The EU Legal framework on public procurement

1. Introduction

The purpose of this guideline on the EU public procurement legal framework is to help procurement officers of cities understand the principles and requirements that need to be followed when a tender they intend to publish is expected to be worth more than a given amount. Even if a tender does not exceed the legally set thresholds and does not need to follow the specific requirements described in EU law, the general principles of public procurement on transparency, equality of treatment, and proportionality, among others, must be respected. The complete EU legal framework on public procurement is included in the following legal acts:

The guideline assists local governments in applying the third (Directive 2014/24/EU) and fourth (Directive 2014/25/EU) while procuring digital products and services. The goal is to help procurement officers understand the scope and applicability of the legislation, ensuring compliance when upgrading digital infrastructure and implementing a Local Digital Twin.

Smaller municipalities with limited resources may not frequently engage in high-value procurements and may be less familiar with the legal framework. This chapter is a starting guide, outlining key considerations to ensure fair and compliant procurement processes.

The "Scope and Applicability" sub-section identifies when the specific act applies to local public organisations. The "General Principles of EU Public Procurement" sub-section explains the legal principles mandated by the TFEU and EU public procurement Directives, applicable regardless of contract value, with interpretations and practical examples.

By following these guidelines, city officers will gain a clear understanding of relevant legislation for tenders exceeding the EU threshold and good practices for national procurements.

2. Scope and applicability

EU law establishes minimum harmonised rules for public tenders exceeding a set monetary threshold, presuming cross-border interest. These rules govern how public authorities and certain utility operators procure goods, works and services through public contracts awarded to selected economic operators, regardless of whether the procurement serves a public purpose.

For high-value contracts, EU rules ensure fairness, transparency and non-discrimination. Lower-value tenders are subject to national rules, which must still comply with general EU law principles.

There are three mutually exclusive contract types—works, supplies and services—each with different thresholds determining the applicability of EU procurement rules. Works contracts typically have higher thresholds than supplies and services. Contracts exceeding these thresholds must be advertised EU-wide to promote open and fair competition.

The financial thresholds in the Delegated Regulations of the respective EU Directives on public procurement are listed under Chapter 1. Introduction. The thresholds are updated every two years via the publication of a dedicated Delegated Regulation to reflect economic changes and international obligations. It is important to note that these thresholds exclude Value Added Tax (VAT). The latest updates were published in November 2023. They took effect on 1 January 2024, and for each of the procurement Directives, they can be found on the following EC official page ‘Public Procurement → Legal Rules and Implementation → Thresholds’.

Based on the latter, the current thresholds are:

Public Works Contracts: €5,538,000
Supply and Service Contracts for Central Government Authorities: €143,000
Supply and Service Contracts for Sub-Central Contracting Authorities: €221,000
Light Touch Regime for Social and Other Specific Services: €750,000
Utilities Sector (Works Contracts): €5,538,000
Utilities Sector (Supply and Service Contracts): €443,000

These thresholds apply to each procurement procedure that is initiated. A ‘splitting’ prohibition applies, which prevents the artificial splitting up of essentially similar procurements into lower-value procurements which would fall below the relevant threshold and thus outside the scope of 2014 Directives. This rule ensures that all relevant contracts are subject to EU public procurement rules, preventing contracting authorities from avoiding obligations by artificially splitting or undervaluing procurements. For further details, refer directly to Article 5 of Directive 2014/24/EU.

Even when the value of a contract is below the set thresholds, if the procurement has potential cross-border interest, then the EU general procurement principles still apply.

Details can be found in the following ‘Commission interpretative communication on the Community law applicable to contract awards not or not fully subject to the provisions of the Public Procurement Directives’.

3. General principles of EU public procurement

The principles of EU public procurement are foundational guidelines designed to ensure that procurement processes conducted by public authorities across EU Member States are fair, transparent, and open to competition (equitable and non-discriminatory).

These principles derive from the Treaty on the Functioning of the European Union (TFEU) and from the relevant EU procurement Directives and govern how public authorities across the EU purchase goods, services, and works, ensuring that all potential suppliers are treated fairly and equally. In addition, on the international level, EU provisions are highly aligned with the Agreement on Government Procurement (GPA) of the World Trade Organization (WTO) between 48 Member States 1 .

As the European Court of Justice (ECJ) has stated on several occasions 2 ‘Although certain contracts are excluded from the scope of the Community directives in the field of public procurement, the contracting authorities which conclude them are nevertheless bound to comply with the fundamental rules of the Treaty’.

