Ho
H ToTopicscs
Hot
Public Law
Curre
ent deba
ate in Germany re
egarding
g U.S. IT
comp
panies a
and "no spy
s guarantee"
July 20
014
The Ge
erman Fede ral Ministry of the Interrior has receently publish
hed its
adminiistrative guiidance rega
arding a "no spy guaran
ntee" for com
mpanies tha
at
enter into certain p
procuremen
nt contracts
s with the Geerman Fede
eral
nment. Seve
eral recent press
p
article
es also purp
port that a number of
Govern
Federa
al States, so
o far includin
ng the states of Bremen
n, Hamburg, Schleswig
gHolstein and Saxo
ony-Anhalt, also plan to
o introduce ccomparable
e guarantee
ements for ttheir IT tend
der procedurres.
require
1. Wha
at is a "no sp
py guarante
ee"?
Office of thee Federal Min
Pursua
ant to the guid
dance, the Procurement
P
nistry of the
Interiorr can demand
d from bidde
ers in upcoming tender prrocedures wiith possible
security
y relevance a binding sellf-declaration
n. In the self--declaration, the bidder
declare
es that he is ccapable of complying witth contractuaal confidentia
ality obligatio
ons
and, in particular, u
under no oblig
gation to disc
close to thirdd parties confidential
informa
ation, busine ss and trade
e secrets, of which
w
he gaiins knowledg
ge in the cou
urse
of the contractual
c
re
elation with the
t public authority. Purssuant to the guidance,
g
confide
ential informa
ation is define
ed as any infformation whhich would be
e qualified ass
security
y-sensitive b
by an objectiv
ve third party
y or which is marked as confidential.
c
The declaration doe
es not apply if the bidder is legally obbliged to disc
close such
informa
ation to foreig
gn public autthorities that are not secuurity authoritiies, such as
securitiies and exch
hange superv
visory bodies
s, regulatory authorities or
o financial
authorities. Howeve
er, he must not
n be obliged to disclosee information
n to foreign
security
y authorities.. The guidan
nce also reco
ommends to ssupplement the contractu
ual
terms and
a condition
ns currently used
u
in procu
urement proccedures with
h a clause
pursuant to which t he bidder is required to give
g
written nnotice to the public autho
ority
if he is no longer ab
ble to comply
y with the confidentiality cclause.
Whethe
er a self-decllaration is requested or not
n may be leeft up to the contracting
c
government agencyy to decide on
o a case-by--case basis, taking into account
a
whethe
er the procure
ement at han
nd requires a more stringgent security--sensitive
approach or not.
w will a "no s
spy guaranttee" work?
2. How
Our Ex
xpertise
Public Law
Pursua
ant to the deccree, the selff-declaration will be part oof the review
w of reliabilityy
(pre-qu
ualification re
eview) and sh
hall also work as a presuumption of proof concerning
the obligation of the
e bidder to diisclose confidential inform
mation to thirrd parties. Th
his
means that bidderss who submitt a signed self-declarationn even thoug
gh they know
w
that the
ey are legallyy obliged to disclose
d
conffidential inforrmation to foreign securitty
authorities will be e
excluded from
m the tender procedures. Bidders who
o do not submit
Hot Topics
a self-declaration will be excluded because bidders are requested to submit
complete tender documents.
The supplementary confidentiality clause in the contractual terms and conditions
could lead to an extraordinary right to termination of contracts.
3. How could a "no spy guarantee" affect foreign IT companies?
The "no spy guarantee" is likely to affect foreign IT companies in at least three
ways. First of all, even though a German subsidiary of a foreign company is not
legally bound to disclose confidential data to foreign security authorities, there is a
potential risk of exclusion. U.S.-based companies should be aware that the
prevailing public opinion in Germany is that U.S. companies will not be able to
submit a truthful declaration regarding a "no spy guarantee" due to their legal
obligations in the U.S. (e.g. USA Patriot Act). Although the Patriot Act includes
provisions where U.S. companies may be compelled to produce relevant
information as part of national security investigations, it is unclear if the existence
of lawful court orders in the U.S. and pursuant to the Patriot Act would be viewed
as a permissible exception for U.S. companies to the "no spy guarantee".
