Negotiated Procedure

The negotiated procedure (German: Verhandlungsverfahren) is one of the five procedure types for awarding public contracts above the EU thresholds. Its defining feature is that the contracting authority may negotiate with selected bidders on the bids submitted – on price, technical specifications, delivery terms and contract conditions. This sets it apart from the open procedure and the restricted procedure, where after bid submission only clarifying clarification discussions, but no genuine re-negotiation, are permitted.

The negotiated procedure is governed for supply and service contracts by § 17 VgV, and for construction works by § 3a EU and § 3b EU VOB/A. It is not a default procedure: under § 119(2) GWB, only the open and the restricted procedure are available to the authority by free choice; the negotiated procedure, the competitive dialogue and the innovation partnership are only available where a statutory exception applies.

With and without a call for competition

Procurement law distinguishes two variants:

• With a call for competition (standard): The authority publishes a contract notice. Interested companies submit a request to participate; after checking the suitability criteria, the authority invites only suitable candidates to submit bids and negotiate. At least three candidates must be invited (§ 51(2) VgV).
• Without a call for competition (exception): The authority approaches selected companies directly without prior publication. This variant is only permitted in very narrow exceptional cases under § 14(4) VgV and is dealt with in detail under negotiated procedure without competition.

When is the negotiated procedure permitted?

The negotiated procedure with a call for competition may only be chosen under § 14(3) VgV when one of the conditions listed there exhaustively is met – for example, where the authority's needs cannot be met without adapting readily available solutions, where the contract includes conceptual or innovative solutions, where the contract cannot be awarded without prior negotiations due to specific circumstances (such as complexity or legal/financial risks), where the requirement cannot be specified with sufficient precision, or where a prior open or restricted procedure produced only irregular or unacceptable bids.

Typical scope of application

In practice the negotiated procedure is used above all where the subject matter cannot be fully specified in advance: complex IT projects, bespoke consulting and design services, demanding construction projects, or procurements with a high conceptual content. For bidders it offers the chance to refine their own solution through dialogue – but at the same time demands more effort in the bidding and negotiation phase than a single-stage open procedure.

The negotiated procedure is determined by EU law and implemented nationally at two levels – at statutory level in the GWB and at regulation level in the VgV and VOB/A-EU.

EU legal basis. EU Procurement Directive 2014/24/EU governs the negotiated procedure in Article 29 (competitive procedure with negotiation) and in Article 32 (negotiated procedure without prior publication). The directive defines it as a special procedure whose use is tied to the enumerated conditions of Article 26.

National basis: GWB. § 119 GWB names the five procedure types and provides in subsection 2 that only the open and the restricted procedure are available to the contracting authority by free choice. The negotiated procedure – like the competitive dialogue and the innovation partnership – is "only available insofar as this is permitted under this Act". The choice therefore requires justification and must be documented in the procurement file.

Choice of procedure: § 14 VgV. § 14(3) VgV lists exhaustively the grounds on which a negotiated procedure with a call for competition (or a competitive dialogue) is permitted. § 14(4) VgV governs the – even narrower – conditions for a negotiated procedure without a call for competition. Both provisions are exceptions to the default procedures and must be interpreted narrowly.

Procedural steps: § 17 VgV. § 17 VgV governs the negotiated procedure with a call for competition for supply and service contracts in detail:

• Call for competition (§ 17(1)): Any interested company may submit a request to participate.
• Time limits (§ 17(2), (3), (6)): The minimum period for requests to participate is 30 days from dispatch of the notice, at least 15 days in urgent cases; for initial bids a minimum period of 30 days from the invitation applies.
• Initial bids (§ 17(4)): Only companies invited to bid submit indicative initial bids.
• Obligation to negotiate (§ 17(10)): The authority generally negotiates with bidders on the initial and any subsequent bids in order to improve their content. Minimum requirements and award criteria are excluded from negotiation.
• Award without negotiation (§ 17(11)): The authority may award the contract on the basis of the initial bids without entering into negotiations – but only if it has reserved this possibility in the contract notice.
• Equal treatment (§ 17(13)): During negotiations all bidders must be treated equally; confidential information may not be passed on in a discriminatory manner.
• Final bids (§ 17(14)): On closing the negotiations the authority sets a uniform deadline for final bids (BAFO) and awards on the basis of the award criteria.

Minimum number of candidates: § 51 VgV. Under § 51(2) VgV the intended minimum number of candidates to be invited in the negotiated procedure may not be lower than three (by comparison: at least five in the restricted procedure).

Construction works. For construction contracts above the thresholds, § 3a EU VOB/A governs the admissibility conditions and § 3b EU VOB/A the conduct of the negotiated procedure, largely in parallel to the VgV.