These principles apply to contract awards that may interest economic operators from other Member States, regardless of whether the EU public procurement Directives explicitly cover the contracts. Given the specific characteristics of the digital products and services sector—such as its size, market structure, and the minimal impact of geographic location on the provision of digital goods or services—contracts related to implementing a Local Digital Twin will inherently attract EU-wide interest. Consequently, such contracts must be awarded in compliance with the fundamental standards established under EU law.

Every public procurement process must adhere to fundamental principles and standards throughout all stages, from market consultation and drafting tender requirements to contract awarding and notification. The key principles are as follows:

Free movement of goods, right of establishment and the freedom to provide services

The fundamental principle to start with is that a qualifying contract must be opened up to an EU-wide competitive tender. This translates into publishing in a medium with wide coverage as described in the EU public procurement Directives and treating all EU tenderers equally from the drafting of the selection criteria to awarding the contract.

This principle services from the free movement of goods that prohibits quantitative restrictions on imports and all measures having equivalent effect between Member States and can be found in Articles 34-36 of the TFEU; it also services from the right of establishment that can be found in Article 49 of the same and from the freedom to provide services across Member States that can be found in Article 56 of the same.

Examples of selection criteria in a tender that would be unlawful based on this principle are, e.g.:

Requirement that the tenderer already has an office open to the public or a representative or experience in the country or region where the service is to be provided;
Preference is given to economic operators carrying out their main activity in the region where the works constituting the object of procurement are to be carried out.

Equal treatment

Equal treatment requires identical situations to be treated in the same way or different situations not to be treated in the same way. This implies that contracting authorities should not take into account the different abilities or difficulties faced by individual economic operators but will judge them purely based on the results of their efforts, i.e., on the basis of the tenders they submit. It provides for an objective assessment of tender prices and tender qualities and ignores any considerations that are irrelevant to the discovery of the economically efficient tender.

An example of the equal treatment principle is found in Article 24 of the 2014/24/EU General Procurement Directive, which states that conflicts of interest in procurement procedures can lead to partiality. To prevent competition distortion and ensure equal treatment of all economic operators, such conflicts must be identified, prevented, or remedied.

Equal treatment of tenderers should be applied when assessing them against the selection criteria set for a particular tender. In addition, the scores given to each tender application should be clear, justified, and fully recorded to demonstrate how the evaluation committee arrived at the award decision and prove that all applicants were treated fairly during the awarding process.

Non-discrimination 3

In the EU context, the equal treatment principle extends to nationality and the origin of goods. All EU-based economic operators and bids, including goods of EU origin, must receive equal treatment. This means that eligibility conditions based on nationality or local provenance automatically create unequal treatment, as they discriminate against certain (foreign) economic operators while favouring others. Contracting authorities must not impose conditions that lead to direct or indirect discrimination, such as requiring bidders to be established in the same Member State or region as the contracting authority.

Beyond the national dimension, the equal treatment principle also prevents the use of tailor-made specifications that intentionally or unintentionally favour specific suppliers. Technical specifications must not refer to a particular brand, source, process, trademark, patent, type, origin, or production method unless strictly justified by the contract's subject matter. Even in such cases, the reference must always be accompanied by "or equivalent" to allow fair competition. Whenever possible, contracting authorities should use general performance or functional descriptions instead.

Examples of unlawful and discriminatory selection criteria:

Having at least 5 similar references from the public sector only, and not the private sector, unless justified and non-discriminatory;
Providing references for previous works that are significantly higher in value and scope than the contract being tendered, unless justified and non-discriminatory;
Already having qualifications/professional certificates recognised in the country of the contracting authority at the time of submission of tenders, as this would be difficult for foreign tenderers to comply with in such a short timeframe;
Complying with a particular professional standard without using the wording ‘or equivalent’.

Transparency

Contracting authorities ensure compliance with the principles of equal treatment and non-discrimination by adhering to the principle of transparency, which serves as the mechanism for verification. The obligation of transparency, according to the ECJ case-law 4 , ‘consists in ensuring, for the benefit of any potential tenderer, a degree of advertising sufficient to enable the services market to be opened up to competition and the impartiality of the procedures to be reviewed’.

Transparency requirements are explicitly stipulated in the general procurement Directive 24/2014 in Section 2 and Articles 48-55 of the Directive, which is dedicated to publication and transparency.