Secondly, it might not be sufficient if a German subsidiary of a U.S.-based group
that participates in a tender procedure in Germany submits the self-declaration
because there might be spillover effects (e.g. due to personnel overlaps). It is
finally important to note that the proposed "no spy guarantee" will not only be
required from companies or entities who want to contract with public authorities,
but also from companies who are subcontractors.
4. Are there remedies under public and procurement laws to challenge a "no
spy guarantee"?
The implementation of the "no spy guarantee" as a self-declaration in the context of
the review of reliability could be challenged with a review procedure before the
Public Procurement Board and, in case the review procedure is not successful, an
immediate appeal before a Higher Regional Court. The supplementary
confidentiality clause in the contractual terms and conditions could be challenged
in a civil law proceeding and also with a review procedure before the Public
Procurement Board and, in case the review procedure is not successful, an
immediate appeal before a Higher Regional Court.
5. Not yet discussed, but essential: compatibility of a "no spy guarantee"
under the EU Treaty?
Following the current debate in Germany about a "no spy guarantee", one cannot
help but think about the compatibility of the guarantee with EU law. Such a
guarantee could be regarded as an infringement of the principle of nondiscrimination, because certain U.S. companies who have been in a leadership
position in IT tender procedures for years will now be confronted intentionally with
obligations and requirements that they can most likely not comply with due to their
national laws, even though they would like to do so. A "no spy guarantee" could
also infringe the principle of equal treatment since there could be IT companies
from other countries which might have similar national laws as U.S.-based
companies but are currently not discussed at all. This question of compatibility with
EU law requires further intensive review.
2
Hot Topics
her information
n, please conta
act:
For furth
Dr. Marc Gabriel,
G
LL.M.
E-Mail: Marc.Gabriel
ckenzie.com
@bakermc
Dr. Susanne
S
Mertens,, LL.M.
E-Ma
ail: Susanne.Merten
ns
@ba
akermckenzie.com
Jonathan C. Poling
E-Mail: Jon
nathan.Poling
@bakermc
ckenzie.com
Proff. Dr. Joachim Sch
herer, LL.M.
E-Ma
ail: Joachim.Schere
er@
bake
ermckenzie.com
M
- Partn
nerschaft von Rec
chtsanwälten, Wirtschaftsprüfern
n, Steuerberatern
n und Solicitors
Baker & McKenzie
Berlin
Friedrichstrasse 88 / Unter deen Linden
10117 Berrlin
Tel.: +49 (0)
( 30 2 20 02 81 0
Fax: +49 (0)
( 30 2 20 02 81 199
Frankfurt / Main
Bethmannstrasse 550-54
60
0311 Frankfurt/Maain
Tel.: +49 (0) 69 2 999 08 0
Fax: +49 (0) 69 2 999 08 108
Dusseldo
orf
Neuer Zollhof 2
sseldorf
40221 Dus
Tel.: +49 (0)
( 211 3 11 16 0
Fax: +49 (0)
( 211 3 11 16 1999
Munich
M
Theatinerstrasse 233
0333 Munich
80
Tel.: +49 (0) 89 5 552 38 0
Fax: +49 (0) 89 5 552 38 199
www.bakermck
w
kenzie.com
Get Connected:
This clientt newsletter is pre pared for informattion purposes only
y. The informationn contained therein should not be re
elied
on as lega
al advice and shouuld, therefore, not be regarded as a substitute for dettailed legal advice
e in the individual
case. The advice of a qualiffied lawyer should
d always be sough
ht in such cases. Inn the publishing of
o this Newsletter, we
cept any liability inn individual cases..
do not acc
M
- Partne rschaft von Rechttsanwälten, Wirtsc
chaftsprüfern, Steuuerberatern und Solicitors
S
is a
Baker & McKenzie
profession
nal partnership un der German law with
w its registered offices in Frankfuurt/Main, registered
d with the Local Court
C
of Frankfu
urt/Main at PR No.. 1602. It is associated with Baker & McKenzie Internnational, a Verein organized under the
t
laws of Sw
witzerland. Membeers of Baker & Mc
cKenzie International are Baker & M
McKenzie law firms
s around the world
d. In
common with
w terminology uused in professional service organiz
zations, reference to a "partner" means a professiona
al
who is a partner,
p
or equivaleent, in such a law
w firm. Similarly, reference to an "offifice" means an offfice of any such law
firm.
3