De Facto Award in Public Procurement Law 2026

De facto award: unlawful contract conclusion without the prescribed procurement procedure. Overview of challenge, nullity and legal consequences.

Definition: A de facto award occurs where a contracting authority awards a contract that would be subject to a tendering obligation under procurement law directly to a company without conducting the prescribed procurement procedure, thereby breaching the principles of transparency and competition.

Last updated: January 2026 · Legal basis: Directive 89/665/EEC Article 2d, GWB Section 135, BVergG 2018 Section 334

What is a de facto award?

The de facto award is the most serious breach of procurement law: the contracting authority concludes a contract for a service subject to a tendering obligation without ever having initiated the prescribed procurement procedure. The term "de facto" indicates that the contract has actually (in fact) been concluded, even though the legally required prerequisite – a transparent, public tender – is missing. The market is thereby excluded from the opportunity to participate in the contract.

Typical constellations:

Direct award without any procedure (for contracts above the EU thresholds)
Conclusion of a contract during review proceedings in breach of the standstill period
Material contract amendment equivalent to a new award (de facto award through contract modification)

Legal consequences of a de facto award

A de facto award generally renders the contract concluded without a tender ineffective (void). This is the most severe legal consequence in all of procurement law and is intended to have an effective deterrent effect.

In Germany, Section 135 GWB governs ineffectiveness:

Contracts concluded in breach of the tendering obligation may be declared ineffective by the public procurement tribunal.
Ineffectiveness must be asserted within certain deadlines (Section 135(2) GWB): 30 days after the breach becomes known, but no later than six months after conclusion of the contract (where notice is missing: 30 days after publication of a subsequent notice).

In Austria, the consequence is governed by Section 334 BVergG 2018.

Ex ante transparency notice as a protective instrument

The contracting authority can avert the consequence of ineffectiveness by publishing a so-called ex ante transparency notice before concluding the contract. This instrument – regulated in Article 2d(4) of Directive 2007/66/EC – enables the contracting authority to publicise an intended direct award and to observe a waiting period of at least ten days. If no bidder raises objections and the contracting authority then concludes the contract, the contract is generally no longer ineffective – although fines or other sanctions may still apply.

Review in the event of a de facto award

Unsuccessful companies can also file a review application in the event of a de facto award. In Germany, the public procurement tribunals are competent; in Austria, the administrative courts. The application deadline generally begins with knowledge of the conclusion of the contract. In review proceedings, the ineffectiveness of the contract can be established.

Distinction from an unintended de facto award

The genuine de facto award must be distinguished from the "unintended de facto award" in the case of an admissible direct award: if the contracting authority mistakenly assumes that an exception to the procurement procedure applies (e.g. urgency or sole source), there is formally a de facto award, but its unlawfulness depends on whether the exception requirements were actually met.

FAQ

Can a de facto contract remain effective despite being unlawful? Yes, under narrow conditions. Section 135(2) GWB provides that, despite unlawfulness, a contract may be upheld for overriding reasons of general interest. However, this is limited to extreme exceptional cases.

Who can challenge a de facto award? Any company that has an interest in the contract and has suffered, or is likely to suffer, harm from the breach of procurement law. Prior participation in the procedure is not required.

Are there personal consequences for the contracting authority? No, not directly under procurement law. However, a de facto award may have budgetary consequences and – where corruption is involved – may have criminal-law relevance.

Last updated: January 2026 All information without guarantee. For legally binding advice, please consult a law firm specialising in public procurement law.