Hesse Procurement Law: New Thresholds & Collective Bargaining Compliance

Higher Thresholds for Direct Awards

The core of the reform is significantly raised thresholds. Going forward, supplies and services up to 100,000 euros and construction services up to 750,000 euros can be awarded directly with comparative quotes but without a formal procurement procedure. Previously, the value limit here was uniformly just 10,000 euros, according to the Ministry of Economic Affairs. However, even below the new thresholds, comparative quotes must still be obtained before a contract is awarded.

The law aims to reduce bureaucracy in the awarding of public contracts and to accelerate procedures. At the same time, it is about greater collective bargaining compliance: fair pay is to play a central role in procurement. In the future, companies that offer jobs covered by collective agreements should no longer be disadvantaged when bidding for public contracts in Hesse.

Collective Bargaining Compliance as the Core of the Reform

Previously, firms paying dumping wages often had a competitive advantage in procurement, critics of the status quo say. The amendment is intended to ensure that collective bargaining compliance becomes largely mandatory in contract awarding. This moves pay in line with collective agreements to the center of procurement practice.

The regulations primarily affect investments commissioned by the state, counties, cities, and municipalities – for example, the renovation of roads and schools. The higher exemption limits are intended to allow these projects to be implemented more quickly, without having to wait for multiple formal tendering procedures.

Reactions and Criticism from the DGB

The DGB Hessen-Thuringia welcomed the law on Thursday in a statement. It is a "großer Schritt für gute Arbeit in Hessen", the trade union announced on Thursday in a statement. The DGB emphasized that companies with jobs covered by collective agreements would no longer be disadvantaged in the future.

At the same time, the DGB voiced criticism: unlike for construction contracts, the collective bargaining compliance requirement has so far not applied to the same extent to supplies and services. In the union's view, this gap still needs to be closed so that fair wages take effect in all areas of public procurement.

With the funds from the federal government's debt-financed special fund, additional investment funds will be available in the coming years. The Hessian amendment is intended to ensure that these monies can flow swiftly into concrete projects. The Ministry of Economic Affairs sees this as an important contribution to the modernization of the state's infrastructure.