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Public Procurement Act Amended to Implement Remedies Directive

internationallawoffice.com, 2008
1. Dezember 2008

On October 23 2008 the Federal Chancellery introduced a new draft bill regarding an amendment to the Federal Public Procurement Act 2006. It has asked the public and the authorities concerned for reviews and comments by December 23 2008.


The bill is expected to be accepted by the Council of Ministers in the first quarter of 2009. It seems likely that Parliament will pass the bill in the summer or autumn of 2009, so that the amendment can enter into force on December 20 2009 at the latest (as provided for by the EU Remedies Directive (2007/66/EC, amending Directives 89/665/EC and 92/13/EEC). Major amendments to the bill in the course of parliamentary procedure are not expected.

Remedies and Recognition Directives

The main objective of the draft amendment is to implement the EU Remedies Directive, which was issued to improve the effectiveness of review procedures concerning the award of public contracts. Further, the EU Directive on the Recognition of Professional Qualifications (2005/36/EC) has been implemented in relevant Austrian laws (eg, trade law), which makes it necessary to amend certain sections of the Federal Public Procurement Act that refer to these provisions.

Major Amendments to Act

Annulment of contracts in breach of act
In order to combat serious infringements of the Federal Public Procurement Act and the EU public procurement rules (in particular direct awards and awards in breach of the fundamental principle of transparency), the bill provides the Federal Public Procurement Authority with enhanced powers when dealing with ascertainment proceedings and new powers to declare contracts null and void.

A contract may be annulled on request if the contracting authority awarded such contract:

without prior publication of a contract notice;
without prior notification of the decision to award a contract; or
in infringement of substantial legal provisions by basing it on a framework agreement or dynamic purchasing system.
If the Federal Public Procurement Authority deems the award of a contract to be unlawful for one of these reasons, it must declare the contract null and void.

Alternative penalties
The contracting authority may file a request for the Federal Public Procurement Authority to refrain from declaring the contract null and void, even though it has been awarded illegally, provided that overriding reasons relating to a general interest require the contract to be upheld. Economic interests in the ineffectiveness of the contract may be considered as overriding reasons only if, in exceptional circumstances, ineffectiveness would lead to disproportionate consequences.

The regime below the thresholds of the EU Public Procurement Directives (2004/17/EC and 2004/18/EC) is less severe. If the interests in maintaining a contract outweigh the interests in terminating it, the Federal Public Procurement Authority may not consider the contract ineffective, provided that the contracting authority made such a request and its approach was not evidently illegal.

In such cases the draft bill provides for alternative penalties, although the extent to which these penalties will be imposed is not yet clear. The draft bill provides for fines of up to 10% of the amount of the tender; however, a cap - which is likely - is still subject to discussion.

New system for proof of qualification
The draft amendment also provides for a simplified system regarding proof of qualification. It refrains from requesting extensive supporting documentation. In most cases the submission of a so-called ‘self-certification’ is sufficient proof of qualification. However, in case of doubt, the contracting authority still has the right to ask bidders to submit certain documents.

New time limits for review proceedings
Further, the bill establishes a new time limits system. The period between the decision to award a contract and the conclusion of the contract (the standstill period) now takes into account different means of communication. If fax or electronic means of communication are used or if the decision to award a contract has been subject to a voluntary publication, a contract may not be concluded before the expiry of a standstill period of at least 10 calendar days. If other means of communication are used, the contract may not be concluded before the expiry of a standstill period of 15 days. The standstill period below the relevant thresholds is seven days. This new system also applies to a request for a review of a contracting authority decision.

Electronic communication
The draft amendment establishes a preference for electronic means of communication (ie, correspondence by email or fax).


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