03-04-2011

No direct award to local public transport companies




Shortly after the Supreme Court, now Düsseldorf Higher Regional Court reversed a large direct award of public transport services. The Procurement Division considers awards to local transport companies to be inadmissible when no tendering competition has taken place prior to the award.

Four Münsterland counties wanted to enter into a contract for bus services with local provider Regionalverkehr Münsterland (RVM). Other companies were given no opportunity to submit an offer - competition was thus excluded.

Direct awards impeding competition

According to the Düsseldorf Higher Regional Court, the public procurement complaint boards and divisions have jurisdiction over the review of awards under EU Regulation 1370/2007. This even if there is no order, but a concession.

It is remarkable how decisively the court stopped the proceeding by the Münsterland counties. According to the Higher Regional Court, applicable law in North Rhine-Westphalia prohibits larger direct awards of contracts to transport companies without prior bidding contest. With Section 2(10) Local Public Transport Act, the legislature would subscribe to a minimum of competition. Even outside of North Rhine-Westphalia, the decision of the Higher Regional Court will have consequences. Accordingly, direct awards are generally inadmissible if the contractor or its subsidiaries provide services themselves in competition.

Second decision in a short period

On February 8, the Supreme Court had already ruled in a landmark decision that bids under public procurement principles must be invited for transport contracts. Dr. Ute Jasper, public procurement specialist of law firm Heuking Kühn Lüer Wojtek, therefore holds that an overall reorientation in local public transport will be required: "Municipal companies must be prepared to face competition. As in the telecommunications and energy sectors, this will entail permanent benefits to consumers and taxpayers."

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