (irrespective of the controversial specification in the tender documentations) as the contracting authority (at least in relation to the Austrian lot) was an Austrian hospital operator seated in Austria / Vienna.

At first the Viennese Court confirmed that according to the tender documents an Austrian hospital operator (instead of the German CPB) qualifies as contracting authority in relation to the devices to be supplied to Austria (lot 1). Following the tender documentation the hospital operators should become the principal partners of the supply contracts being subject of the tender. According to the appeal mechanism and the respective procedural law the Viennese Court is competent to rule on procurements of contracting authorities seated in the region of Vienna, the Court further confirmed its competence to rule on the case at hand.

The Court further concluded that even if the German purchasing body would qualify as CPB (which was not sufficiently clear at that stage), the complaints mechanism of Austria would be applicable as the purchasing activities in relation to the Austrian lot are attributable to the Viennese contracting authority.

However, so far Austrian contracting authorities only openly considered relying on this possibility to cooperate with foreign CPBs (especially in the field of medical devices), but left this opportunity all in all unused. This situation changed most recently.

Consequences

Even if the Court did not provide a decision on the merits of the case (since the German CPB immediately withdrew the procedure once the procedure had been challenged), the case raises some interesting questions in relation to the competence of national authorities to rule over tender procedures conducted by CPBs as agent for contracting authorities seated in different member states:

  • The jurisdiction of Austrian procurement review authorities depends – in a simplified scheme - on the control over the respective contracting authorities. Contracting authorities under the control of the city of Vienna are subject of the review competence of the Viennese Court. If the tender procedure is conducted in the name of several contracting authorities being controlled of different states (such as Tirol and Vienna) the share of contract value shall be decisive. However, the Austrian law does not provide for a conflict resolution rule for situations where contracting authorities of different Member States involved in a procurement procedure. In the case at hand the German CPB acted as agent and combined the procurement needs of contracting authorities seated in Austria and Germany by simply dividing the tender into two lots. As the relevant procedural law does not provide any explicit rule for such a situation the Viennese Court simply referred to the "Austrian" lot when establishing its jurisdiction. In fact the issue seems to be more complex than that since the German Courts could also have established their jurisdiction in relation to the "German" lot by solely referring to the respective lot: this raises the questions whether two separate lots of a single tender procedure can be subject of different jurisdictions? In order to avoid such a conflict of national laws it seems necessary to apply certain "assignment" rules for the designation of the applicable procurement legislation and the legislation on remedies when it comes to joint procurements of CPBs. The application of the Austrian "main value" rule per analogism in the case at hand would have caused most likely a final jurisdiction of the responsible court in Germany.
  • Directive 2014/27/EU provides some clarification in relation to the applicable procurement law in case of cross border activities of CPBs. According to Art 39 (3) the national (procurement) law at the seat of the CPB shall apply for the provision of centralised purchasing activities ofCPBs. Hence, under Directive 2014/27/EU ("Directive") the choice of German procurement law for conducting the public procurement procedure would have been appropriate for the procedure conducted be the hospital purchasing group in Germany. It goes without saying that such rules of assignment of jurisdiction might encourage contracting authorities to try to circumvent stricter review mechanisms by engaging CPBs seated in other Member States. In this context Art 39 (1) clearly provides for an anti-circumvention provision when it comes to use CPBs to avoid the application of mandatory provision of the national law which the contracting authorities are subject to. However, the Directive lacks on any express rule on the applicable legislation on remedies. As it may be feared that even after implementation of Directive 2014 contracting authorities and bidders will still face certain risks and legal uncertainties in relation to procurement procedures conducted by CPBs the adoption of a new and precise remedies Directive seems to be solely a question of time.

This article was edited by and first appeared on www.internationallawoffice.com.

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.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
 
Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Related Topics
 
Related Articles
 
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions