Germany: Public Private Partnerships In Germany - An Overview

Last Updated: 26 November 2009
Article by Michael Schaefer and Thomas Voland

Key points

In Germany, there is no single body of laws governing Public Private Partnerships (PPPs). Instead, a plethora of acts, rules and regulations applies. However, the federal and state legislators now appreciate the importance of PPPs for future development in the public sector. They have enacted a series of laws to facilitate PPPs in Germany, the most notable being the PPP Acceleration Act. The federal government has also created institutions that are responsible for co-ordinating and facilitating the development of PPPs in Germany.

Currently, more than 100 PPP projects are in the planning or implementation phase in Germany. They range from big infrastructure projects such as the extension of motorways worth billions of euros to smaller projects such as the extension and renovation of schools, hospitals and prisons.

To facilitate the planning and implementation of PPPs, the federal government and some federal states have passed legislative measures ranging from rules and obligations for the co-operation of public and private partners to the specific promotion of such a co-operation.

We expect, especially in the face of the current financial crisis, that both the number and the value of PPPs in Germany will increase. Additional legislation to facilitate the planning and implementation of PPPs is in the making.

Framework for PPPs

Legal framework

In Germany, PPPs are usually based on an agreement governed by private law and concluded between a public partner and a private entity. The public partner can be the Federal Republic, a federal state or one of its authorities or a local community. In general, the private partner is a legal entity or consortium consisting of several companies as shareholders.

There is no specific law providing a comprehensive framework for PPPs. Instead, PPPs are subject to a number of legal regimes in federal and state laws. These include constitutional and administrative law, the law of public procurement, budget law, tax law, investment and finance law, the law on public subsidies, contract law and corporate law.

The first step towards a more comprehensive regulation on PPPs was made when the federal PPP Acceleration Act (ÖPPBeschleunigungsgesetz) was enacted in 2005. This act is a framework law, which has changed a number of previously existing provisions relevant to operating PPPs, including the Act Against Restraints of Competition, the Public Procurement Ordinance, the Federal Budget Law, the Federal Law on Investment and tax laws.

Phases of a PPP project in Germany

The laws described below apply during the typical phases of a PPP project.

Phase I: identification of possible projects

In phase I, the public partner needs to identify possible projects and to assess the economic demand for PPPs, as well as the economic, technical and legal feasibility of a project.

Federal or state constitutional law may necessitate full public authority over a certain institution or service, or at least certain levels of public control over the process. For example, article 33 paragraph 4 of the Basic Constitutional Law stipulates that only civil servants may exercise administrative authority. Therefore the constitutional and administrative framework of a PPP may require a certain corporate structure for the private partner.

Tax, budget and investment laws and the laws on public subsidies may have an important effect on a project's financial feasibility.

The project must also comply with the provisions on state aid in articles 87 and 88 of the EC Treaty. For example, it has to be determined whether public contributions to the financing of a PPP project, either in the form of direct payments or as state guarantees, constitute illegal state aid.

According to the Federal Budget Law and state budget laws, the economic efficiency of a project has to be substantiated. This requires an economic analysis of the PPP project and its comparison with the implementation of the project on a 'conventional' procurement basis. Moreover, budget laws may set certain limits for the sale or use of public property and require a clearance procedure. Since such limits and provisions may impede the implementation of PPPs, a couple of federal states have introduced special legal provisions to promote the development of PPPs. For examples, please see 'Recent developments' below.

Phase II: preparation and planning

In phase II, the public partner has to develop a contract as well as performance-related specifications. It needs to determine a project's fundamental characteristics – for example, the duration, the suitable contract model and the level of public control. In this phase, contract and corporate law play an important role. This concerns, inter alia, the applicable type of contract, which defines the parties' mutual rights and obligations, various models of financing and the project's corporate design. In Germany, a variety of contract types may apply to PPP projects (eg concession agreements or leasing agreements) and models include supply-and-management contracts, turnkey projects, various lease and concession models, models of private ownership or use of assets. For example, in the case of concession models, legal advice is required to ensure that the fees charged by a private entity comply with laws and regulations on taxes and public fees.

