Used software in public procurement
Economical and permitted. Public sector buyers are bound by the duty to procure economically, and used software licenses may not be excluded across the board in a tender.
What you can rely on
§ 7
German Federal Budget Code (BHO): duty of economy and efficiency
§ 31 VI
German Public Procurement Regulation (VgV): product-neutral specification
2012
Court of Justice of the EU (CJEU) C-128/11 “UsedSoft”: exhaustion also applies to downloaded software
Why used licenses are permitted under procurement law
The principle of economy and efficiency obliges public sector buyers to choose the cheapest offer that meets the requirements. A specification that permits new licenses only, without an objective reason, narrows competition and is open to challenge.
Used volume licenses are functionally identical to new ones. The difference lies solely in the route of acquisition, and that route is secured by the case law of the CJEU and the German Federal Court of Justice (BGH). What you need for the procedure is evidence of the chain of title, and we supply it with every license.
The legal framework you can rely on
Four foundations support the procurement of used licenses. Two come from procurement law, two from copyright law. Together they form the picture you document in the procurement file.
Budgetary law
Economy and efficiency
Section 7 of the German Federal Budget Code (BHO), and the corresponding provisions in the state budget codes (LHO), oblige public sector buyers to achieve the best defensible result with the funds they deploy. Excluding an equivalent, cheaper procurement route without an objective reason runs counter to that and calls for justification.
§ 7 BHO and LHO of the states
Procurement law
A product-neutral specification
Above the EU thresholds, section 31(6) of the Public Procurement Regulation (VgV) requires the subject matter to be described without reference to a particular product; below them, section 23(5) of the Sub-Threshold Procurement Regulation (UVgO) applies in the same way. The route by which a license was acquired is not a feature of the subject matter itself, but of how it is procured.
§ 31 Abs. 6 VgV · § 23 Abs. 5 UVgO
Procurement principles
Competition and proportionality
Section 97 of the German Act against Restraints of Competition (GWB) names competition, transparency, economy and proportionality as the yardsticks for every award. A blanket exclusion of used licenses narrows the field of bidders without any difference in the subject matter to justify it.
§ 97 GWB
Copyright law
Resale is permitted
In Case C-128/11 the CJEU held that software granted permanently may be resold; the BGH confirmed this for volume licenses. The manufacturer's consent is not required. We have set out the decisions and their limits separately.
CJEU C-128/11 · BGH I ZR 129/08
This summary describes the general framework and does not replace a procurement law assessment of the individual case. Which rules apply in concrete terms depends on the contract value, the contracting authority and your own procurement rules. That decision rests with your procurement office.
Suggested wording for the specification
Whether used licenses can be offered at all is decided in the wording of the specification. You can take the first two building blocks and adapt them to your procedure; the third shows which wordings you had better delete.
Building block 1 · to adopt
Expressly permit used licenses
New and used software licenses may be offered. What is decisive is the functional scope of the license, not the route by which it was acquired. Used licenses are permitted provided they meet the evidence requirements set out below.
Effect: the field of bidders widens without lowering the requirements on the subject matter.
Building block 2 · to adopt
Ask for the right evidence
For used licenses the following are to be submitted in text form with the delivery: evidence that the license was first placed on the market within the European Economic Area (EEA) with the rights holder's consent; the previous owner's written confirmation that they have rendered all of their own copies unusable; and complete documentation of the chain of title from the first purchase through to the contracting authority.
Effect: questionable offers fail on these three points, sound ones meet them without effort.
Building block 3 · better avoided
Wording that narrows competition unnecessarily
Requirements such as factory-new license, first license, unused, or a distribution channel authorized by the manufacturer describe no difference in the subject matter. They shut out part of the market without the software procured working any differently, and therefore call for justification. The same applies to asking for a manufacturer's confirmation of the second acquisition, which does not exist in that form.
Effect: deleting these terms lowers the risk of a challenge rather than raising it.
The building blocks are a proposal for you to adopt in your own document, not legal advice. Please coordinate the wording with your procurement office and adapt it to the type of procedure and the contract value. On request we will send you the building blocks as an editable file.
