Direct Award in Public Procurement 2026

Direct award: contracting without a formal tender procedure. AT up to EUR 100,000 (§ 41 BVergG 2018). DE: freihändige Vergabe/direct purchase. Risks and limits.

Definition: A direct award is the award of a contract by a public contracting authority without conducting a formal tender procedure. The authority concludes a contract directly with an undertaking after obtaining offers — sometimes only one — and may do so only within the value thresholds and exceptional grounds set by law.

Last updated: January 2026 · Legal basis: § 41 BVergG 2018, UVgO, GWB/VgV

What is a direct award in public procurement law?

The direct award is the simplest and most informal procurement instrument in public procurement law: the contracting authority selects an undertaking of its choice and concludes a contract directly with it, without conducting a public tender or a formal competitive procedure. It is the exception to the principle of the duty to tender and is therefore only permitted within narrow statutory limits.

The direct award is not a procurement-law-free zone — it too is tied to legal requirements. In particular, the value thresholds set out in the relevant national procurement law must be observed, and even in a direct award the contracting authority remains bound by the general budgetary principles (value for money, economy). The direct award does not release the authority from its documentation obligation: the procurement procedure must be recorded in a verifiable manner.

Purpose and significance

The direct award serves to remove bureaucratic hurdles for low-value procurements where the administrative burden of a formal tender procedure would be disproportionate to the contract value. Where procurement volumes are low, the cost of an elaborate tender procedure frequently outweighs the benefit of the competition obtained. The direct award is therefore a pragmatic instrument for increasing efficiency in public procurement.

At the same time, the direct award carries the highest potential for abuse of all the procurement types: without competition and transparency, there is a risk of favouritism towards certain undertakings, corruption, or uneconomical use of public funds. Procurement supervisory authorities therefore pay particular attention to compliance with the value thresholds and to the improper splitting of contracts (so-called contract splitting), which can be used to circumvent the duty to tender.

Direct award in Austria (§ 41 BVergG 2018)

In Austria the direct award is governed by § 41 of the Federal Procurement Act 2018 (BVergG 2018, Federal Law Gazette I No. 65/2018) and constitutes the lowest procedure type within the sub-threshold area.

Value thresholds under Austrian procurement law

The permissible value thresholds for direct awards in Austria are:

Type of contract	Value threshold (net of VAT)
Supply and service contracts	up to EUR 100,000
Works contracts	up to EUR 75,000

These thresholds apply to the estimated total contract value. The realistic market value of the service at the time of the award decision is always decisive. Subsequently bringing the value below the threshold by reducing the scope of services does not justify a direct award if the originally planned contract value would have exceeded the threshold.

Procedure for a direct award in Austria

Under § 41 (2) BVergG 2018 the contracting authority is required to engage a suitable undertaking. Obtaining several comparative offers is not strictly required, but it is advisable for reasons of economy and documentation. The contracting authority should at least conduct an informal price enquiry with one or more undertakings.

Direct award with prior publication

In addition to the simple direct award, the BVergG 2018 also provides for direct award with prior publication (§ 40 BVergG 2018). Under this variant, the contracting authority publishes a notice and invites interested undertakings to submit offers. The direct award with prior publication is a middle path between the entirely informal direct award and a formal tender procedure, and it increases competition while reducing procedural effort.

Freihändige Vergabe and direct purchase in Germany

Germany has no direct equivalent to the Austrian term "Direktvergabe"; instead, German procurement law recognises the freihändige Vergabe (informal award under UVgO, VOB/A) and the direct purchase in the sub-threshold area.

Freihändige Vergabe under the UVgO

Under § 12 of the Sub-Threshold Procurement Regulation (UVgO), informal award is permitted for supply and service contracts below certain value thresholds. The specific thresholds for informal awards under the UVgO are set by the individual Länder or the Federal Government by decree or administrative instruction and therefore vary. Typical thresholds range from EUR 1,000 (direct purchase) to EUR 25,000 (informal award without publication).

Direct purchase

Below a contract value of EUR 1,000 (net), the contracting authority may carry out a so-called direct purchase under § 14 (4) No. 3 UVgO, i.e. obtain an invoice and place the order without any formalities.

Freihändige Vergabe under VOB/A

For works below the EU threshold, § 3 (5) VOB/A (Section 1) governs the informal award. It is permitted up to a contract value of EUR 3,000 without prior comparison of offers; for higher amounts at least three comparative offers must be obtained.

