Ineffective Contract in Procurement Law 2026 – Nullity and Consequences

Ineffective contract in procurement law: when is a public contract void? De facto award, grounds for ineffectiveness and consequences for contracting authorities.

Definition: An ineffective contract in the procurement-law sense is a public contract that, despite having been concluded, produces no legal effect because it was concluded in breach of essential procurement rules – in particular without the prescribed procurement procedure or in disregard of the standstill period.

Last updated: January 2026 · Legal basis: § 135 GWB, § 101b GWB (former), Directive 2007/66/EC

What makes a procurement contract ineffective?

Procurement law has its own grounds for ineffectiveness that go beyond the general civil-law rules on nullity (§§ 134, 138 BGB). These specific procurement-law grounds for ineffectiveness are intended to ensure that serious procurement breaches can be effectively sanctioned even after a contract has been concluded.

Under § 135 GWB, a public contract is ineffective if the contracting authority:

Awarded the contract without conducting a prescribed procurement procedure (a so-called de facto award or illegal direct award)
Made the award even though the statutory standstill period had not yet expired and a review application was pending
Awarded the contract even though the Procurement Chamber had ordered the suspensive effect of the review application
In the case of a framework agreement or a dynamic purchasing system, has breached the relevant rules

De facto award

The most important case of ineffectiveness in practice is the de facto award: awarding a contract that should have been put out to tender EU-wide, without any formal procurement procedure. This breach is sanctioned particularly severely, because it eliminates competition entirely. Companies that were passed over can have the ineffectiveness of the contract declared by the Procurement Chamber.

Asserting ineffectiveness

Ineffectiveness of a contract under § 135 GWB must be actively asserted by way of a review application. It does not arise automatically. The application must be filed within 30 calendar days of becoming aware of the procurement breach, and at the latest within six months of the conclusion of the contract (§ 135 (2) GWB). Where the conclusion of the contract is published in the EU Official Journal, the time limit is shortened to 30 days from publication.

Legal consequences of ineffectiveness

If the Procurement Chamber or the Higher Regional Court (OLG) declares the contract ineffective, it is void from the outset. This has significant practical consequences:

The contractor no longer has any claim to the agreed remuneration (restitution under the law of unjust enrichment is possible)
Services already rendered can be settled under the law of unjust enrichment
The contracting authority must re-run the procurement procedure
Damages claims by bidders who were passed over are possible

Exception: continuation in the public interest

In specific circumstances, the Procurement Chamber may refrain from declaring the contract ineffective if overriding reasons in the general interest require the contract to continue. In that case, however, it must impose a fine on the contracting authority and may shorten the contract term (§ 135 (3) GWB).

FAQ

Is a contract automatically ineffective if it has been concluded in breach of procurement law? No. Ineffectiveness under § 135 GWB must be actively asserted within the statutory time limits. After those time limits have expired, the contract is effective even if it was concluded in breach of procurement law.

Who can assert ineffectiveness? Any company that has an interest in the contract and that has been harmed or could be harmed by the procurement breach can file a review application.

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