We keep our promise to NATO allies and increase the defense budget year after year. In 2031, Germany will again provide 10 percent of all NATO capabilities. To do this, we need a defense budget equal to two percent of the gross domestic product. (Defense Minister A. Kramp-Karrenbauer at the Munich Security Conference 2020)
In future, more and more money will be available for the defense budget in order to be able to meet Germany's ever increasing, more volatile and complex security and defense policy challenges.
The supply of soldiers of the Bundeswehr with functional and best possible equipment as well as the functionality of critical infrastructures must be guaranteed at all times. The Defense Department has 44.9 billion euros available for defense spending in 2020.
In order to ensure that the Bundeswehr soldiers are provided with the best possible equipment for the fulfillment of their constantly expanding security and defense policy tasks and to be able to meet all infrastructure requirements in this connection, the armed forces must be appropriately equipped, as well as national, innovative ones , powerful and competitive security and defense industry. In this context, the country's own national security and defense industry is of strategic importance, both from a security and defense policy perspective and from a technology and industrial policy perspective. This is expressed, among other things, by the “Strategy Paper for Strengthening the Security and Defense Industry” recently approved by the Federal Cabinet on February 12, 2020.
In the defense sector, the Federal Republic of Germany, as a contracting authority, is a central customer for armaments, services and research and development services. Both sides are therefore interested in continuing to optimize the procurement process in the security and defense sector, especially if the volume of arms contracts will also multiply due to increased budgetary resources. In this respect, the client and contractor are facing a common challenge: on the one hand to take into account the increased regulatory requirements in complex procurement processes and on the other hand to increase the throughput of contracts.
The representatives of the Federal Office for Equipment, Information Technology and Use of the Bundeswehr (BAAINBw) together with the representatives of the Bundesverband der Deutschen Sicherheit- und Defenseindustrie e. V. (BDSV) is now on its way to optimize procurement. Over a period of almost two years (2018/2019), the representatives on both sides discussed, discussed and finally discussed a new contract (BAAINBw procurement contract) for procurements in the large range between 428,000 euros and below 25 million euros can agree on a consolidated version. The new contract has been in force since January 1, 2020. In particular for the protection of typical contractual risks, such as the areas of liability, warranty and contractual penalty regulation, it was possible to develop uniform solutions for a large number of contractual constellations and to adopt them in the new contract. Lengthy contract negotiations between the contracting parties on these critical points, which in the past were often the cause of a delay in the entire procurement process, will be a thing of the past in the future.
Die Beweggründe für eine solche Initiative sind vielfältig. Einzelne Regelungen der bis dato existierenden Vertragsmuster wurden den technischen Entwicklungen in verschiedenen Rüstungssparten nicht mehr gerecht. Neben wichtigen inhaltlichen Aspekten des neuen Mustervertrages wurden in paritätisch besetzten Expertenrunden intensiv aktuelle Problemfelder, die unterschiedlichen Interessenlagen der Akteure, multilaterale Vertragsbeziehungen und die hierzu unterschiedlichen Anforderungen an eine neue Mustervertragsregelung betrachtet und in den verschiedenen Gremien konstruktiv gelöst. Auch zum Teil sehr strittige Themen, die in der Vertragspraxis zu großen Herausforderungen führen, wurden in den Schwerpunktarbeitsgruppen nicht ausgeklammert und immer wieder kritisch hinterfragt. Beispielhaft seien hier folgende Schwerpunktthemen benannt: Haftungsbegrenzungen in Abhängigkeit vom Auftragswert und bei projektspezifischen Sonderrisiken sowie die Begrenzung zu vereinbarender Vertragsstrafen. Zu nennen ist darüber hinaus auch eine größtmögliche Ausgewogenheit in den Vertragsregelungen zu den Gewährleistungsfällen, zum Rücktritt und zur Kündigung des Vertrages. Nicht zuletzt konnte auch eine insgesamt angemessene Vergütungsregelung im Rahmen der vorgegebenen Preisbildungs- und Preisprüfungsmechanismen gemäß der Verordnung PR Nr. 30/53 über die Preise bei öffentlichen Aufträgen (VO PR 30/53) sichergestellt werden.
