What is a Direct Award?
A direct award (Direktvergabe) is the simplest form of procurement under German law, applicable only to contracts of very low value. In this procedure, the contracting authority may procure goods, services, or works directly from a supplier of its choice without conducting a formal competitive tender or inviting multiple offers. The contracting authority is not obligated to compare prices from different suppliers, though it should still ensure that the procurement represents good value for public funds.
The direct award is only permissible below specific value thresholds, which are typically set by the individual German federal states or the respective contracting authority's internal procurement guidelines. Common thresholds for direct awards range from 1,000 to 5,000 euros for supplies and services, though some jurisdictions allow direct awards up to higher amounts. The UVgO provides the general framework but leaves the exact thresholds to be determined by the applicable budgetary regulations.
Despite the absence of formal competitive requirements, contracting authorities must still adhere to general principles of sound financial management, including ensuring economical use of public funds. In practice, many contracting authorities maintain internal policies requiring informal price comparisons even for direct awards, and all procurement decisions must be documented, including the justification for choosing a particular supplier.
Why It Matters for Bidders
For bidders, direct awards represent a segment of the public procurement market that is largely invisible. Since there is no publication requirement, companies can only access these opportunities through established relationships with contracting authorities, active marketing, or being listed in relevant supplier databases. Building direct contacts with procurement offices and maintaining visibility through catalogs, frameworks, or marketplace registrations can increase the likelihood of being considered for direct awards.
While individual direct awards tend to be small in value, their cumulative volume can be significant. For small and medium-sized enterprises, direct awards can serve as an entry point into public procurement, helping to build a track record and relationships that can lead to larger contract opportunities.
Legal Framework
The direct award is regulated in Section 14 UVgO for supply and service contracts below the EU thresholds. For construction works, analogous provisions exist in the VOB/A. The applicable value thresholds are determined by the relevant budgetary regulations (Haushaltsrecht) of the respective federal state or municipality. No equivalent exists above the EU thresholds, where formal competitive procedures are always required.