Indirect Awards in Procurement Law 2026

Definition: Indirect awards refer to procurement processes in which contracts are not awarded by the public funding body itself, but by a private or public grant recipient funded by it; whether procurement law applies depends on whether the grant recipient qualifies as a contracting authority.

Last updated: January 2026 · Legal basis: § 99 GWB; Art. 2 Directive 2014/24/EU; Federal Budget Code (BHO); ANBest-P; state aid law

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Concept of indirect awards

In indirect awards, public funds do not flow directly into a procurement by the state; instead, the state funds a third party (grant recipient), who in turn awards contracts. The question of whether the grant recipient must apply public procurement law in doing so is one of the most complex questions in German and European procurement law.

Typical constellations:

• Non-profit associations receive public grants and use them to award works contracts.
• Research institutions receive funding and use it to procure equipment.
• Hospitals (private operators) receive KHZG funds and award IT contracts.

Applicability of procurement law to grant recipients

The applicability of procurement law depends not on the origin of the funds but on the legal nature of the grant recipient – specifically on whether it meets the requirements of § 99 GWB (public contracting authority).

Case 1: Grant recipient is a contracting authority

If the grant recipient is already a public contracting authority under § 99 GWB (e.g. a public-law body, a state-funded institution), it must apply procurement law without restriction – regardless of whether the funds come from its own budget or from grants.

Case 2: Grant recipient is not a contracting authority

If the grant recipient is not a contracting authority, it is in principle not subject to procurement law. The funding body may, however, require application of procurement law through ancillary provisions (ANBest-P, ANBest-Gk); breach of these ancillary provisions can lead to recovery of the grant.

Grant law and procurement duty

Grant law often obliges grant recipients to observe procurement-law principles even when they are not contracting authorities within the meaning of the GWB. The General Ancillary Provisions for Grants (ANBest-P) contain procurement principles that grant recipients must observe in order not to have to repay the funds.

Typical requirements in ANBest-P:

• Obtaining at least three quotes for larger procurements
• Documentation of the award decision
• Principle of economic efficiency

State aid law dimension

When a public contracting authority grants funds to a private undertaking, this may raise state aid issues; the award of contracts by the grant recipient can also, in some circumstances, be relevant under state aid law. Compliance with procurement law in these cases also serves to avoid state aid risks.

FAQ

Must a non-profit association that receives funding put contracts out to tender? Only if it meets the requirements of § 99 GWB (contracting authority) or if the ancillary provisions of the funding decision impose procurement obligations.

What happens if a grant recipient breaches procurement-related ancillary provisions? The funding body can recover the grant in whole or in part; the amount of the recovery depends on the severity of the breach.

Is the ANBest-P binding on all federal authorities? Yes; ANBest-P is binding on federal grant recipients; the Länder have analogous regulatory frameworks (Länder ANBest-P).

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Last updated: January 2026 All information without guarantee. For legally binding advice, please contact a law firm specialising in procurement law.