Negotiated Award in Public Procurement Law

Negotiated award: an award without a public tender to particular bidders in the sub-threshold area. Permissible only under narrow statutory conditions.

Definition: The negotiated award (German: freihändige Vergabe) is a type of procedure in the sub-threshold area in which the public contracting authority enters into negotiations directly with one or more undertakings on the subject of the contract and the price, without a public tender and without a formalised competitive procedure, and awards the contract without prior publication.

Last updated: January 2026 · Legal basis: § 41 BVergG 2018 (AT), § 12 UVgO (DE), § 3a VOB/A (DE)

What is the negotiated award?

The negotiated award is the most flexible, but also the most strictly limited, type of procedure in public procurement, in which the contracting authority negotiates directly with one or a few selected undertakings without prior public notice. It is typically used in the sub-threshold area and enables a swift, low-bureaucracy award where the conditions for a more formal procedure are not met or such a procedure would not be appropriate.

Since there is no open competition in the negotiated award, it is subject to narrow statutory conditions. Its abusive use – that is, its use as a means of circumventing the competition requirement – breaches procurement-law principles and can lead to the ineffectiveness of the contract.

Significance and function

The negotiated award fulfils an important function in situations where a formal procurement procedure would be disproportionate, impractical, or impossible for objective reasons – however, it must never become the rule, but remains an exception requiring justification.

Permissible use cases typically include:

Urgent procurements where the deadlines for an open procedure cannot be observed
Services that, for technical or artistic reasons, can only be provided by a single undertaking (exclusivity)
Supply or service contracts of very low value (small-value rule)
Contracts requiring secrecy
Follow-on contracts after an initial tender, under certain conditions

Legal basis

The negotiated award is named differently in Austria and Germany, but is substantively regulated in a comparable manner – in both legal orders the principle applies that its use requires objective justification.

Austria (BVergG 2018)

In Austria, the Federal Procurement Act 2018 (BVergG 2018) recognises the negotiated award as a separate type of procedure in the sub-threshold area for supply and service contracts. It corresponds to the "negotiated procedure without prior publication" in the above-threshold area. Key provisions:

§ 41 BVergG 2018: Conditions for permissibility of the negotiated award in the sub-threshold area (supplies and services)
§ 46 BVergG 2018: Negotiated award for construction contracts in the sub-threshold area
Value threshold: Up to EUR 100,000 (net), the negotiated award is permissible where the substantive conditions are met; direct award up to EUR 50,000 (net) without any competition

The negotiated award in Austria does not require a public notice but does require at least three offers to be obtained, where possible and reasonable. The selection of the undertakings to be invited must be transparent and non-discriminatory.

Germany (UVgO / VOB/A)

In Germany, the negotiated award is governed by the following provisions:

§ 12 UVgO: Negotiated award without prior call for competition (equivalent to the negotiated award) for supply and service contracts below the EU thresholds; permissible, inter alia, for contract values up to EUR 25,000 (net), in cases of technical exclusivity, urgency, or where an open procedure produced no result
§ 3a VOB/A: Negotiated award for construction services below the thresholds; permissible up to EUR 10,000 (net) without specific justification and where particular objective grounds exist
Value thresholds: Vary by federal state and contract type; many federal states have their own administrative provisions with state-specific value thresholds

In Germany, the term "freihändige Vergabe" is replaced in the terminology of the UVgO by "Verhandlungsvergabe ohne Teilnahmewettbewerb" (negotiated award without prior call for competition), but is substantively identical.

Related terms

FAQ

Must any competition take place at all in a negotiated award? As a rule, yes. Both the Austrian BVergG 2018 and the German UVgO and VOB/A prescribe that, in the negotiated award – where possible – several offers should be obtained (in Austria, at least three). Only in exceptional cases (e.g. genuine exclusivity, very small contracts) is a direct award to a single undertaking without any competition permissible.

What happens if a negotiated award is carried out without the required conditions being met? Abusive use of the negotiated award – i.e. circumvention of the tendering requirement – can lead to the ineffectiveness of the concluded contract. In Austria, the BVwG is competent for review. In Germany, procurement chambers and civil courts can be called upon. There are also potential budgetary-law consequences and, for EU co-financed projects, corrections by audit authorities.

Does the negotiated award also apply in the above-threshold area? There is no negotiated award in the classical sense in the above-threshold area, but the "negotiated procedure without prior publication" (Art. 32 Directive 2014/24/EU) fulfils a comparable function. Its conditions of application are, however, even narrower and confined to tightly defined exceptional cases (e.g. extreme urgency, failed open procedure, protection of exclusive rights).

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