Bonn under attack over rule changes

Date: 05/09/1996

By Elizabeth Wise

GERMANY'S public procurement policies are coming under fire from all sides as the clock ticks away towards the deadline set by the US administration for concessions from Bonn.

The Clinton Administration, prodded by disgruntled US electrical companies which have repeatedly lost contracts to German bidders, has threatened sanctions if Bonn does not show some sign of changing its rules by 30 September.

At the same time, the Commission has begun infringement procedures against Germany for allegedly failing to implement EU procurement rules fully.

Bonn says its accepts “certain aspects” of arguments from Brussels and Washington, and is working on reforms.

“We have one month left and this will be devoted to efforts to make our laws more compatible with European and US legislation,” said a spokeswoman in Bonn's economics ministry.

Both American businessmen and US officials complain that in Germany, when a company which has lost a bid wants the decision reconsidered, it must take its complaint to an administrative office rather than a legal arbiter.

In most countries, a court reviews the decision, increasing the possibility that an unfair award will be reversed. In Germany, a company may take its case to a civil court, but the procedure is too slow to correct the damage in time.

American firms, which have repeatedly lost out in bidding wars in Germany in recent years, complain that not only are they losing bids unfairly but they are also given no chance to rectify the situation.

Normally, Germany and the US would not pick fights with one another. But the Clinton Administration is taking a tough line in response to complaints from US giants such as General Electric Co. and Westinghouse Electric Corp., which have unsuccessfully bid for power plant projects in Germany.

GATT rules say there should be no differentiation between an American and a European bidder for such projects.

US companies are not the only ones battling for a slice of Germany's 30-billion-ecu power market. Other European firms also want a fighting chance to compete with Siemens and the German division of Asea Brown Boveri (ABB) for contracts.

Germany cannot possibly pass and enact new legislation by 30 September, but officials hope that Economics Minister Gunther Rexrodt will be able to present a draft of a new law, or at least a proposal, to parliament by then.

Bonn hopes that such a formal first step will be enough to keep the sanctions threat at bay.