BGH: In the event of awards, the contracting authority will bear the risk that the award is delayed due to a review procedure and, as a consequence, prices increase

"With this decision, the Federal Court of Justice has answered one of the most important outstanding issues of today's procurement law," explained Dr. Ute Jasper, Partner at the Düsseldorf office of law firm Heuking Kühn Lüer Wojtek and head of the Public Sector Practice Group.

On May 11, 2009, the BGH decided (case no. VII ZR 11/08) whether a successful bidder is able to request compensation from the contracting authority for cost increases incurred during a review procedure. In the specific case, a construction company requested additional compensation from the Federal Republic of Germany for increased steel and cement costs incurred by delays due to a review procedure.

The BGH decided as follows: The contract will be entered into per the invitation to bid. Deadlines and dates will initially remain unchanged even if they can no longer be kept. However, the parties need to agree on dates and costs again in order to fill the contractual gap.

If they fail to achieve an agreement, the BGH will assume a gap which it will fill by supplementary interpretation of the contract. It will consider "what the parties would have agreed on for the case for which they have failed to make provisions in appropriate consideration of their interests in good faith as fair contract partners."

In consideration of the circumstances of the individual case, the construction time is to be adjusted based on the principles of Section 6 no. 3 and 4 of the VOB/B contracting rules. It will generally be moved back by the period of delay to a later date. The bidder's disadvantage caused by a less favorable construction season may be compensated.

The compensation will be amended based on additional costs or cost savings. Provisions are made in VOB/B for such legal consequence if the price basis for contractually provided services changes due to orders of the principal.

In the Act against Restraints of Competition, the legislator had provided for legal protection for losing bidders by means of a review procedure. However, it had failed to fully provide for its effects on the award procedure. This gap has now been closed by the BGH.

"This decisions results in considerable cost increases for the public sector since a lot of times the contract can only be awarded at a later time due to review procedures," explains Jasper. "We suggest to consider the consequences of review procedures in advance and to provide for adjustment opportunities already in the award documents. This is the only way to avoid legal uncertainties."

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