Phase III: award procedure

In phase III, the public partner usually carries out a contract award procedure and invites the submission of applications from interested private entities. According to section 2 of the Procurement Ordinance, the PPP project is subject to a formal award procedure if its volume exceeds a certain threshold (eg in 2008 €412,000 for supplies and services for drinking water, energy or transport; €133,000 for general supplies and services for federal government institutions; €206,000 for all other supplies and services; and €5,150,000 for construction projects). Budget laws may require a tender even if the project remains below the thresholds in the Procurement Ordinance. Procurement law often requires a Europe-wide tender and entitles the applicant to seek legal remedies before a public procurement tribunal under section 107 et seq of the Federal Act on Restraints on Competition. The public partner needs to prepare and publish an award notice and performance-related specifications and conduct an awards procedure in accordance with procurement law. At this stage, legal advice is regularly needed to ensure that the procedure complies with all applicable laws and that the bidders' rights are duly observed.

Phase IV: implementation and controlling

In phase IV, the project is implemented. Depending on the subject matter, a significant range of laws may apply during this phase – eg in the case of a construction or transport project, the provisions of public and private building law, transport law, environmental law, civil law and other laws. If the project needs to take over a service that has so far been publicly run, the private entity may be obliged to employ public servants. This requires the application of public service law and the relevant provisions of individual and collective labour law.

The PPP Acceleration Act

Some of the above-mentioned laws have been modified by the PPP Acceleration Act to facilitate PPPs. For example, the meaning of 'public contracts' has been clarified to facilitate the determination of applicable law.

Moreover, a new procedure for public procurement called 'competitive dialogue' (Wettbewerblicher Dialog) has been introduced. This is a procedure for the award of particularly complex contracts by public contracting entities. An invitation to participate is made and selected persons or companies are invited to negotiate all the details of the contract.

Furthermore, the Federal Budget Law has been modified. The amended section 7 paragraph 2 allows entities to take into account the assumption of risk in assessing the economic efficiency of a project as a condition for compliance with the Federal Budget Law. This is particularly relevant for PPPs because the risk allocation can be a major element of a PPP's economic balance. Section 63 paragraph 2 of the Federal Budget Law now allows the sale of federal real estate even though there is a public demand for such property. Before this amendment, the prohibition of sale rendered sale-and-leaseback contracts impossible.

Other amendments concern inter alia tax laws and the Federal Law on Investments. The latter one allows mutual real estate funds to hold a number of shares in a PPP project company.

PPP institutions in Germany

  • A number of institutions have been established to facilitate PPPs. They include the Federal PPP Task Force, which is a part of the Federal Ministry for Transport, Building and Urban Affairs in Berlin. A number of federal states have their own PPP commissions or task forces. These institutions have advisory and information functions and are not involved in the decision-making processes for individual PPP projects. They serve as knowledge databases and offer assistance to communities considering setting up a PPP. They also play an important role in informing the public and in developing common standards on the treatment of PPPs. The Federal PPP Task Force publishes a database of all PPP projects in Germany ( /).
  • In December 2007 the federal government decided to establish a corporation called 'Partnerships Germany' (Partnerschaften Deutschland; PDG) to provide qualified and neutral advice on PPP-related issues to all public entities. PDG shall pool significant expertise and knowhow in the field. It will offer remunerated advice to public partners on specific projects, especially during the early stages of a PPP. For this purpose, PDG concludes framework agreements with public partners interested in receiving advice from it. PDG will also be involved in basic groundwork with regard to the development of the legal framework for PPPs in Germany. It plans to employ approximately 50 members of staff from sectors such as finance, industry, consulting and public service. PDG merely aims to cover its costs but is not profit-oriented. It complements the market for PPP consulting in Germany. Its shares are held by the federal government, 10 federal states and 82 municipalities (approximately 70 per cent) and private investors from various countries and all sectors dealing with PPP (approximately 28 per cent). PDG began its operational activity in early 2009. Freshfields Bruckhaus Deringer acted as a principal adviser to the government in the process of establishing PDG.