Documents you can put in the procurement file
The effort in a procurement rarely lies in the buying, but in the documentation. You receive these documents with every delivery, without having to ask for them separately.
- Complete chain of title across all previous owners
- Copy of the invoice from the first purchase
- The previous owner's written confirmation of deletion
- Exact designation of version, edition and license type
- Details of the activation method and downgrade rights
- End-of-support date for the version concerned
- Comparison against the list price of the new license
- Quote with tiered pricing by quantity
- Validity period in line with your requirements
How to present value for money convincingly
Asserting a saving is not enough for the file. It needs a reference point, a period and a source. These three angles together cover what an assessment of value for money has to carry.
Comparison against list price
The simplest reference point is the current list price of the same version and edition as a new license. We set it against the quoted price in writing, with the date and the source, so that the figure stays traceable in the file and can still be checked later.
A view across the period of use
A perpetual license is paid for once and then used; a subscription runs on every year. Looked at across the same period, the picture shifts markedly. Tell us your planning horizon and we will work both variants through for your quantity.
Follow-on costs and end of support
Part of value for money is how long the version will still receive security updates. We give the end-of-support date for every version offered before you buy. That lets you relate the price to the remaining lifespan rather than to an open-ended period.
What you get from us for the file
You receive the comparison as part of the quote, not as a verbal statement. It names the product, version, edition, quantity, quoted price, the comparison price used and the date it was obtained. The assessment of value for money is thereby documented without you having to research it yourself.
We give terms on request and matched to the quantity, since prices depend on the stock available at the time.
How the procurement works in practice
Which procedural route is the right one is for your procurement office to decide, based on the contract value and your own procurement rules. From our side it looks the same in every case.
1. Describe what you need
Tell us the product, version and quantity, or simply describe your environment. With server licenses we work out the client access licenses you need as well, so that nothing is missing in the procedure.
2. Quote naming the evidence supplied
You receive a written quote that expressly names what is delivered and which evidence comes with it. That lets you demonstrate value for money without having to ask.
3. Reserving availability
Because these are limited holdings, we hold back quantities we have committed to for the duration of your validity period. An award that falls through for want of availability helps nobody.
4. Delivery and documentation
The license paperwork arrives complete and in one go. On request we provide it in the structure your procurement file calls for.
This description does not replace a procurement law assessment of the individual case. The choice of procedure and compliance with your own procurement rules rest with your procurement office.
Objections that come up regularly in-house
Most reservations about used licenses stem from habit rather than from procurement law. We hear six of them again and again, and each has a factual answer you can pass on.
Surely the manufacturer does not recognize this
Recognition is not provided for in law. Under the case law of the CJEU and the BGH, transferring an exhausted license requires no consent from the manufacturer. There is therefore no register and no confirmation that could be obtained. What counts is the documentation of the chain of title alone.
The risk of a challenge is too high
The risk sits rather on the other side. What is open to challenge is a specification that permits new licenses only, without an objective reason, and thereby narrows competition. A product-neutral description with clear evidence requirements is the more cautious option, not the riskier one.
We cannot check the evidence
That is why we supply it in a fixed structure: origin, confirmation of deletion, chain of title, subject matter. For each item it is clear which document meets which requirement. On request we include a checklist you can take into the procurement file.
Are there still security updates?
Yes, to the same extent as with a newly bought license, for as long as the version is in support. The route of acquisition changes nothing there, because technically it is the same software. We give the end-of-support date for the version before you buy, so that it feeds into your planning.
We need the current version
Then we first check whether the current version is actually available as a perpetual license. If it is, it comes into consideration. If it is not, an older version with enough support life left can be the more economical choice. We will tell you openly when a new license is the better solution.
The quantity turns out not to be available after all
Used licenses come from limited holdings; that is the essential difference from a new license. This is why we hold back quantities we have committed to for the duration of your validity period and confirm availability in writing. What we cannot deliver with certainty, we do not offer.