Legal protection. If a contracting authority chooses the negotiated procedure without sound justification, or breaches the principle of equal treatment, bidders can challenge this in review proceedings before the public procurement tribunal – this regularly requires a timely complaint under § 160(3) GWB.

A university hospital wants to procure a new hospital information system (HIS) and integrate it into its existing IT landscape. The estimated contract value is €6.5 million over six years, well above the EU threshold for services (€216,000 from 1 January 2026). It must therefore be tendered EU-wide under the VgV.

Choice of procedure. The hospital cannot fully specify the requirements for interfaces, migration and workflows in advance; the optimal solution only emerges in dialogue with the providers. A ground under § 14(3) VgV is therefore met (conceptual/innovative solution, requirement not specifiable with sufficient precision). The contracting authority accordingly chooses the negotiated procedure with a call for competition and documents this in the procurement file.

Process:

1. Notice and call for competition. Publication of the contract notice on TED. Eight companies submit a request to participate; the hospital checks the suitability criteria and selects four suitable candidates (above the minimum of three under § 51(2) VgV).
2. Invitation and initial bids. The four selected bidders receive the tender documents with minimum requirements and award criteria and submit indicative initial bids.
3. Negotiation rounds. Over two rounds the hospital negotiates individually with each bidder on architecture, migration concept, service levels and price. Minimum requirements and award criteria remain unchanged (§ 17(10) VgV); all bidders are treated equally.
4. Final bids (BAFO). After closing the negotiations, the hospital sets a uniform deadline for final bids.
5. Award. Before the award, the hospital informs the unsuccessful bidders under § 134 GWB and observes the standstill period. The contract is awarded to the most economically advantageous tender.

An IT systems house using Patterno-HIT for market monitoring receives the notice on the day of publication in its daily briefing. The AI search profile specifically filters out such complex negotiated procedures in the it-digitalisierung field, so the sales team can decide early whether to participate – which matters, because the participation deadline falls well before the actual bidding phase.

The negotiated procedure is more demanding than the open procedure – mistakes occur on both the authority and the bidder side:

• Negotiated procedure without a sound exceptional ground. The most common pitfall: authorities choose the negotiated procedure out of convenience or for expected flexibility, although no ground under § 14(3) VgV applies. This is challengeable in review proceedings and regularly leads to cancellation.
• Negotiating minimum requirements or award criteria. Under § 17(10) VgV these are precisely the elements excluded from negotiation. Changing them later breaches the transparency principle and the principle of equal treatment.
• Unequal treatment in the negotiation rounds. A bidder's solution ideas may not be passed on to competitors without consent; information advantages and differing negotiation depth are not permitted (§ 17(13) VgV).
• Forgetting to reserve award without negotiation. If the authority wants to be able to award on the basis of initial bids, it must expressly reserve this in the notice under § 17(11) VgV. Without the reservation, it must negotiate.
• Underestimating participation deadlines (bidder side). The deadline for the request to participate falls well before the bid submission. Waiting for the bidding phase means missing the boat – candidate selection is long since complete.
• Incomplete documentation. Negotiation rounds, the substance of discussions and evidence of equal treatment must be recorded fully in the procurement file. Missing minutes are the biggest weak point in a dispute.

The following recommendations have proven effective for a legally sound and efficient negotiated procedure – for authorities and bidders alike:

• Justify the choice of procedure cleanly. Authorities should name the applicable ground under § 14(3) VgV specifically and document it in the procurement file. A generic justification ("too complex") is not enough.
• Define minimum requirements early and precisely. Because minimum requirements and award criteria are non-negotiable, they belong clearly in the tender documents. Anything intended to be negotiated must be deliberately left open.
• Structure the negotiation rounds. A fixed agenda, uniform questions to all bidders and minuted results safeguard equal treatment under § 17(13) VgV. It is sensible to plan the number of rounds in advance and communicate it transparently.
• Consider reserving award without negotiation. Those who want to stay flexible should reserve in the notice, under § 17(11) VgV, the right to award on the basis of the initial bids – which saves time when an initial bid is already convincing.
• Document equal treatment. Every negotiation round, every additionally provided piece of information and every deadline belong in the procurement file. In review proceedings this is the central line of defence.
• Bidders: take the call for competition seriously. Because the deadline for the request to participate falls before the bid submission, early market monitoring is decisive. Patterno-HIT aggregates more than 180 procurement platforms and uses AI to filter out exactly the negotiated procedures that match your business profile – including the often-overlooked participation deadlines.
• Prepare for the negotiation like a sales process. Bidders should enter the negotiation with clear room for manoeuvre, calculated floors and a consistent solution concept. Improvising here gives away negotiating advantages.