Contract Value in Public Procurement Law
The contract value is the estimated total value of a contract excluding VAT, which determines the application of procurement law and the choice of procedure.
Definition: The contract value is the estimated total value of the service to be awarded, excluding VAT, which must be determined by the contracting authority before initiating a procurement procedure and serves as the basis for determining the applicable procurement rules and the procedure to be followed.
Last updated: January 2026 · Legal basis: Art. 5 Directive 2014/24/EU, § 3 VgV, § 13 BVergG 2018
What is the contract value?
The contract value is the key concept for determining whether and which procurement law applies: it decides whether a contract must be tendered EU-wide or whether national rules with lower requirements suffice. The contract value is always to be understood as an estimated value that must be determined before initiating the procurement procedure on the basis of careful market analysis and cost calculation. The actual award price may differ from the estimated contract value without affecting the legality of the procedure.
The correct determination of the contract value is one of the most important duties of the contracting authority before the procedure begins. Errors in the estimate – in particular an undervaluation that leads to falling below the thresholds – can result in the invalidity of the concluded contract.
Significance and Function
The contract value is the decisive criterion for distinguishing between the EU-wide above-threshold range and the national below-threshold range – and thus for the scope of the contracting authority's transparency and competition obligations.
If the contract value exceeds the EU thresholds in force, the contracting authority is required to publish the procurement procedure EU-wide and to comply with the strict procedural and deadline rules of the EU procurement directives. Below the thresholds, the national procurement rules apply, which are less burdensome but must also uphold the fundamental principles of procurement law (transparency, competition, equal treatment).
Calculating the Contract Value
The calculation of the contract value follows clear legal requirements designed to ensure that the actual economic value of a contract is fully captured. The estimate must include:
- Basic services: The estimated value of the main service
- Options: Value of any extension or expansion options
- Renewal clauses: Value of contract extensions (e.g. under framework agreements)
- Premiums and payments: All payments to bidders or candidates (e.g. competition prizes)
For framework agreements and dynamic purchasing systems, the estimated total value of all individual contracts over the entire term is decisive. For recurring contracts, the total annual value must be used.
Prohibition of Circumvention: Ban on Artificial Splitting
Procurement law expressly prohibits the artificial splitting of contracts with the aim of falling below the thresholds and thereby circumventing the obligation to tender. Related services must be assessed as a whole; arbitrary splitting into smaller lots is not permitted. Objectively justified division into lots is, however, permitted, in which case the total contract value continues to serve as the benchmark.
Current EU Thresholds (2024/2026)
| Type of Contract | Public Contracting Authorities | Utilities |
|---|---|---|
| Supply and service contracts | EUR 143,000 | EUR 443,000 |
| Works contracts | EUR 5,538,000 | EUR 5,538,000 |
| Social services | EUR 750,000 | EUR 1,000,000 |
The thresholds are adjusted by the European Commission every two years.
Legal Basis
The methodology for calculating the contract value is bindingly specified at EU level.
- EU: Art. 5 Directive 2014/24/EU (methods for calculating the estimated contract value)
- Austria: § 13 BVergG 2018 (calculation of the estimated contract value)
- Germany: § 3 VgV (calculation of the estimated contract value), § 1 para. 2 VOB/A
Related Terms
FAQ
What happens if the actual award price significantly exceeds the estimated contract value? If the award price exceeds the thresholds even though the estimated contract value was below them, the procurement procedure is not automatically unlawful – provided the estimate was made carefully and methodically correct. However, if the estimate was deliberately set too low, this may lead to the invalidity of the contract.
Must ancillary costs (e.g. transport, installation) be included in the contract value? Yes. The contract value must include all remuneration to be paid by the contracting authority, including ancillary services such as delivery, installation, training or maintenance, provided they form part of the contract.
How often are the EU thresholds adjusted? Pursuant to the WTO Agreement (Government Procurement Agreement, GPA), the EU thresholds are reviewed and, if necessary, adjusted every two years. The current values are published by the European Commission in the Official Journal of the EU.
Last updated: January 2026 All information provided without guarantee. For legally binding advice, please consult a law firm specialising in procurement law.
Book a demo.
See what BOND finds for your company — tenders, suppliers, and partners you'd never discover on your own. Cancel any month, anytime.