The contract notice, any prior information notice (including clear technical specifications, exclusion grounds, selection and award criteria) and the results of procurement need to be published with a minimum of specific information, with a specific timeline, in a specific form and published electronically. In cases of clarification requests by the tenderers, communication is recommended to be exclusively in writing, and all additional information provided by the contracting authority must be made public to all potential tenderers and not only to the tenderer requesting clarifications.

While evaluating tenders, contracting authorities have to draw up an evaluation report and keep enough information on each contract to justify decisions made on the selection of tenderers and the awarding of contracts. The evaluation committee should ensure that there is a written justification for each score given, and the scores and comments for each tenderer must be presented in a written letter to the tenderer and included in the evaluation report.

Proportionality

Every stage of the tender procedure must align with the tender’s goal, with all choices justified based on the contracting authority’s needs. The proportionality principle ensures that procurement procedures and requirements are appropriate and not excessive.

This means that key aspects (such as participation conditions and award criteria) must be relevant and necessary to achieve the procurement’s objectives. More specifically:

choice of tender procedure: should be in direct link with the value of the contract and its subject matter;
whether or not to combine contracts or divide them into lots;
number and contents of suitability requirements, requirements relating to financial and economic strength, requirements relating to technical and professional skill selection criteria (all these conditions should be related and proportionate to the object of the procurement); E.g. Having an annual revenue of EUR 10 million even if the contract value is only EUR 1 million is a disproportionate selection criterion;
requirements for consortiums,
award criteria: choosing the most appropriate award criteria between ‘lowest price’, ‘lowest costs on the basis of cost-effectiveness’ or ‘best price-performance ratio’ based on the relevance and nature of the contract.
contract terms and conditions.

Mutual recognition

As stated in Article 60 of the TFEU, this principle states that certifications, standards, and qualifications from one EU Member State should be recognised by other Member States. It facilitates cross-border participation in public procurement by reducing administrative barriers for suppliers from different EU countries.

If applicants or tenderers are required to submit certificates, diplomas or other forms of written evidence, documents from other Member States offering an equivalent level of guarantee have to be accepted in accordance with the principle of mutual recognition of diplomas, certificates and other evidence of formal qualifications.

Therefore, it is unlawful to set, for instance, as a requirement of proof that an applicant is a member of a certain professional association of the country of the contracting authority, as long as the applicant can demonstrate proof that they qualify for a certain professional activity according to their national framework.

4. Sources and reading materials

Commission interpretative communication on the Community law applicable to contract awards not or not fully subject to the provisions of the Public Procurement Directives, 2006, Commission Interpretative Communication
Public Procurement in the EU: Legislative Framework, Basic Principles and Institutions, 2016, Sigma Programme (OECD/EU joint initiative)
Public Procurement: Below-Threshold Contracts, 2016, Sigma Programme (OECD/EU joint initiative)
Public Procurement Guidance For Practitioners, 2018, European Commission
Implementation and best practices of national procurement policies in the Internal Market, 2021, EC
NON-COMPLIANCE WITH THE RULES ON PUBLIC PROCUREMENT - TYPES OF IRREGULARITIES AND BASIS FOR QUANTIFICATION
Common procurement vocabulary (CPV), European Commission’s ‘DG (Directorate-General) for Internal Market, Industry, Entrepreneurship and SMEs’ website, Accessed 14.1.24
Your Europe - Public tendering rules

The texts that make up the EU legislative framework for procurement, along with a range of other useful documents and links, can be found on the European Commission’s ‘DG (Directorate-General) for Internal Market, Industry, Entrepreneurship and SMEs’ website: https://single-market-economy.ec.europa.eu/single-market/public-procurement_en.

1GPA is intended to make laws , regulations, procedures and practices regarding government procurement more transparent and to prevent the protection of domestic products or suppliers or discrimination against foreign products or suppliers.it contains two elements i) general rules and obligations and ii) schedules listing the national entities in each WTO MS that are covered by the GPA agreement.
2See paragraph 20 of the Bent Mousten Vestergaard case (Case C-59/00, https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX%3A62000CO0059), where also similar rulings are mentioned.
3TFEUArticle 18(1): “Within the scope of application of the Treaties, and without prejudice to any special provisions contained therein, any discrimination on grounds of nationality shall be prohibited.“.
4See paragraph 62 of the Telaustria case (C-324/98,https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX%3A61998CJ0324)