DIW Berlin Warns of Constitutional Risks in Eliminating Lot-Based Contracts Priority for SMEs
The German Institute for Economic Research (DIW Berlin) has issued a report emphasizing the significance of lot-based contracts in awarding public construction projects to small and medium-sized enterprises (SMEs). The report cautions that eliminating the priority for such contracts may pose constitutional risks due to potential breaches of competitive fairness and equal treatment principles.
SMEs play a crucial role in the construction industry, driving public investments and regional economic stability. Ensuring their participation in public contracts guarantees subsequent service delivery and fosters competition. Lot-based contracting, which divides projects into smaller lots, increases the number of potential bidders, enhancing price and quality competition. This approach also reduces project delays and promotes innovative, specialized solutions.
The Federal Council's proposed abolition of priority for lot-based contracting could hinder SME participation in public tenders. In an economy dominated by SMEs, fair competition for government contracts is vital. The priority for lot-based contracting reflects the principle of equality as per Article 3 of the German Basic Law.
The DIW Berlin report underscores the importance of lot-based contracts for SMEs in the construction industry. Abolishing their priority could pose constitutional risks and hinder fair competition for government contracts. Stakeholders should consider the implications for SME participation and regional economic stability.