Lots, framework agreements and call-offs
Used licenses behave differently from new goods in one respect: the stock is finite. That has consequences for how the procedure is cut, and it is worth thinking about before the contract notice goes out.
Dividing lots by product family
One lot for server licenses together with their client access licenses, another for workstation software: that division reflects how the holdings actually occur in the market. A single lot covering all products shuts out suppliers who can only cover part of it, and shrinks competition accordingly.
A fixed quantity rather than open call-offs
A framework agreement with undefined call-offs across several years sits badly with a finite stock. More dependable is a fixed quantity with a delivery date, or a maximum quantity with an express reservation as to availability. That way no commitment arises which cannot be honored later.
Validity period and reservation
Weeks often pass between the submission of a bid and the award. We hold back the quantity offered for the duration of your validity period and confirm this in writing in the quote. If the procedure runs longer, talk to us; extending the reservation is usually possible.
Large quantities can be accommodated too
With large procurements a combination is the usual route: part of the quantity from used licenses, the rest as new. That split can be set out cleanly in the specification and delivers the saving where it can be demonstrated. Whether your requirement can be met entirely from used holdings, we will tell you before the procedure, so that you can cut it correctly from the outset.
What we offer procurement offices
Tailored to the requirements of public procurement.
Evidence for the procedure
Complete documentation of origin and transfer that you can take into the procurement file.
Quotes matched to the lot size
Clear quotes on request, matched to lot sizes and framework agreements rather than rigid list prices.
A named contact
A personal contact for tenders and for questions while the procedure is running.
Frequently asked questions from procurement offices
May we permit used licenses in the specification?
Yes. A product-neutral specification that turns on function rather than on the route of acquisition permits used licenses and widens the field of bidders.
What documents do we put in the procurement file?
From us you receive the documentation of the chain of title, the previous owner's confirmation of deletion and the declaration of transfer. Those documents evidence the lawfulness of the purchase.
Are framework agreements for used licenses possible?
In principle yes. Since the stock of used licenses is limited, we agree quantity and term with you in advance. Come to us with what you need.
How does invoicing work?
You receive the contract and the invoice from your contracting party, with VAT shown separately and every detail you need for budgetary purposes.
Does buying used licenses have to be justified separately?
As a rule, no. What calls for justification is rather the opposite case: excluding an equivalent, cheaper option. A short note on value for money in the procurement file, resting on our written comparison, is usually enough. That decision rests with your procurement office.
Can used licenses be bought through existing framework agreements?
That depends on the agreement in question. Existing framework agreements are often cut for new licenses and do not cover used ones. In that case, check whether a separate procurement outside the framework agreement is permitted. We will supply the paperwork for that check.
How do we handle the availability risk in the procedure?
By settling it before the contract notice goes out. Tell us the product, version and quantity, and we will tell you in advance whether the quantity can be met. Quantities we commit to are held back for the duration of your validity period. If the requirement is larger than the stock, we say so openly before you set the procedure up.
Can we carry out a market survey before the procedure?
Yes, and with used licenses it is particularly worthwhile, because availability and price levels behave differently from new goods. We answer market survey inquiries without obligation and without them turning into a quote. It has no bearing on taking part in the procedure later.
How do we obtain the evidence if an audit only comes years later?
The paperwork is with you in full on delivery and belongs in the procurement file. In addition we archive the complete chain permanently and make it available again on request. A message quoting your invoice number is enough; there is no charge.
Material for further examination
What you need when the procurement office looks deeper or the requirement becomes concrete.
The legal position on used software
The CJEU and BGH rulings with their case numbers, the four limits of what is permitted and the four documents that count in a license audit. Suitable as evidence for the procurement file.
Microsoft licenses available
Our current stock by product family, with the end-of-support date and license type on every entry. A basis for a market survey before the contract notice.
Terms and articles
Calculating client access licenses correctly, planning around support deadlines, telling license types apart. Useful when the specification has to be technically precise.
An inquiry for your procurement office
Tell us what you need and the lot size. We answer with a quote and the matching evidence.