Ineffectiveness of the Contract in Procurement Law 2026 – Legal Basis and Procedure

Ineffectiveness of the contract: procurement-law grounds for nullity, time limits to assert it, legal consequences and exceptions at a glance.

Definition: In procurement law, ineffectiveness of the contract refers to the legal nullity of a public contract determined by a competent review body following serious breaches of procurement rules at the time of contract conclusion.

Last updated: January 2026 · Legal basis: §§ 135, 168 (2) GWB, Directive 2007/66/EC, BVergG 2018

Structure of ineffectiveness in procurement law

Ineffectiveness of the contract is the most severe sanction available under procurement law and serves to ensure effective enforcement of the requirement of competition even after a contract has been concluded. The procurement-law concept of ineffectiveness was introduced into European law by Remedies Directive 2007/66/EC and implemented in Germany in § 135 GWB. It is the counterweight to the binding nature of contracts under private law: even a validly concluded contract can be subsequently declared ineffective if it came about as a result of a serious breach of procurement law.

Procurement-law ineffectiveness has to be distinguished from general civil-law nullity:

Feature	Civil-law nullity (§§ 134, 138 BGB)	Procurement-law ineffectiveness (§ 135 GWB)
Occurrence	Automatic (ex lege)	Only on a finding in review proceedings
Time limit	None	30 days / 6 months (§ 135 (2) GWB)
Who may invoke	Anyone	Only bidders with standing
Exception	None	Mandatory continuation in the general interest possible

Grounds for ineffectiveness

§ 135 (1) GWB sets out four groups of cases that can lead to the ineffectiveness of the contract:

1. Unlawful direct award (de facto award)

The most common and most serious form is the complete circumvention of the procurement procedure. If a contracting authority awards an EU-tender contract directly, without any notice or procedure, the resulting contract is ineffective. The same applies to unlawful reliance on exceptions, for example where the contracting authority has wrongly chosen a negotiated procedure without notice.

2. Breach of the standstill period

If the contracting authority makes the award before the statutory standstill period (at least 15 calendar days after informing the bidders, § 134 GWB) has expired, and no valid contract has come into existence as a result of that breach, the Procurement Chamber can declare ineffectiveness.

3. Disregard of an interim injunction

If the contracting authority concludes the contract even though the Procurement Chamber had ordered the suspensive effect of a review application or a court had issued an interim injunction, the contract is ineffective.

4. Breaches in framework agreements and dynamic systems

On call-offs from framework agreements or dynamic purchasing systems, breaches of the relevant rules can lead to the ineffectiveness of the individual call-off contract.

Procedure for asserting ineffectiveness

Ineffectiveness must be asserted by way of a review application to the competent Procurement Chamber. Strict time limits apply:

30 days from actual knowledge of the procurement breach (where the applicant has become aware of the award)
30 days from publication of a notice of contract award in the EU Official Journal
6 months from the conclusion of the contract as an absolute longstop (applies where no notice has been published)

Legal consequences

A finding of ineffectiveness by the Procurement Chamber or the Higher Regional Court (OLG) takes retroactive effect (ex nunc or ex tunc, depending on interpretation). The contract is treated as never having existed. This has the following consequences:

Restitution under the law of unjust enrichment for services already rendered
No contractual obligation on the contracting authority to pay for future services
Possible damages claims by bidders who were passed over
Obligation to re-tender the contract

Exception: continuation in the general interest

By way of exception, the Procurement Chamber may refrain from declaring ineffectiveness where overriding reasons in the general interest require the contract to continue (§ 135 (3) GWB). Such reasons must be interpreted restrictively and can exist, for example, where immediate termination of the contract would endanger public services of general interest. In that case, the Procurement Chamber must:

Impose an effective sanction on the contracting authority (fine)
Shorten the term of the contract

Austria

In Austria, the ineffectiveness of the contract is governed by § 341 BVergG 2018. The Federal Administrative Court and the regional administrative courts can, on application, declare the nullity of contracts concluded under serious breaches of procurement law. The time limits and grounds are similar to German law, but differ in detail.

FAQ

Can the ineffectiveness also be invoked by the contractor? No. In principle, only bidders who were passed over or potential bidders with an interest in the contract have standing. The contractor itself cannot invoke the ineffectiveness of its own contract under § 135 GWB.

What happens to remuneration already paid if the contract is declared ineffective? Payments already made must be reclaimed under the principles of unjust enrichment (§§ 812 et seq. BGB), to the extent that the contractor has not rendered any services. A claim for compensation by way of value exists for services that have been rendered.

Can the contracting authority avoid a threatened ineffectiveness application? If the contracting authority publishes the contract award in the EU Official Journal (voluntary ex-ante transparency notice), the 30-day period starts to run earlier and may mean that applications are out of time before the contract is concluded.

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