What does negotiated award mean?
The negotiated award (freihändige Vergabe), called Verhandlungsvergabe in the current terminology of the UVgO (Sub-Threshold Procurement Rules), is a below-threshold procurement procedure in which the contracting authority invites one or more companies directly to submit bids and can negotiate the bids. Unlike the formal procedures (public tender, restricted tender), the negotiated award gives the contracting authority more leeway in how it designs the procedure.
The negotiated award can be carried out with or without a participation contest. In the variant with participation contest, the tender is published and interested companies can apply. The contracting authority then selects suitable candidates and negotiates the bids with them. In the variant without participation contest, the contracting authority approaches selected companies directly. This variant is allowed only under certain conditions, for example if a public or restricted tender was unsuccessful, in cases of particular urgency or if the work can only be performed by a specific company.
The counterpart of the negotiated award above the thresholds is the negotiated procedure under the VgV (Public Procurement Ordinance). What both procedure types have in common is that the contracting authority may negotiate the content of the bids with the bidders, which is generally not allowed in open and restricted procedures.
Facts & figures
| Metric | Value |
|---|---|
| Legal basis for supplies/services | Section 12 UVgO (Verhandlungsvergabe) |
| Legal basis for construction work | Section 3a(4) VOB/A Section 1 |
| Counterpart above the threshold | Negotiated procedure (Section 17 VgV) |
| Scope limit | below the EU threshold (< €216,000 or < €5,404,000 for works) |
| Minimum number of companies to invite (practice) | 3 bidders, where possible |
| EU directive, negotiated procedure | Art. 29 Directive 2014/24/EU |
Relevance for bidders
The negotiated award gives bidders the chance to optimize their bid in dialogue with the contracting authority. Negotiations can clear up misunderstandings, clarify the content of the work and adjust conditions. This can be particularly advantageous for complex or innovative services where the requirements cannot be clearly defined in advance.
However, transparency in negotiated awards is lower than in public procedures. Bidders who are not approached directly may not learn about the tender at all. It is therefore advisable to maintain good relationships with public contracting authorities and to be listed in the AVPQ. Bidders should also note that the principles of equal treatment and competition apply to negotiated awards as well.
Legal framework
The negotiated award, now called Verhandlungsvergabe, is governed by Section 12 UVgO for supply and service contracts. For works contracts, the rule is in Section 3a(4) VOB/A (Construction Contract Procedures, Part A) Section 1. These provisions list exhaustively the conditions under which a negotiated award without participation contest is allowed. The contracting authority must justify the choice of procedure type in the procurement records.