Works Contract in Procurement Law

Definition: A works contract is a public contract for the execution or for both the design and execution of works or for the realisation of a work intended to meet the requirements of the contracting authority economically or technically, in accordance with Art. 2(1)(6) of Directive 2014/24/EU.

Last updated: January 2026 · Legal status: Directive 2014/24/EU, BVergG 2018, VOB/A

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What is a works contract?

A works contract is a public contract whose subject matter is the execution of construction works, the combined design and execution of works, or the realisation of a work that meets the requirements of the contracting authority. The statutory definition is found in Art. 2(1)(6) of Directive 2014/24/EU and has been transposed into both countries' national law.

The concept covers three categories:

1. Execution of construction works – Pure performance of activities listed in Annex II of Directive 2014/24/EU (e.g. building and civil engineering, electrical installations, heating and ventilation systems).
2. Design and execution – Combined contract under which the undertaking performs both planning and execution (the so-called general-contractor model).
3. Work pursuant to requirements set by the contracting authority – Realisation of a work that economically or technically benefits the contracting authority, irrespective of how the contractual relationship is labelled.

Significance and function

The works contract is the procurement category of greatest legal significance, since it is subject to a substantially higher EU threshold than supply and service contracts. The current EU threshold for works contracts is EUR 5,538,000 (net, excluding VAT) and applies uniformly to public contracting authorities and to utilities. The Commission adjusts this value every two years by regulation.

The threshold is calculated on the basis of the total contract value. Contract splitting – i.e. the artificial division of a construction project into several lots in order to fall below the threshold – is expressly prohibited (Art. 5(3) Directive 2014/24/EU).

Distinction from supply contracts

The distinction between a works contract and a supply contract is frequently contested in practice and depends on the main subject matter of the contract. Where plant or machinery is supplied and permanently installed, this constitutes a supply contract with ancillary works if the supply component predominates. Conversely, if the construction services predominate – measured by economic value – the contract is a works contract. The European Commission and the CJEU have developed extensive case law on this question.

Distinction from works concessions

In a works contract, the contracting authority bears the economic consideration (payment of the price). In a works concession, by contrast, the consideration consists of the right to exploit the work or in that right together with payment, with the operating risk remaining with the concessionaire (Art. 5(1)(a) Directive 2014/23/EU).

Legal basis

Procurement law for works contracts is based on a multi-layered framework of EU and national law.

• Directive 2014/24/EU – Art. 2(1)(6) (definition), Art. 4(a) (threshold), Annex II (list of activities)
• Directive 2014/25/EU – Utilities
• Implementing Regulation (EU) 2023/1770 – Adjustment of thresholds

Austria

In Austria, works contracts are defined in § 4 BVergG 2018 (BGBl. I No. 65/2018) and follow EU terminology. The procedural rules for works contracts below thresholds – i.e. below EUR 5,538,000 – are set out in §§ 46 et seq. BVergG 2018, allowing simplified procedure types such as the restricted tender or direct award. ÖNORM B 2110 (General Contract Provisions for Construction Works) forms part of many Austrian works contracts.

Germany

In Germany, the award of works contracts is governed by the GWB (§§ 97 et seq.) and the VOB/A (Award and Contract Regulations for Construction Works). VOB/A Section 2 applies to EU-wide procurement above thresholds, Section 1 to the national regime. It contains detailed rules on specifications, deadlines, suitability evidence and award criteria. Federal-state procurement regulations may impose additional requirements.

Related terms

• Public tender
• Procurement procedure
• Restricted tender
• Bill of quantities
• Service contract
• Concession award
• Notice
• Suitability check
• Electronic auction

FAQ

What is the difference between a works contract and a works concession? Under a works contract, the contracting authority pays the undertaking a price. Under a works concession, the undertaking instead receives the right to use and operate the constructed work and thereby bears the economic operating risk.

From what value must a works contract be put out to EU-wide tender? The EU threshold for works contracts is currently EUR 5,538,000 (net). Below this value, the national procurement rules of the relevant Member State apply.

Can a construction project be split into multiple lots to circumvent the threshold? No. Artificial splitting with the aim of falling below the EU threshold is expressly prohibited by Art. 5(3) of Directive 2014/24/EU and can render the contract void.

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