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The Obligation to Tender For Non-Eligible Parts of a Construction Project 

by Daniela Hattenhauer, Ute Klemm

Published: April, 2017

Submission: April, 2017

 



The Oberlandesgericht Celle has recently adopted a decision that is likely to be of particular interest to hospitals which are not, in principle, public contracting authorities within the meaning of the law, but which are used by public authorities to pay more than 50 per cent for the construction of hospitals pursuant to Section 99, 4 of the GWB (decision of 29 November 2016, ref. 13 G 8/16).


In the decided case, the client planned to modernize a hospital in three construction phases. In the first construction phase, a new functional area with a helicopter landing area on the roof was to be built.


The client is not a public contracting entity within the meaning of Section 99 Nos. 1 to 3 GWB and therefore, in principle, is not obliged to comply with the provisions on the granting of rights. However, he received funding of more than 50 percent for the first phase of construction by the responsible ministry. Thus, he is a public contracting entity within the meaning of § 99 No. 4 GWB. According to Article 99 (4) of the GWB, legal persons under private law apply, inter alia, to public contracting authorities in which they receive funding for the construction of hospitals from contracting authorities, with which the projects are subsidized by more than 50%. Accordingly, the contractor has issued the construction work for the first phase of construction in Europe-wide award procedures.


Costs for Helicopter Landing is Not Eligible


Only the work for the new construction of the helicopter land was intended to be given to the client in an informal form, ie outside a formal tendering procedure. He justified this by saying that helicopter land was not explicitly covered by funding by the Ministry, and therefore - unlike the other construction measures - did not constitute a public contracting entity within the meaning of section 99 no. 4 with regard to the award of construction work for the helicopter land runway GWB. In order to answer the question of whether the project is subsidized more than 50 per cent, the sub-project should be classified as a subproject, since Section 99 (4) GWB refers to a specific construction project and the new construction of the helicopter land area leads to a "complete self-life". The new construction of the helicopter landing site is an independent project which is not eligible for funding, but is financed exclusively by means of own resources and to which the right to rectification is therefore not applicable. Against this direct allocation, a company turned to the argument that the helicopter land area was part of the overall construction of the first construction phase and the services would therefore have to be formally issued. The OLG Celle gave the company the right. That the helicopter land area is part of the overall construction of the first section and the services would therefore have to be formally marketed. The OLG Celle gave the company the right. That the helicopter land area is part of the overall construction of the first section and the services would therefore have to be formally marketed. The OLG Celle gave the company the right.


Eligibility is not decisive


The OLG Celle ruled that the client applies as a contracting authority within the meaning of § 99 No. 4 GWB with regard to the entire first construction section, including the helicopter land area. It does not matter whether the costs of individual modules are eligible or not. On the other hand, the overall costs for the first construction phase, including the helicopter land field, should be considered for the question of the predominant public subsidization. Otherwise, the contracting authority would always be in a position to award the non-eligible parts of the project without a formal procedure, which would entail the risk of circumventing the law of remission.


Exception


On the other hand, the legal situation is exceptional when the subsidies are allocated to individual construction measures in the application documents, or if the applications for funding relate to specific, delimitable project parts. In the decided case, however, the helicopter land area constitutes an essential component of the overall construction measure and is associated with it in an inseparable functional context. This is due to the fact that the helicopter landing can not be erected without the new function road because it is on its roof. Therefore, the helicopter land square also does not lead to a "complete self-life" in the sense of the intended use, contrary to the view of the client.


Conclusion


The question of the predominant public subsidization within the meaning of § 99 No. 4 GWB is to be examined in principle by the volume of the concrete overall construction measure and not by the size of individual modules. The calculation of the project costs does not include the "eligible costs" if the non-eligible construction measure represents a substantial part of the eligible construction project and is an indivisible function (guiding principle)


 


 

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