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Germany’s parliament cleared legislation that would establish a federal competition registry for procurement contracts, to contain information on companies convicted of crimes and misdemeanors such as money laundering and tax evasion.
The Bundesrat, the parliament’s upper house, approved the bill July 7, in a move lawmakers say will increase transparency by making it easier for government bodies awarding public tenders to determine whether there are reasons to exclude companies for receiving these public procurements.
The bill aims to do this by creating a nationwide electronic competition registry listing crimes and misdemeanors committed by companies, including bribery, human trafficking, financing terrorism, money laundering, tax evasion and withholding social security contributions.
Government bodies are already required by German law to determine whether there are grounds to exclude potential contractors from an offer, but difficulties in conducting these background investigations have allowed companies with criminal histories to obtain procurements, lawmakers wrote in their justification for the bill.
The competition registry should thus ensure that public tenders are “only awarded to firms that haven’t committed any substantial legal violations and that compete fairly,” the lawmakers said.
Under the bill, public authorities awarding contracts over 30,000 euros would be required to check the registry for entries.
The bill was approved by the Bundestag, the lower house, on June 1. It will now be submitted to the federal president for his expected signature. When signed, the law will go into effect the day after its publication in Germany’s Federal Law Gazette.
The bill doesn’t automatically exclude companies in the register from being awarded contracts, but those that find themselves listed might face problems, attorneys said.
“It will be compulsory to check the register before awarding a contract over a certain amount,” Oliver Geiss, a partner at Squire Patton Boggs, told Bloomberg BNA in a July 7 interview. “So it can have pretty damaging consequences for companies that get onto this registry.”
Public officials might also proceed more carefully with awarding contracts to companies listed on the registry, he added. “If something goes wrong, this person will have fingers pointed at them—I think indirectly it will have a very strong effect.”
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