"The federal government has long been talking about reducing bureaucracy and promising to ease the burden on German companies. But instead of following up with action, the ZDB is imposing further bureaucratic shackles on businesses," says the ZDB. (Photo: © Andrea De Martin/123RF.com)
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4 November 2024
The Federal Cabinet is about to make decisions on two proposed laws. The construction industry warns of even more bureaucratic burdens and a disadvantage for small and medium-sized businesses.
The German Federal Government will soon decide on two new legislative proposals . The first is the Public Procurement Transformation Act , submitted by the Federal Ministry for Economic Affairs and Energy (BMWK). According to the BMWK, this act aims to simplify, accelerate, and digitize public procurement procedures . At the same time, it is intended to make public procurement more socially, environmentally, and innovative . It contains nearly 200 individual proposals for reforming procurement law both above and below the EU thresholds and is expected to reduce the burden on public administration and businesses by approximately €1,3 billion.
Smaller contracts are to be awarded more easily – as direct contracts without a complex tendering process – documentation requirements for companies are to be significantly reduced , and digitalization in tendering and review procedures is to be further advanced. The legally binding consideration of social and environmental aspects in tendering procedures is intended to strengthen sustainable procurement . "The planned measures are easy to implement and geared towards the realities of procurement practice. At the same time, they preserve the necessary flexibility for contracting authorities," the ministry promises.
Secondly, the Cabinet will vote on the Federal Collective Bargaining Compliance Act of the Federal Ministry of Labor and Social Affairs (BMAS). The law aims to safeguard the functioning of collective bargaining autonomy by protecting and promoting the application of collective agreements. "Broad employee involvement at the company-level partnership" is intended to establish essential prerequisites for strong social partnership . The BMAS thus aims to eliminate the disadvantages faced by companies bound by collective agreements in the competition for federal public contracts and concessions.
Companies will be required to grant their employees collectively bargained working conditions when carrying out public contracts and concessions from the federal government . Increased digitalization will be facilitated by online works council elections , which are to be piloted in the upcoming regular works council elections in 2026. Furthermore, employees will be better protected when establishing a works council and during its activities, as criminal offenses against works council bodies and their members will no longer be prosecuted upon request, but ex officio.
Operations management
Operations management
Operations management
The German Construction Industry Federation (ZDB) warns that the current drafts would mean even more bureaucracy and simultaneously disadvantage small and medium-sized enterprises (SMEs), and demands a thorough revision of both draft laws . "The federal government has long talked about reducing bureaucracy and promised to relieve the burden on companies in Germany. But instead of taking action, businesses are being saddled with even more bureaucratic hurdles . We urgently warn of the consequences that both laws would have," says ZDB Managing Director Felix Pakleppa.
He criticizes the proposed measures in the Public Procurement Transformation Act: "The draft bill from the Federal Ministry for Economic Affairs and Energy aims to make it even easier for public authorities to completely outsource the planning of their own projects . The principle of awarding contracts in lots actually applies; contracts must be divided into quantities and tendered according to specialist areas. The new law opens the floodgates for public clients to tender a contract in its entirety and leave the planning to the executing companies ."
The result is that only a few large corporations can still bid on public construction contracts. Pakleppa: "Medium-sized construction companies are at a disadvantage . And this is at the expense of taxpayers, since only broad competition among local SMEs brings good prices . Furthermore, states and municipalities will be required to specify even more social and environmental criteria in their search for construction companies. This will lead to increased documentation and verification requirements ."
The law on compliance with collective bargaining agreements means more work for everyone . "The law aims to promote competition and bind companies more closely to collectively agreed wages – but it will achieve the opposite ," explains Pakleppa. "No company will join a collective bargaining association, no employee will join a union. The companies that will benefit are not those that consistently adhere to collective agreements, but also those that only promise to comply with the collectively agreed regulations, which are further defined by a statutory instrument, for the duration of a federal contract ," he predicts.
Whether companies immediately revert to non-compliance with collective bargaining agreements afterward is irrelevant . "This approach cannot achieve lasting collective bargaining agreements . Legislative requirements for compliance with such agreements merely create new bureaucratic hurdles and costs for everyone : for companies and the public sector. Documentation and audits will increase on both sides, placing an additional burden on small and medium-sized enterprises (SMEs) in particular." It is therefore urgently necessary to revise both laws. "Both drafts are the opposite of what we need."
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