Comparison: Austria and Germany

Feature	Austria (BVergG 2018)	Germany (UVgO/VOB/A)
Term	Direct award	Informal award / direct purchase
Threshold supplies/services	up to EUR 100,000	variable (Länder instruction, typically up to EUR 25,000)
Threshold works	up to EUR 75,000	up to EUR 3,000 (without comparative offers)
Publication	Not required	Not required
Documentation obligation	Yes	Yes

Distinction from freihändige Vergabe

Under Austrian procurement law, the direct award must be distinguished from the freihändige Vergabe under § 30 BVergG 2018: the latter takes place in the sub-threshold area at higher contract values, but does not require public publication.

The Austrian freihändige Vergabe sits between the direct award and the formal tender procedures. It generally requires the collection of at least three offers and a documented award decision. In Germany, the Austrian freihändige Vergabe most closely corresponds to the restricted procedure without competitive selection under the UVgO.

Risks of direct awards

The direct award is the most error-prone form of procurement in the public sector: if it is applied unlawfully, a so-called "de facto award" arises, which can lead to the nullity of the contract.

Unlawful contract splitting

The improper splitting of a single contract into several partial contracts in order to fall below value thresholds (contract splitting) is expressly prohibited (§ 13 BVergG 2018; § 2 (3) UVgO). When calculating the value, the total value of an economically coherent contract is decisive, not the sum of individual call-offs.

De facto award

If a contract is awarded without the legally required formal tender procedure even though the thresholds for a direct award have been exceeded, an unlawful de facto award exists. Such awards can be challenged by passed-over candidates and declared void (Art. 2d Directive 89/665/EEC; § 135 GWB; § 334 BVergG 2018).

Documentation obligation

Even in direct awards, the procurement procedure must be documented. The contracting authority must at least record which undertaking was engaged, at what price, and on what grounds the direct award was chosen as a permissible procedure type.

Legal basis

The direct award is governed exclusively by national procurement law; EU procurement law contains no independent direct-award rule below the thresholds, but does allow simplified procedures.

Relevant provisions:

Austria: § 41 BVergG 2018 (direct award), § 40 BVergG 2018 (direct award with publication), § 30 BVergG 2018 (informal award), § 13 BVergG 2018 (prohibition on contract splitting)
Germany: §§ 12–14 UVgO (informal award, direct purchase), § 3 (5) VOB/A (informal award for works), § 2 (3) UVgO (prohibition on circumvention)

National implementation

Austria (BVergG 2018)

The Federal Procurement Act 2018 governs the direct award in § 41 and is one of the few procurement provisions that is anchored exclusively in national law and has no direct EU-law counterpart. The comparatively high threshold of EUR 100,000 for supplies and services makes the direct award an important procurement instrument in Austria — in particular for small municipalities and smaller public bodies that regularly award contracts of this size.

The Federal Procurement Agency (BBG) and the Austrian Federal Competition Authority (BWB) regularly publish guidance on the correct application of the direct award.

Germany (GWB / VgV / UVgO / VOB)

Germany has no uniform federal framework for informal awards in the sub-threshold area; whether the UVgO applies depends on whether the relevant Land or the Federal Government has declared it binding by decree or regulation. This results in a patchwork of different thresholds and procedural requirements depending on the Land. The Federation and most Länder have essentially introduced the UVgO; nevertheless, different thresholds for the individual simplified procedure types continue to exist.

Related terms

FAQ

Up to what amount is a direct award permitted in Austria? For supply and service contracts up to EUR 100,000 net (excluding VAT), and for works contracts up to EUR 75,000 net under § 41 BVergG 2018. These thresholds relate to the estimated total contract value.

Is it mandatory to obtain an offer in a direct award? In Austria, § 41 BVergG 2018 prescribes that a "suitable undertaking" be engaged; obtaining comparative offers is not legally mandatory but strongly recommended for reasons of economy and documentation. In Germany, the requirements depend on the relevant Länder rules and the contract value.

What is the difference between a direct award and an informal award? Under Austrian procurement law, the direct award (§ 41 BVergG 2018) is the most informal form of contract award for small contracts, whereas the informal award (§ 30 BVergG 2018) applies to higher values and generally requires several comparative offers. In Germany, the terms are sometimes used synonymously; the "freihändige Vergabe" under the UVgO is functionally equivalent to the Austrian direct award.

May a contracting authority split a contract to avoid exceeding the direct-award threshold? No. The improper splitting of contracts is expressly prohibited. When determining the contract value, the total value of the economically coherent contract is always decisive. If a contract is artificially split in order to remain below thresholds, a procurement-law infringement exists.

What are the consequences of an unlawful direct award? An unlawful direct award (de facto award) can be challenged by passed-over undertakings before the competent procurement supervisory authority. The contract may be declared void; the contracting authority also faces damages claims and budgetary-law consequences.

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