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International Construction Law Review

RIGHTS OF COMPENSATION IN GERMAN LAW FOR DELAY IN THE AWARD OF A PUBLIC SECTOR CONTRACT

THOMAS STEHLE*

INTRODUCTION

Construction projects (e.g. a road) of public authorities are awarded in formal public procurement by a tender process. The construction companies which participate have to estimate their prices and make an offer. In the meantime, no negotiations between the parties involved are allowed according to procurement law. On the one hand, this is to avoid misuse of power by the public authorities and, on the other hand, it is to prevent corruption. However, this leads to problems when delay occurs during the award process resulting in delay in the award. In many cases this delay in the award causes a shift of the construction period and dates previously set can no longer be met, leading to changes in the subject of the tender (e.g. the construction period of a road moves from summer to winter). Because of the legal ban on renegotiation the parties cannot discuss these changes before finally concluding the construction contract. This raises the question about the content of such a contract and its value for each party.

OVERVIEW OF THE CASE LAW OF THE GERMAN FEDERAL COURT ON DELAY IN PUBLIC PROCUREMENT AWARDS

The jurisprudence of the German Federal Court on delay in awards started on 11 May 2009 with a fundamental decision1 on autobahn A113 (the road connection to the not yet opened main airport of Berlin). In this case the award of the contract for the construction work was stopped by the procedure of a procurement review process. Consequently, the time limit for awarding the contract was exhausted. At the same time, the steel and cement prices had risen considerably. The German Federal Court upheld the lower courts and ordered the contracting authority to pay the costs caused by the delay in the award. The 7th Civil Senate followed Gröning2 and established the following principle: “The delay in the procurement process must not


Pt 2] Rights of Compensation in German Law

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