What is Lot Division?
Lot division (Losaufteilung) is the practice of splitting a public procurement into multiple smaller lots, each of which can be awarded separately to different bidders. German procurement law establishes a strong presumption in favor of lot division: under Section 97 (4) GWB, contracts must be divided into lots by trade (Fachlose) and by region (Teillose) where this is technically and economically feasible. Contracting authorities must justify any decision not to divide a contract into lots.
Lot division by trade means dividing the contract according to different professional disciplines or service categories. For example, a building construction project might be divided into lots for earthworks, structural work, electrical installations, plumbing, and finishing work. Lot division by region means dividing geographically dispersed contracts according to areas or locations, such as separate lots for facility management in different cities or regions.
The purpose of lot division is twofold. First, it promotes competition by enabling smaller, specialized companies to bid on portions of the contract that match their capabilities, rather than being excluded because they cannot deliver the entire scope. Second, it supports the political objective of ensuring that small and medium-sized enterprises (SMEs) have fair access to public contracts. The "think small first" principle, embedded in both German and EU procurement policy, is operationalized primarily through lot division requirements.
Why It Matters for Bidders
Lot division creates significant opportunities for SMEs that might otherwise be unable to compete for large consolidated contracts. Companies should actively monitor whether contracts are appropriately divided and, if they believe that a failure to divide a contract into lots restricts their access, raise this issue through bidder questions or formal complaints.
For larger companies, lot division means they may need to submit bids for multiple lots within the same procedure. Many procurement procedures allow bidders to submit offers for individual lots, combinations of lots, or all lots. Contracting authorities may apply discount mechanisms for combined lot awards, creating strategic pricing decisions for bidders.
Legal Framework
The lot division requirement is established in Section 97 (4) GWB and further detailed in Section 30 VgV. For construction procurement, VOB/A Section 2 Paragraph 2 emphasizes division by trade. EU Directive 2014/24/EU Article 46 requires contracting authorities to explain their reasons for not subdividing into lots. The European Commission has issued guidance encouraging lot division as a key tool for promoting SME access to public procurement.