Functional Specifications in Procurement Law
Functional specifications: tendering based on requirements and performance objectives instead of execution details. Art. 42(3)(b) Directive 2014/24/EU, § 95 BVergG 2018.
Definition: Functional specifications are a form of tender in which the public contracting authority describes only the desired outcome, the performance objectives and the requirements to be met – rather than the specific method of execution – so that bidders retain scope to develop their own solution.
Last updated: January 2026 · Legal basis: Art. 42(3)(b) Directive 2014/24/EU, § 95 BVergG 2018, § 31 VgV
What are functional specifications?
Functional specifications define what is to be achieved, not how to achieve it – leaving the choice of methods, materials and solution approaches to the bidder. The contracting authority sets out the performance objectives, requirement profiles and quality standards; the bidder independently develops the concept for achieving these objectives. This fundamentally distinguishes functional specifications from prescriptive specifications, where the method of execution and technical details are precisely defined.
Typical areas of application are IT systems, software development, complex services, research contracts and innovative construction projects. Whenever the contracting authority knows the objective but not the optimal method of achieving it, functional specifications offer advantages.
Significance and function
Functional specifications encourage innovation and competition, as they motivate bidders to develop creative and efficient solutions rather than follow a predefined path. The contracting authority benefits from the market's know-how and may receive better solutions than it could have specified itself.
At the same time, functional specifications carry risks: without precise requirements, tenders can be harder to compare and the quality assurance during acceptance becomes more complex. It is therefore essential to define minimum requirements clearly and to design the award criteria in such a way that the submitted solution concepts can be assessed appropriately.
Functional specifications are particularly suitable in combination with the negotiated procedure or the competitive dialogue, since both allow an exchange about solution approaches.
Distinction from prescriptive specifications
While prescriptive specifications tie the contractor to a precisely defined method of execution, functional specifications grant creative freedom in developing the solution. In practice, both forms are often combined: certain requirements (e.g. safety standards, interfaces) are prescribed in detail, while other areas remain described functionally.
| Feature | Functional spec | Prescriptive spec |
|---|---|---|
| What is described? | Objective and requirements | Method of execution and details |
| Scope for the bidder | Wide | Narrow |
| Comparability of tenders | More involved | Easier |
| Promotion of innovation | High | Low |
| Typical use | IT, services | Construction, standard supplies |
Link to alternative tenders
Functional specifications create ideal conditions for allowing alternative tenders, as they grant bidders conceptual scope from the outset. Contracting authorities that use functional specifications signal their openness to alternative solution approaches. Under Art. 45 Directive 2014/24/EU, alternative tenders are only admissible if the contracting authority expressly permits them.
Legal basis
Functional specifications are expressly recognised in Art. 42(3)(b) of Directive 2014/24/EU as a permissible form of technical specification.
- Art. 42(3)(b) Directive 2014/24/EU – Functional description as a form of specification
- Art. 45 Directive 2014/24/EU – Alternative tenders
- § 95 BVergG 2018 – Specifications (Austria)
- § 31(3) VgV – Technical requirements via performance and functional requirements (Germany)
Related terms
- Prescriptive specifications
- Specifications
- Alternative tender
- Bill of quantities
- Tender
- Procurement law
- Contracting authority
- Sustainable procurement
FAQ
When should a contracting authority opt for functional specifications? Functional specifications are advisable when the contracting authority knows the objective but not the optimal method of achieving it – for example in innovative IT projects, complex services, or when market solutions are to be used that the contracting authority does not know in detail.
How does the contracting authority evaluate tenders based on functional specifications? Because the tenders contain different solution concepts, the award criteria must include qualitative aspects such as concept quality, technical approach and degree of innovation. A purely price-based evaluation is generally not appropriate for functional specifications.
Can functional specifications lead to a flood of contract amendments? Yes, if the minimum requirements are not formulated precisely enough. Acceptance and verification of whether the agreed objectives have been met require clear and measurable success criteria.
Last updated: January 2026 All information is provided without warranty. 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.