Tenders above the estimate: cancel, negotiate, retender

Before deciding, the client needs to establish where the difference comes from. Three causes have to be kept apart, because each calls for a different route.

The diagnosis is also the test of whether cancellation comes into consideration at all. As shown below, the case law cited only accepts reliance on a lack of funds if the estimate itself was sound. A diagnosis that points to an out-of-date or incomplete estimate largely rules out this route. How the tenders are checked and evaluated in detail is covered in the article on checking and evaluating tenders.

Section 17(1) VOB/A (the German rules on the award of construction contracts, Part A) lists three grounds for cancellation. The tender procedure may be cancelled where "no tender has been received that meets the tender conditions" (no. 1), where "the tender documents must be fundamentally changed" (no. 2) or where "other serious reasons exist" (no. 3) (unofficial translation, as are all quotations in this article).

There is no separate ground in the text for tenders that are too expensive. Anyone who wants to end a procedure because costs have been exceeded must therefore rely on the open wording of no. 3 or, if the project is being redesigned in any case, on no. 2. Both routes require reasons that will stand up to review.

The duty to give notice applies in every case. Applicants and tenderers must be informed "stating the reasons" and, where relevant, of the intention to start a new procedure, "without delay in text form" (section 17(2)). The reasons the client writes here are the same ones the client will later have to defend.

Cancellation must be kept separate from the bar on award. Section 16d(1) no. 1 VOB/A prohibits the award of the contract on a tender with an inappropriately high or low price. That concerns the individual tender, not the procedure, and the wording does not tie appropriateness to the contracting authority's cost estimate.

The trend in published case law is that a lack of funding can support cancellation, but only on narrow conditions. The decision usually cited is one of the OLG Düsseldorf (Higher Regional Court of Düsseldorf, order of 29.08.2018, VII-Verg 14/17, reported by vergabeblog.de on 13.12.2018). It concerns a procedure above the EU thresholds and the then version of section 17 EU(1) no. 3 VOB/A 2016. On that view, a lack of funding can be "a serious reason" where three conditions are met together:

On the cost estimate, the decision, relying on earlier judgments of the BGH (Federal Court of Justice), sets requirements that go far beyond a formality. It must be a methodologically sound forecast, it must be current and it must relate to the same subject matter as the bill of quantities. A safety margin is also expected; the blog renders the wording of the BGH (X ZR 108/10) as a "very considerable mark-up". In the case decided, the court held 10 per cent to be sufficient. That is an assessment of the individual case, not a general rule.

This leads to the most important sentence in this article: on this case law, a deficient cost estimate blocks the route to cancellation. An estimate without a date, based on an earlier design status or on a different scope of works from the bill of quantities can be held against the contracting authority. The work that supports cancellation is therefore the check of the cost estimate before tendering. How the client decides before tendering when the cost calculation exceeds the budget is covered in the article The cost calculation exceeds the budget: deciding before tendering.

Below the EU thresholds, section 17(1) no. 3 VOB/A contains the same wording on other serious reasons. Whether the courts apply the same standards there is not decided by the Düsseldorf order; no settled rule for all procedures can be derived from it. For works contracts, the EU threshold has stood at EUR 5,404,000 since 1 January 2026.

After the diagnosis, the public client essentially has three routes open. They are not mutually exclusive, but they have different preconditions.

Negotiation is only possible where the type of procedure allows it. Whether prices or works may be discussed after the tenders are in depends on the type of procedure chosen, for example a Freihändige Vergabe (direct negotiated award), and that in turn depends on the estimated contract value and on the value limits of the federal government or the Land. The types of procedure and value limits are covered in the article on procurement types and thresholds. What matters for the budget: the possibility of negotiating is fixed when the type of procedure is chosen, that is, before tendering.

Retendering only pays off after a change. A tender procedure with unchanged documents generally repeats the same result. A new procedure makes sense if the client first revises the scope of works, reduces the programme, simplifies standards, divides lots differently or moves the construction period. If the documents are fundamentally changed in the process, the ground for cancellation in no. 2 is the obvious one. The type of contract also belongs under review; which type leaves which cost risk with the client is shown in the article Unit price, lump sum or general contractor: which contract protects the budget.

No procedure for market research. Anyone who starts a tender procedure in order to test the market acts against section 2(5) VOB/A, which declares award procedures for the purpose of market research to be inadmissible. A cancellation that was planned from the outset is hard to justify.

For procedures above the EU thresholds, the state of the procurement law reform needs to be checked separately. What the Vergabebeschleunigungsgesetz (Procurement Acceleration Act) means for these procedures is covered in the article on the Procurement Acceleration Act. The case law described here has to be read in the light of the law as it stood at the time.

The private client needs no ground for cancellation, but does need a clean basis of comparison. The client can negotiate with individual tenderers, cut items and ask for new quotes. The danger lies not in the law but in comparability: after two rounds of negotiation, each with changed works, often nobody knows any longer which tender covers which scope.

Three rules keep the process under control. Every change to the scope of works is given in writing to all tenderers still in the running. Every tender version is given a version number and a date. The comparison is made item by item on the same basis, not just on the tender total.

Reduction before discount. A price discount on an unchanged scope rarely closes a real gap. It is more effective to draw up a list of savings options with their estimated effect, which the client decides on and which is then put to all tenderers for pricing.

A caveat for consumers. Anyone building as a consumer should pay attention, with lump sum offers, to the Baubeschreibung (building specification), which becomes part of the contract under section 650k BGB (Bürgerliches Gesetzbuch, the German Civil Code); the details are covered in the article on the private client in this guide.

Public or private: the decision after a result that is too expensive must be traceable. The file should contain the cost estimate with its date, price base and reference to the bill of quantities, the comparison of the tenders with the estimate by trade or by item, the diagnosis of the cause, the routes examined with their effect on budget and programme, the decision taken and, in a public procedure, the notice under section 17(2) VOB/A.