Public tenders

The decision on public tenders

Around 18% of European GDP is awarded through public tenders. Especially in the energy, transport, defence, IT and healthcare sectors, public tenders are considered an essential element of procurement.

Companies deciding whether to opt for public procurements should weigh up the pros and cons of public procurement processes.

Why should you turn to the public market?

• it offers enormous market potential
• it offers a sales market in almost all business areas
• it largely offers secure payments
• it provides harmonised EU tendering directives which are essentially the same as each other
• it offers competition, public visibility, transparency and non-discrimination
• it offers potential for supplier agreements

Potential arguments against the public market

• it focuses only on the cheapest price (lowest bidder principle)
• fragmentation of calls for tenders happen too often
• it is too bureaucratic
• deadlines are too short and the tendering jargon – with its technical specifications – is incomprehensible
• it lacks transparency and feedback on unsuccessful offers
• there is too much local and national competition
• prices cannot be renegotiated

The tendering process in 12 steps

1.  the public sector has a concrete demand
2. decision on the award process
3. decision on what exactly should be bought
4. estimate of the contract value
5. choice of tendering procedure
6. preparation of the tender documents
7. development of the technical specifications
8. choice of award criteria
9. publication of the tender
10. receipt of the tenderers’ bids
11. evaluation
12. signing of a contract or termination without contract

Together with the Federal Public Procurement Act, the public procurement law regulates the award of the following types of contract by public contracting authorities: supply contracts, service and service concession contracts, works and works concession contracts and the execution of design contests.

According to the Federal Public Procurement Act, there are ten different types of award procedure. The choice of award procedure depends on the type and scope of the contract. For example, in the case of works, supply or service contracts, direct award is only permissible if the estimated contract value excluding VAT does not reach EUR 100,000.

A distinction is made between public tendering procedures in the lower and upper threshold ranges, depending on the value of the contract. Threshold values have been defined for this purpose – contracts above the set thresholds need to be put out to tender throughout the EU.

Since October 2018, contracting authorities have also been required to carry out award procedures in the upper threshold electronically.

Threshold values for the upper threshold from the 1^st January 2020

 In the Federal Law Gazette for the Republic of Austria II No. 358/2019, the Federal Minister for Constitution, Reform, Deregulation and Justice announced the thresholds for contract award procedures as set by the European Commission.

The new thresholds apply from the 1st January 2020. All amounts stated are exclusive of VAT:

• EUR 5,350,000 for works contracts
• EUR 5,350,000 for works concessions
• EUR 214,000 for service and supply contracts awarded by other contracting authorities
• EUR 139,000 for service and supply contracts awarded by central contracting authorities
• EUR 428,000 for service and supply contracts awarded by sectoral contracting authorities

 What procurement platforms are currently available in Austria?

 A number of bodies carrying out public tenders publish information about this in various media outlets. At present, public contracting authorities use, for example, the following procurement platforms for the award of their contracts:

• auftrag.at
  Subject to charges. Here you can find Austrian and European public tenders.
• vergabeportal.at
  Subject to charges. Here you will find Austrian and European tenders as well as tenders in selected international markets.
• http://ankoe.at
• https://www.vemap.com/bundesvergabegesetz
• http://provia.at
  (tender platform of ASFINAG – the Austrian motorways and expressways financing stock corporation – and ÖBB – the Austrian Federal Railways)

Every day, the TED – Tenders Electronic Daily – simultaneously provides public access to more than 2,400 tenders from the federal government, the federal states, municipalities and associations of municipalities in the EU states, provided they exceed a certain threshold value. Each year, a total of 520,000 tenders with an estimated total value of EUR 420 billion can be found online.

Tenders under EU external aid programmes in EU third countries are also included in the TED. According to Community law, these tenders must be published in the Official Journal of the European Union and thus also in the TED, in addition to any national publication. The aim is to give all interested parties the opportunity to obtain information on public contracts. Not only new contracts and preliminary information on planned tenders are published, but also the results of the procedures (name of the best bidder and hammer price!). Tenders for EU third country programmes can also be found in the tender database of the EU agency EuropeAid (only in English).

Further sources:

• EuropeAid Online Services (EU external aid)
• EU Funding and Tenders (EU Action Programmes)
• EU funding guide (information portal of the WKÖ)

Multilateral organisations such as the World Bank or the European Investment Bank (EIB) and regional development banks finance projects (agriculture, energy, environment, health/social affairs, transport, water supply, education and poverty reduction) in developing countries. They supervise the project development, the preparation of tenders and the award of contracts and thus offer opportunities for Austrian companies along the entire project cycle. Such projects and programmes financed by international development banks and institutions provide consultants and suppliers with a wide range of business opportunities in the course of tendering procedures. You can read more about this on the website of Advantage Austria.

• Tenders for projects of the international development banks as well as the tenders for EU third country programmes can be found in the Development Gateway database dgMarket which is subject to charges. This is a very well designed and largely complete internet portal on projects of international development banks and EU external aid (including the UN, Asian Development Bank, European Bank for Reconstruction and Development, European Investment Bank, World Bank; EU third country programmes) where tender and project information is published.

The procurement system of the United Nations (UN Procurement) with a total volume of around 18.8 billion US dollars per year is a field not yet exhausted for Styrian companies.

For all activities and operations carried out by the individual institutions of the United Nations, they need products and services in order to realise their visions of peace, security, poverty reduction and protection of the planet (set out in the 17 Sustainable Development Goals –SDGs).

The largest UN purchase of goods and services is in the health sector (medicine, syringes, laboratory equipment), followed by transport, food and agriculture and a very large administrative sector (which also includes consultancy services). In addition to this, machines, vehicles, environmental services are constantly purchased in large quantities, among other goods and services.

UNGM – United Nations Global Marketplace

An overview of the operating UN organisation as well as the regulations of the UN public procurement system is important in order to apply for contracts from the UN.

For some years now, there has been a platform (UN Global Marketplace) on which potential suppliers can register free of charge by means of UNSPSC codes and on which 99% of tenders from UN buying institutions (there are various types of tenders) can be found.

Every day, this online tool provides access to around 18 new tenders (most recently it contained a total of 6,500 tenders). On average, 350 tenders are available for interested parties to view at any time.

For the majority of the UN agencies that use the UN Global Marketplace to publish their tenders, supplier registration on www.ungm.org has become mandatory (these 26 institutions pool over 95% of the UN procurement volume).