Risks for potential investors

The German parliament has recently adopted a reform of the German procurement law. In particular, the new law tightens the obligation to procure large quantities of goods and services in several lots rather than in one comprehensive package. It was argued that this reform could have negative effects on future PPPs by forcing the contracting authority to split PPP contracts, which could reduce the projects' efficiency. However, the new law allows public authorities to award several lots in a single package if economic or technical reasons necessitate this. This provision gives ample room for manoeuvre to preserve the implementation of comprehensive PPP projects in Germany. Moreover, there are various cases in which a separation into 'vertical' quantity lots may be reasonable. For example, if 60 school buildings in one region are to be renovated and operated, a separation into two or three lots of 30 or 20 buildings may be efficient.

On the level of each individual PPP project, the question of who is going to bear the risk of a reduction in demand is probably the most controversial issue within the negotiation leading towards a PPP contract. The public partner often attempts to shift the risk to the private investor. This can force the private investor to bear the negative consequences if the actual demand does not meet the expectations. For example, the current economic crisis could lead to a reduction in heavy goods vehicle (HGV) traffic on motorways. The revenue generated by the HGV tolls could therefore be lower than expected. Or the number of patients frequenting a medical institution run under a PPP scheme could be lower than estimated. This could bring the private investor into dire straits because it relies heavily on the revenues generated by the project in order to finance the project. If the numbers do not add up, the result could be the investor's insolvency. It is therefore vital for the private investor to insist that the public partner bears the risk of a reduction in demand. The private investor should bear this risk only if the reduction in demand can be directly attributed to its own performance – eg if a comparable facility attracts more customers than the one run by the private investor simply because it is better maintained or offers a better deal to customers.

Current PPP projects

Extension of motorways (so-called 'A-models')

Some of the most important PPP projects in Germany concern the extension of parts of German motorways (Autobahnen). In these socalled A-models ('A' as an abbreviation for Autobahnausbau; motorway extension), the private partner takes over responsibility for extending the number of lanes as well as for paying the costs of maintenance and operation of both the existing and new lanes in certain parts of existing motorways. In return, the private partner gets the revenues from the HGV tolls (tolls paid for the use of the motorways by HGVs). Additionally, the federal government may pay an initial subsidy to get the project started. The details of these A-models are governed by a concession contract. Currently, the following A-models are in the process of being executed:

  • A1 between Bremen and Buchholz in Lower Saxony: extension from two to three lanes in each direction (72.5km long); contract period for maintenance and operation: 30 years;
  • A4 in Thuringia: construction of a 22.5km-long section of the motorway as well as extension of existing sections; contract period for maintenance and operation: 30 years;
  • A5 between Malsch and Offenburg in Baden-Württemberg: extension from two to three lanes in each direction for a 41.5kmlong section of the motorway as well as maintenance and operation of a 59.7km-long section of the motorway for 30 years; the contract volume amounts to approximately €600m; and
  • A8 between Munich and Augsburg in Bavaria: extension from two to three lanes in each direction for a 37km-long section of the motorway as well as maintenance and operation of a 52km-long section of the motorway for 30 years.

Other PPP projects

Additionally, approximately 100 other PPP projects are in the planning or implementation phase. Most of these concern the renovation, extension or construction of public buildings ranging from schools, hospitals, barracks and prisons to castles and gardens. For example, the city of Nuremberg awarded the contract to renovate and rebuild some of its schools to a private consortium within a PPP scheme. The overall worth of this contract is €50m. Similar projects for renovating and reconstructing schools in PPP schemes can be found in numerous cities and administrative districts all over Germany.

PPPs in the health sector are increasing, too. For instance, the university hospital of Schleswig-Holstein is building a new centre for particle therapy for curing cancer patients in Kiel. This new centre, worth €250m, is the largest PPP project in the health sector in Germany.

Recent developments

In the past few years, both the federal and the state legislators have passed – or are still working on – a number of legislative measures that directly concern the feasibility and implementation of PPPs in Germany. On the federal level, the most important developments are the reform of the public procurement law and the new Investment Act.

