Article(s) in Directive 2014/24/EU: 2(1) No. 5, 1(2)
Topic: Public contracts
Member State: GER
Court/rev. board: OLG Düsseldorf
1. IMPLEMENTATION / RELEVANT NATIONAL LEGISLATION
Art. 2(1) No. 5 of Directive 2014/24/EU has been implemented in § 103(1) of the GWB (Gesetz gegen Wettbewerbsbeschränkungen). The definition of ‘public contracts’ in the directive has been almost adopted word by word, just leaving out some details (e.g. that the contract has to be concluded in writing).
Since the beginning of the refugee crisis in 2015, the respondent city of Düsseldorf has been running refugee accommodation centres under its own responsibility. The city does not, however, provide social care services for the refugees. The city leaves this up to local welfare associations and supports these associations with public funds. After the opening of a new municipal accommodation centre in 2017, a welfare organization with a religious background took over the social care services for refugees. The organization applied to the respondent for funding for the employment of qualified staff in March 2017. Shortly afterwards, the respondent approved the application and transferred the funds. The agreement concluded between the respondent and the organization stipulated that the organization was to reimburse the funds if they were not or no longer used for the intended purpose (i.e. the provision of social care services for refugees).
The applicant, an enterprise offering care services for refugees on a commercial basis, was of the opinion that the agreement was a public contract within the meaning of Article 2(1) No. 5 of Dir 24 and thus applied for a review.
The court focused on the question whether the funding agreement between the city of Düsseldorf and the welfare organization was a public contract. The relevant element of the definition of public contract for this case was the requirement of an “acquisition” (cf. Article 1(2) of Dir 24). The court held that this necessarily involves an enforceable obligation on the part of the contractor to perform the contract, recurring on the ECJ’s judgment Helmut Müller (C-451/08). In order to substantiate their interpretation of § 103(1) GWB, they drew on the directive and argued that the mere financing of activities that may be linked to the obligation to reimburse the funds received was explicitly excluded in recital 4. Public funding has to be clearly separated from awarding public contracts as the former is characterized by the fact that the financing recipient does not enter into any independently enforceable obligation to achieve a certain success, but must repay any money received in the event of improper use. The court therefore concluded that the funding agreement was not a public contract. Other issues (such as a possible exclusion of the social care services from EU rules under Article 14 and Protocol 26 TFEU) were not discussed in the decision.