Small and Medium-Sized Enterprises (SMEs) in Procurement Law 2026

SMEs in procurement law: measures to facilitate access by small and medium-sized enterprises to public tenders and contracts.

Definition: Small and medium-sized enterprises (SMEs) are companies that employ fewer than 250 persons and have an annual turnover of no more than EUR 50 million or an annual balance sheet total of no more than EUR 43 million; in procurement law they benefit from special support measures designed to facilitate their access to public contracts.

Last updated: January 2026 · Legal status: Recommendation 2003/361/EC; Directive 2014/24/EU recitals 2, 78, 124; GWB § 97 para. 4; BVergG 2018 § 20

What are SMEs in procurement law?

Small and medium-sized enterprises form the economic backbone of Europe and are a particular focus of procurement law, which is intended to facilitate their access to public contracts in structural terms. The European SME definition (Recommendation 2003/361/EC) distinguishes three sub-categories:

Category	Employees	Annual turnover	Balance sheet total
Micro-enterprises	< 10	≤ EUR 2 million	≤ EUR 2 million
Small enterprises	< 50	≤ EUR 10 million	≤ EUR 10 million
Medium-sized enterprises	< 250	≤ EUR 50 million	≤ EUR 43 million

SME support measures in procurement law

Procurement law provides a number of instruments designed to make it easier for SMEs to participate in procurement procedures.

Division into lots (duty to award by lots)

The most important instrument for the promotion of SMEs is the duty to divide contracts into lots. Under § 97 para. 4 GWB and § 20 BVergG 2018, contracts are to be divided into specialist lots and partial lots in order to enable smaller companies, too, to participate. Where a contracting authority decides not to divide a contract into lots, it must give reasons for that decision in the procurement documents.

Eligibility requirements

Eligibility requirements may not be set disproportionately high. Excessive turnover requirements (e.g. a minimum annual turnover more than three times the contract value) may be discriminatory towards SMEs and thereby contrary to procurement law.

Simplified evidence through self-declarations

SMEs may initially provide evidence of the eligibility criteria by means of self-declarations (in the EU through the European Single Procurement Document, ESPD); the underlying evidence need only be produced on request by the contracting authority.

Consortia of bidders

SMEs can join together in consortia in order to satisfy jointly the eligibility requirements which they would not satisfy individually. The formation of consortia is permissible under procurement law, provided it does not have an anti-competitive effect.

Reliance on the capacities of other entities

SMEs may rely on the capacities of other companies (e.g. parent company, subcontractors) in order to evidence missing capacity or references.

Payment terms and security

In order to protect the liquidity of SMEs, payment terms and security (deposits, guarantees) should be designed proportionately.

National SME strategies

Both Germany and Austria have developed national strategies to promote access by SMEs to public contracts.

In Germany, § 97 para. 4 GWB requires contracting authorities to divide contracts into lots and provides that the interests of small and medium-sized businesses are to be given priority in award procedures. The principle of supporting the medium-sized sector is a central feature of German procurement law.

Corresponding rules in Austria are found in the BVergG 2018, which likewise seeks to ensure the appropriate participation of SMEs in procurement competition.

Challenges for SMEs

Despite the support measures in procurement law, SMEs face considerable obstacles in practice when seeking access to public contracts.

Administrative burden: procurement procedures are complex and require significant bureaucratic effort (evidence, forms, platforms)
Financial requirements: security obligations and pre-financing obligations place a strain on liquidity
Large contract volumes: contracts are often too large for individual SMEs
Access to information: SMEs often lack the resources to monitor all tenders
Digitalisation: e-procurement platforms can pose a hurdle for small companies

Related terms

FAQ

Is there a duty under procurement law to favour SMEs? No. Procurement law requires equal treatment of all bidders. SMEs are not to be favoured, but their access is to be facilitated by means of division into lots and proportionate requirements.

Can contracting authorities set an SME quota? No. A binding SME quota would be incompatible with the principle of equal treatment under procurement law.

What happens if a contracting authority fails to divide a contract into lots without giving reasons? This constitutes a breach of procurement law, which may be challenged in review proceedings by bidders who have been passed over.

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