Furthermore, the reform of the Federal Investment Act in 2007 (the Investmentänderungsgesetz) introduced a new class of funds, the PPP funds. Investment companies can now invest in PPP project companies. Thus, this new act enables the use of private capital for PPP projects. Even individual private investors can now participate in the opportunities offered by the PPP market.

At the same time, the federal states have developed legislative measures to further the development of PPP projects.

One example is section 35a of the law on hospitals of the federal state of Hesse. This section extends the eligibility of state-owned hospitals for subsidies. Under the new scheme, hospitals can obtain state subsidies not only for construction or renovation projects run by themselves, but also for those implemented within a PPP. As long as the PPP is economically efficient, it gains the same rights of access to state funding as completely state-run hospital extension, renovation or reconstruction projects.

Another example for the promotion of PPP projects in the health sector is the 'lump-sum construction subsidy' for hospitals in the state of North Rhine-Westphalia (NRW-Baupauschale). Instead of approving and financing specific construction or renovation projects of stateowned hospitals, the state now gives each and every state-owned hospital a lump-sum subsidy of €460,000 per year. The individual hospital is able to choose the projects it wants spend the money on. It is also possible to use the money for acquiring private financing for larger projects or to pool the subsidies of several years and/or hospitals to realise larger projects. As a consequence, many hospitals are expected to use their newly gained freedom for renovating, reconstructing or extending their buildings and institutions with the help of PPPs.


Legal developments

In 2006, a new parliamentary working group was established to draft a second federal framework law, the PPP Simplification Act (ÖPPVereinfachungsgesetz). This shall cover several economic sectors of relevance for the PPP market in Germany, including healthcare, social infrastructure, transport and defence. The act is still being debated within the working group and will presumably not enter into force before 2010.

In March 2009, the German parliament started the initiative 'Fair competitive conditions for PPP in Germany', which aims to increase the attractiveness of PPP solutions. As part of this initiative, the implications of value added tax (VAT) for PPP projects shall be assessed and potentially modified. So far, the provision of services by public authorities themselves is not subject to VAT. By contrast, VAT has to be paid if a private partner provides the same services in a PPP. Consequently, PPPs may be disadvantaged by comparison with the provision of services by public authorities. The new initiative shall serve to reduce or eliminate this disadvantage. Moreover, the parliament plans an amendment of the Federal Budget Law. This shall ensure that projects are implemented by private entities or on the basis of PPPs if an economic assessment has proven the efficiency of such an implementation. Finally, the parliament has asked the government to amend the Act on the Private Financing of Long-Distance Roads (Fernstraßenbauprivatfinanzierungsgesetz) to facilitate the construction of special buildings on roads, such as bridges or tunnels.

New PPP projects

Various PPP projects will be executed within the next few years. In particular, the government's measures to support the German economy in the face of the financial crisis will probably lead to faster execution of planned projects. Among those projects are several extensions of motorways within the A-models scheme. The German Ministry of Transport has launched the planning and procurement process for the A8 between Ulm and Augsburg in Bavaria. This project worth €280m comprises a lane extension as well as maintenance and operation of a 58km-long section of the A8. Moreover, the A9-project between Hermsdorf and Schleiz in Thuringia has been launched. In a second wave, four other A-projects will be launched, probably in 2009 or 2010 at the latest: the A1 between Lotte and Münster together with the A30 Rheine-Lotte autobahn in North Rhine-Westphalia; the A6 between Wiesloch-Rauenberg and Weinsberg in Baden-Württemberg; the A7 between Bordesholm and Hamburg in Schleswig-Holstein; and the A7 between Salzgitter and Drammetal in Lower Saxony. Additionally, parts of the A45 near Gambach and the crossing of the A60 and A643 near Mainz shall be restored within PPP projects. No timeline has yet been set for these projects.

Partnerships Germany has become operative by advising the City of Dresden on a PPP project in the culture sector. Furthermore, it shall play an important role in providing advice on opportunities for PPPs under the 'rescue packages' for the German economy.

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

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

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”

Mondaq Advice Centre (MACs)
Up-coming Events Search
Font Size:
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
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). 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 & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd 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 or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.