Procurement Procedures Explained

Open procedure, restricted tender, negotiated procedure, competitive dialogue – procurement law knows different paths to a contract. Each procedure has its own rules, opportunities, and pitfalls. This article helps you keep track.

The Basic Principle: Competition Is the Rule

Procurement law is based on a simple principle: Public contracts should be awarded through competition. The contracting authority describes what they need. Bidders make offers. The best one wins.

But "competition" can look different. Sometimes a hundred bidders compete. Sometimes only three are invited. Sometimes negotiations happen, sometimes not. The procedure type determines the rules of the game.

The Most Important Procedure Types at a Glance

The Open Procedure: Everyone Can Participate

The open procedure is the classic for EU-wide tenders. It works like this:

1. The contracting authority publishes the tender
2. Every interested company can submit a bid
3. All bids are evaluated using the same criteria
4. The best one receives the contract

Advantages for you:

• Maximum equal opportunity
• No preselection that could exclude you
• Transparent evaluation criteria

Disadvantages:

• High competitive pressure
• Elaborate bid preparation with no guarantee of being shortlisted
• No possibility for renegotiation

The open procedure is the most common procedure type above thresholds. Below thresholds, the equivalent is called public tender.

The Restricted Procedure: First Apply, Then Bid

In the restricted procedure, there are two stages:

Stage 1 – Participation Competition:

The contracting authority publishes a notice. Interested companies apply with qualification documents. The contracting authority selects the most suitable applicants.

Stage 2 – Bidding Phase:

Only the selected applicants are invited to submit bids. They receive the complete tender documents and prepare their offers.

When is it used? - For complex contracts where only specialized providers qualify - When the contracting authority wants to limit the number of bids - For contracts requiring special experience or references

Advantages for you:

• Fewer competitors in the bidding phase
• Effort for the complete bid only after prequalification
• Often better success rates

Disadvantages:

• You can be eliminated in the first round
• Double effort: participation application and bid
• Longer procedure duration

Below thresholds, there's the restricted tender – with or without a preliminary participation competition.

Negotiated Procedure: Negotiations Are Allowed

In the negotiated procedure, bids aren't simply evaluated. Negotiations take place.

The process:

1. Companies submit initial bids
2. The contracting authority conducts negotiation rounds
3. Bidders can improve their offers
4. The final bid is submitted at the end

When is it used? - For complex services that can't be fully specified in advance - When innovative solutions are sought - For professional services (architects, engineers) - In exceptional cases of urgent need

Advantages for you:

• Opportunity to explain and adjust your bid
• Misunderstandings can be cleared up
• Often higher success rates for bidders with good solutions

Disadvantages:

• Time-consuming
• Uncertainty about negotiation direction
• Risk of revealing too much

The negotiated procedure also exists without prior publication – but only in narrowly defined exceptional cases.

Competitive Dialogue: For Really Complex Cases

The competitive dialogue is the most elaborate procedure. It's used when the contracting authority can't yet define their requirements precisely.

The process:

1. Publication with rough requirements
2. Selected applicants are invited to dialogue rounds
3. Solution approaches are developed in dialogue
4. Only then are concrete bids requested

Typical use cases:

• Complex IT projects
• Public-private partnerships
• Innovative infrastructure projects

For most companies, competitive dialogue is rarely relevant. It's mainly used for major projects.

Direct Award: Procurement Without Procedure

For very small contracts, the contracting authority forgoes a formal procedure. They award directly – often without obtaining multiple quotes.

The limits (vary by federal state):

• Direct award: up to approx. 1,000-5,000 EUR
• Informal award with multiple quotes: up to approx. 10,000 EUR

For you, this means: You won't find these contracts on tender portals. Access is through familiarity with the contracting authority.

Special Case: Open House

The Open House procedure is strictly speaking not a procurement procedure. The contracting authority sets conditions and concludes contracts with everyone who accepts them. There's no selection decision.

Typical in healthcare: Health insurers conclude contracts with all service providers who meet certain conditions.

Deadlines: Time Is Money – And Sometimes Tight

Every procedure has minimum deadlines. For EU-wide procedures, these are particularly long:

Tip: Plan your capacities ahead. When an interesting tender is published, you should be able to start immediately.

The Submission Deadline: The Moment of Truth

The submission deadline is when bids are opened. In the past, this happened publicly – all bidders could attend and hear competitors' prices.

Today this mostly runs electronically. But the principle remains: After the deadline, all bids are opened simultaneously. Late submissions are not considered.

The submission result shows who participated and – depending on the procedure – also the bid prices.

Variant Bids: When You Know Better

Sometimes the contracting authority envisions a solution that isn't optimal. Variant bids allow you to offer an alternative.

Important:

• Variant bids are only permitted if the contracting authority explicitly allows them
• They must meet minimum requirements
• Often you must also submit a main bid alongside the variant

Variant bids can be a differentiator – but they also mean double effort.

Framework Agreements: Win Once, Deliver Multiple Times

With framework agreements, a specific contract isn't awarded, but a long-term arrangement is concluded. The contracting authority can then call off individual orders over the term.

Advantages for you:

• Planning security over a longer period
• Less acquisition effort after winning
• Building a customer relationship

To note:

• Framework agreements often have demanding qualification criteria
• Competition is intense because total value is high
• Full volume isn't always guaranteed

What If the Tender Is Cancelled?

Sometimes the contracting authority cancels the tender – without awarding a contract. Reasons can be:

• No or only unsuitable bids
• Significant change in requirements
• Budget problems

For you, this means: Your effort was in vain. Legally, you have hardly any claims. This risk is part of the tender business.

Conclusion: Know the Right Procedure

The procedure type determines your strategy:

• Open procedure: Focus on a strong bid that speaks for itself
• Restricted procedure: First show convincing qualifications, then the bid
• Negotiated procedure: Good preparation for dialogue, flexibility

Understand the procedure before you invest. And watch the deadlines – they're unforgiving.

In the next article, we cover prequalification, CPV codes, and the various contractor types.