Fact Sheets on the European Union
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Public procurement

This fact sheet explains the EU rules on public procurement, i.e. the process by which public authorities, such as government departments or local authorities, purchase work, goods or services from companies. It outlines the legal framework, main procedures and recent policy reforms, including measures on digitalisation, sustainability and international procurement. It highlights the European Parliament’s role in shaping and reviewing the EU public procurement framework.

Legal basis

The Treaty on the Functioning of the European Union: Articles 26 and 114 provide the legal basis for the single market and establish common EU rules necessary for its functioning, including in public procurement; Articles 34, 56, 57 and 62 ensure that public contracts are open to cross-border competition in goods and services; and Article 53(1) provides the legal foundation for coordinating national rules that affect access to economic activities.

Objectives of EU public procurement rules

The aim of EU public procurement rules is to ensure that public contracts (i.e. contracts awarded by public authorities to companies to provide works, products or services) are awarded fairly and efficiently across the EU’s open single market.

Their main objectives are to:

  • Ensure equal treatment and transparency in awarding public contracts;
  • Open national procurement markets to competition across the EU;
  • Help public authorities secure the best value for public money;
  • Reduce fraud and corruption risks;
  • Support broader policy goals such as innovation, digitalisation and sustainability.

Public procurement accounts for around 14% of the EU’s GDP and is particularly important in sectors such as construction, energy and telecommunications. It is therefore a major driver of economic growth, job creation and innovation within the EU single market. Opening procurement to competition within the single market helps public authorities secure better value for money, while supporting the competitiveness of EU companies and promoting transparent and efficient award procedures.

Early laws on public procurement

The European Community adopted legislation aimed at coordinating national rules, imposing obligations on the publication of calls for tender and the objective criteria used to examine tenders. Starting in the 1960s, several legal acts relating to public procurement were adopted but the Community later decided to simplify and coordinate legislation in this field, adopting a directive on procedures for awarding contracts for public works, public supply and public service (Directive 2004/18/EC) and a directive on the procurement procedures for the water, energy, transportation and postal services sectors (Directive 2004/17/EC). A few years later, a directive introduced specific rules for defence procurement (Directive 2009/81/EC), aiming to facilitate access to the defence markets of other Member States.

Reform of public procurement policy

In 2014, Parliament and the Council adopted a new public procurement package that includes three directives:

  • The Public Procurement Directive;
  • The Utilities Directive on procurement in the water, energy, transport and postal services sectors;
  • The Concessions Directive, which establishes a legal framework for the award of concessions, ensuring that all economic actors in the EU have effective and non-discriminatory access to the EU market, and provides greater certainty on applicable legal provisions. Concessions are contracts awarded by a public authority to one or more companies for works or services (e.g. motorway maintenance and management). A company awarded a concession is remunerated primarily by being permitted to run and exploit the works or service.

In 2012, the Commission proposed a regulation on international public procurement policy. It aimed to clarify the rules governing access to the EU’s single market in public procurement and procedures for companies, goods and services from outside the EU. It also set out to strengthen the EU’s position when negotiating access for EU companies, goods and services to the public procurement markets of non-EU countries. A deadlock in negotiations resulted in a new proposal by the Commission in 2016. Parliament and the Council signed the International Procurement Instrument (IPI) on 23 June 2022. The IPI seeks to promote the global opening of procurement markets.

Furthermore, on 12 July 2023, the Foreign Subsidies Regulation (Regulation (EU) 2022/2560) came into effect, enabling the Commission to address distortions and ensure a level playing field for all companies operating in the single market. These new rules ensure that foreign subsidies can be addressed by the Commission in individual public procurement procedures, by requiring EU public buyers to exclude companies that have received distortionary foreign subsidies from public procurement procedures.

In April 2012, the Commission adopted a strategy for e-procurement with the aim of reaching full e-procurement by mid-2016. On 16 April 2014, Parliament and the Council adopted a directive on electronic invoicing in public procurement.

