Estimation of Contract Value in Procurement Law

The estimation of contract value is a mandatory step before every award procedure and determines which rules apply. Regulated in § 3 VgV and Art. 5 Directive 2014/24/EU.

Definition: The estimation of contract value is the determination, to be made before initiating an award procedure, of the expected total value of a public contract excluding VAT, which serves as the basis for choosing the applicable procurement law regime, pursuant to Art. 5 Directive 2014/24/EU, § 3 VgV and § 13 BVergG 2018.

Last updated: January 2026 · Legal basis: Art. 5 Directive 2014/24/EU; § 3 VgV; § 13 BVergG 2018; § 3 SektVO

What is the Estimation of Contract Value?

The estimation of contract value is a mandatory procedural step to be carried out before initiating every award procedure, the outcome of which determines whether EU-wide or national procurement law is to be applied. The estimated contract value must always be calculated without VAT (net).

The estimation must be realistic and verifiable. The decisive factor is the expected total value to be paid under an economic view. A deliberately understated estimate intended to fall below the EU thresholds and thereby circumvent procurement law is expressly prohibited (anti-circumvention rule).

Significance and Function

The correct estimation of contract value is of decisive importance in procurement law because it determines the applicability of the GWB/BVergG and the procedure to be followed.

Calculation Rules in Detail

Different rules apply to the estimation depending on the subject matter of the contract:

Supply and service contracts (Art. 5 para. 1 Dir. 2014/24/EU, § 3 para. 1 VgV): The expected total value over the entire contract term is decisive. For contracts of indefinite duration or with automatic extension, the monthly value must be multiplied by 48 (4-year value).

Framework agreements and dynamic purchasing systems (§ 3 para. 2 VgV): The estimated total value of all individual contracts over the term of the framework agreement is to be applied.

Options and extension clauses: Options and extension clauses must always be included in the estimation, even if their exercise has not yet been decided (§ 3 para. 3 VgV, Art. 5 para. 1 subpara. 2 Dir. 2014/24/EU).

Lots (§ 3 para. 7 VgV): When divided into lots, the total value of all lots is decisive for the threshold calculation. A division into lots in order to circumvent the threshold is inadmissible (anti-circumvention rule). An exception applies for lots whose individual value does not exceed EUR 80,000 (supplies/services) or EUR 1,000,000 (construction works) and whose total value does not exceed 20 % of the total contract value.

Recurring contracts (§ 3 para. 5 VgV): For similar, recurring services, either the total value of the last 12 months or the estimated value of the next 12 months is to be used as the basis for estimation.

Timing of the Estimation

The estimation must be carried out at the time the award procedure is initiated and documented in the procurement file. If circumstances change significantly after the estimation, a re-estimation may be required.

Anti-Circumvention Rule

The anti-circumvention rule prohibits the artificial division of contracts or the choice of a particular calculation method with the aim of avoiding the application of the EU thresholds. Violations may result in the nullity of the concluded contract.

Legal Basis

The estimation rules are regulated in parallel at EU level and in national law.

Art. 5 Directive 2014/24/EU – methods for calculating the estimated contract value
§ 3 VgV – national implementation for the classical sector (DE)
§ 3 SektVO – estimation rules for utilities contracting authorities (DE)
§ 13 BVergG 2018 – calculation of contract value (AT)
§ 6 UVgO – documentation obligation in the below-threshold range (DE)

Related Terms

FAQ

Which VAT applies to the estimation? The estimation is always made without VAT (net). The gross value is irrelevant for the threshold calculation.

What happens if the estimate was too low and the actual contract value exceeds the threshold? If it only becomes apparent after award that the contract value exceeds the EU threshold, this generally has no impact on the validity of the already concluded contract, provided that the estimation was made carefully and in good faith. In the case of deliberate underestimation, nullity of the contract is imminent.

Must options be considered in the estimation? Yes. All options – regardless of whether their exercise is likely – must be included in the estimation. This applies to extension options as well as quantity or performance options.

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