The working groups moderated by the respective negotiators of the BAAINBw and the BDSV led to important insights into the different needs and requirements for a uniform contract. The clauses known in the BAAINBw under the designation B070 were used as a basis for discussion. This represents a kit of text modules that are generally used selectively by the BAAINBw (typically for contracts with procurement volumes between EUR 500,000 and EUR 25 million - each gross).
The various working groups were not just staffed by lawyers. Due to the fact that companies from different market groups as well as the different areas (sales, organization, technology) were represented in the main topics, it was possible to examine the respective contractual decision for a specific new regulation in the procurement contract in detail from various points of view and requirements. In this respect, it was particularly important not to develop solutions in isolation in department-specific specialist groups, but rather to incorporate the technical, technical, business, sales and legal perspective in a joint dialogue into the work of the individual focus groups. This was the only way to determine the respective perspectives of the stakeholders and their needs in an effective process and to reduce or avoid complex, subsequent coordination efforts. It can therefore be expected that a uniform contract model can also achieve broad industry acceptance.
The client and the contractor were equally keen to create a balanced set of rules when revising the procurement contract. Only in this way could certainty be obtained for future joint procurement projects that the contract will meet with the greatest possible acceptance in its application.
Due to the fact that the composition of the new contract contains regulations for several contract arrangements that can be applied, both contract parties will continue to be responsible for checking and selecting appropriate regulations for the respective contract situation.
From the start of the negotiations, the industry side was concerned with negotiating formulations for the individual text modules with the BAAINBw, which in individual cases do not release the companies facing a clause from the responsibility of carefully reflecting on and examining the clauses used by the authorities. However, the formulations negotiated should give companies the certainty that a satisfactory degree of balance has already been ensured for the clauses used by the industry association together with the BAAINBw.
In addition to procurement projects above EUR 25 million, contract constellations are excluded from the scope of the new procurement contract: projects that were initiated by December 31, 2019 and thus started before January 1, 2020. Also excluded from the scope of the new contract model are pure research and development contracts as well as international cooperation and procurement through international procurement organizations.
From the industrial point of view, there was also a special topic in the area of subcontracting, namely in the event of approval by the client regarding the legal consequences of a subsequent rejection of a subcontractor. From an industry perspective, a comprehensive topic in the discussion was also the endeavor to achieve clarity with regard to all applicable rules and regulations upon conclusion of the contract, so that in the event of subsequent changes, the basis for the inevitable changes to the contract can be traced at any time.
Overall, based on the negotiation status reached on December 3, 2019, there was agreement between the BAAINBw and the industry association BDSV to activate the status of the B070 clause of the BAAINBw reached by December 20, 2019, and accordingly from January 1, 2020 To bring application. There is also agreement between BAAINBw and industry that the application of the B070 clause should be accompanied by training on both sides that is made mutually transparent.
In the joint closing event on December 3, 2019 in Koblenz, the parties also agreed to see a living set of instruments in the new contract model, which can react transparently to technical, technical, organizational and legal developments for market participants whenever necessary . The revision of the BAAINBw procurement contract is also only the beginning of an extensive amendment of all relevant contracts in contractual cooperation; this applies in particular to the regulatory models for contracts in the so-called sub-threshold range (ie below EUR 500,000 gross), which are of particular practical importance from the point of view of medium-sized industrial companies.
Another joint project has already been decided: The area of research and development that is important for the innovative strength of the German security and defense industry should be put on the contractual test bench so that the corresponding contract for research and development services can also be given a new contractual structure. It will be possible very soon to be able to contribute to accelerating the transfer of research and development results into marketable or procurable products and services with a consolidated contract model for research and development services to support innovation-promoting procurement. This is intended to facilitate access to innovative services for the best possible and functional equipment for Bundeswehr soldiers and to ensure that critical infrastructures are always up to date.
Authors: Kornelia Lehnigk-Emden is Vice President of the BAAINBw. Dr. Hans Christoph Atzpodien is the general manager of the BDSV.