What is Procurement Debarment?
Procurement Debarment is the exclusion of a company from participating in public procurement procedures. It is imposed when serious grounds exist that undermine trust in a company's reliability and integrity.
Grounds for Debarment
German law distinguishes between mandatory and discretionary exclusion grounds:
Mandatory grounds (§ 123 GWB):
- Formation of criminal or terrorist organizations
- Bribery and corruption
- Fraud and subsidy fraud
- Money laundering and terrorist financing
- Child labor and human trafficking
- Non-payment of taxes or social contributions
Discretionary grounds (§ 124 GWB):
- Violations of environmental, social, or labor obligations
- Insolvency
- Serious professional misconduct
- Anti-competitive agreements (cartels)
- Significant poor performance on prior contracts
Duration
- Mandatory grounds: Up to 5 years from conviction
- Discretionary grounds: Up to 3 years from the relevant event
- The period can be shortened through self-cleaning measures
Competition Register
Since 2021, the Federal Cartel Office maintains a competition register recording companies with serious misconduct. Contracting authorities must consult it for contracts above certain thresholds.
Self-Cleaning as a Way Out
Companies can regain eligibility through self-cleaning measures including compensation, cooperation with authorities, clarification of circumstances, and implementation of compliance measures.