Direct Contract in Procurement Law 2026

Definition: A direct contract is the award of a public contract without a formal procurement procedure and without competition, directly to a contractor, which is permitted by law up to certain value thresholds.

Last updated: January 2026 · Legal status: BVergG 2018 §§ 41–43, UVgO § 8 (Germany), VOB/A § 3a para. 5

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What is a direct contract?

The direct contract is the simplest form of contract award: the contracting authority commissions a company directly, without first carrying out a tender procedure or obtaining offers. It is the counterpart to a formal procurement procedure and is only permissible below certain thresholds. Above these value thresholds, the direct contract – in the absence of specific exception grounds – is contrary to procurement law and may amount to a de facto award.

In Austrian legal terminology, the direct contract is referred to as a standalone procedure type; in German law, the terms used are "direct award" (Direktvergabe) or award without a procurement procedure.

Value thresholds

The permissible value thresholds for direct contracts differ between Austria and Germany, and by type of contract.

Austria (BVergG 2018)

Pursuant to §§ 41–43 BVergG 2018 (below-threshold area):

• Supply and service contracts: up to EUR 100,000 (net) – simplified direct contract
• Works contracts: up to EUR 75,000 (net) – simplified direct contract
• Direct contract (without any formal requirements): up to EUR 50,000 net for supplies/services, EUR 20,000 for works (depending on the federal state and internal rules)

Note: The exact value thresholds may be adjusted by regulation; current values should always be taken from official sources.

Germany (UVgO / VOB/A)

Under the Below-Threshold Procurement Regulation (UVgO):

• Direct award for supplies and services: up to EUR 1,000 (net) without formal requirements
• Negotiated award without a call for competition: up to EUR 100,000 (net) – comparable to a direct contract with the obtaining of an offer from at least one company

Under VOB/A (works):

• Negotiated award without a formal procedure: up to certain value thresholds set out in the federal procurement principles

The federal procurement principles provide for value thresholds of up to EUR 10,000 (net) for direct awards (budget awards); these may deviate under state regulations.

Requirements for a direct contract

Certain minimum requirements also apply to direct contracts, in particular the documentation obligation and the requirement of economy.

• The contracting authority must document the choice of the direct contract and of the commissioned company
• The requirement of economy (thrift and economic efficiency) also applies to direct contracts
• Arbitrary awards or awards conducive to corruption are not permitted
• Repeated direct contracts to the same company may constitute an impermissible splitting

Delimitation from direct award with prior publication

The simple direct contract must be distinguished from the "direct award with prior publication". The latter requires prior public notification of the intended direct award and is provided for in Austria as an instrument for creating transparency, including in larger direct awards.

FAQ

May a contracting authority always commission the same contractor directly? No. Systematic preferential treatment of individual contractors in direct contracts may be considered a violation of the principle of equal treatment and of the principle of economic efficiency. For recurring needs of a similar nature, rotation should be applied even below the direct-contract thresholds, or at least market research should be conducted.

What applies if several small direct contracts together exceed the value threshold? Impermissible splitting is prohibited. Similar services must be aggregated within the same procurement period. If together they reach a value above the direct-contract thresholds, a formal procurement procedure must be carried out.

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