Supply Chain in Procurement Law 2026

Supply chain in procurement law: significance of supply-chain requirements in public contracts, due diligence obligations and sustainable procurement.

Definition: The supply chain comprises all upstream and downstream processes, undertakings and actors involved in the production, processing and supply of a product or service; in procurement law it is gaining importance through statutory due diligence obligations, sustainable procurement requirements and the option of setting supply-chain standards as contract performance conditions.

Last updated: January 2026 · Legal basis: LkSG (Germany), Directive 2014/24/EU Art. 18 (2), BVergG 2018

What is the supply chain in a procurement context?

In procurement law the supply chain is no longer merely an economic concept but increasingly a legally relevant framework that imposes obligations on contracting authorities and their contractors. As a major purchaser, the public sector bears particular responsibility: by setting targeted supply-chain requirements it can promote social and environmental standards and live up to its role-model function.

Procurement-law requirements concerning the supply chain

Art. 18 (2) Directive 2014/24/EU obliges Member States to ensure that economic operators comply with the relevant environmental, social and labour-law obligations during contract performance.

For the supply chain this includes:

Compliance with the ILO core labour standards (ban on child and forced labour, freedom of association)
Environmental protection requirements along the production chain
Compliance with national minimum-wage rules, including for subcontractors

Supply chain as a contract performance condition

Contracting authorities can lay down supply-chain requirements as contractual performance conditions, provided that they are linked to the subject of the contract and have been announced in advance.

Admissible supply-chain performance conditions:

Evidence of certified supply chains (e.g. Fairtrade, Rainforest Alliance for food)
Prohibition on the use of subcontractors from countries lacking sufficient human-rights protection
Obligation to disclose sub-supplier structures
Evidence of a supply-chain compliance system

Supply Chain Due Diligence Act (LkSG)

In Germany, the Supply Chain Due Diligence Act (LkSG) requires large undertakings with 1,000 or more employees to comply with human rights and environmental due diligence obligations along their entire supply chain.

The LkSG has the following procurement-law consequences:

Tenderers falling within the scope of the LkSG must maintain corresponding compliance systems
Breaches of the LkSG can lead to exclusion from procurement procedures (§ 22 LkSG)
Contracting authorities can require LkSG compliance as a selection criterion or contract performance condition

EU Supply Chain Directive (CSDDD)

The EU Corporate Sustainability Due Diligence Directive (CSDDD) expands due diligence obligations to further undertakings and supply-chain tiers once it is transposed nationally.

The CSDDD (Directive (EU) 2024/1760) will, once fully transposed nationally, further tighten the requirements for supply-chain compliance and indirectly affect procurement law.

FAQ

Can contracting authorities exclude tenderers because of supply-chain breaches? Yes. Breaches of labour and environmental law can be invoked under § 124 GWB (Germany) as a discretionary exclusion ground. LkSG breaches are expressly governed as a possible exclusion ground under § 22 LkSG.

How far does a contracting authority's duty to verify the supply chain extend? The contracting authority's procurement-law duty to verify primarily relates to the direct contractor. Requirements concerning deeper tiers of the supply chain can be agreed as performance conditions, but enforcement is in practice more difficult.

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