On 3 October 2017, the Commission published two communications: ‘Making Public Procurement work in and for Europe’ and ‘Helping investment through a voluntary ex ante assessment of the procurement aspects for large infrastructure projects’. With the aim of further improving European public procurement as part of the public procurement strategy package, it also published a recommendation on the professionalisation of public procurement.

In her Political Guidelines for the Next European Commission 2024-2029, then-candidate for Commission President, Ursula von der Leyen, announced a revision of the public procurement directives to enable preference to be given to EU products in public procurement for certain strategic sectors, help ensure EU added value and security of supply for vital technologies, products and services, and modernise and simplify public procurement rules. On 13 December 2024, the Commission launched an evaluation of the three main public procurement directives (the Public Procurement Directive, the Utilities Directive and the Concessions Directive). It aimed to assess their performance and impact across the EU, whether they remain fit for purpose, deliver on their intended objectives at minimum cost and adequately address current challenges.

Public procurement procedure

Procedures must adhere to the principles of EU law, including the free movement of goods, establishment and service provision. Principles like equal treatment, non-discrimination and transparency are essential, and competition, confidentiality and efficiency must be upheld.

A. Types of procedure

Calls for tender align with various procedure types, based on a threshold system. The directives outline methods for calculating the estimated value of each public contract and the associated procedures.

  • In the ‘open procedure’, any interested company can submit a tender.
  • The ‘restricted procedure’ allows only invited candidates to tender.
  • The ‘competitive procedure with negotiation’ allows any company to request participation, but only those invited following an assessment are allowed to tender.
  • The ‘competitive dialogue’ is for situations where the public authorities issuing the call for tender cannot define their needs; only invited candidates participate in the dialogue. Contracts are awarded based on the best price-to-quality ratio.
  • The ‘innovation partnership’ procedure is for innovative solutions not yet on the market. The authority collaborates with one or several entities for research and development to negotiate a novel solution during tendering.

In special cases, contracts can be awarded without prior publication.

B. Criteria for the award of contract

Contracting authorities are required to award public contracts based on the ‘most economically advantageous tender’ (MEAT) criterion, introduced in the public procurement rules reform. Instead of just the lowest price, MEAT emphasises best value for money by considering quality, environmental and social factors, life cycle costs and innovation.

C. Rules on publication and transparency

Procurement procedures must ensure the required transparency at all stages. This is achieved by publishing the essential elements of procurement procedures, and by publishing information on candidates and tenderers, as well as through the provision of sufficient documentation on all steps of the procedure.

D. Remedies when contracts are breached

The 2007 Remedies Directive ensures an effective review system for breaches of public procurement rules. It introduces the ‘standstill’ period, which, after a contract decision, gives bidders at least 10 days to review the decision before the contract is signed by the authorities. This period allows potential challenges to the decision.

E. Other aspects of public procurement

The rules introduced in 2014 highlight social inclusion and simplify service contracts. They aim to reduce bureaucracy, aid small and medium-sized enterprises (SMEs) with the ‘European single procurement document’, and encourage the division of contracts into lots. E-procurement is prioritised, with specific e-procurement techniques outlined. The directives recognise decisions of the Court of Justice of the European Union on in-house contract awards and reinforce regulations against conflicts of interest and corruption.

Furthermore, the rules emphasise green procurement, considering environmental impact and allowing eco-label references. Green public procurement (GPP) is defined in the Commission communication entitled ‘Public procurement for a better environment’ as ‘a process whereby public authorities seek to procure goods, services and works with a reduced environmental impact throughout their life cycle when compared to goods, services and works with the same primary function that would otherwise be procured’. The Commission has been developing voluntary GPP criteria for several product groups and is proposing minimum mandatory GPP criteria and targets in sectoral legislation such as the Clean Vehicles Directive (Directive (EU) 2019/1161), the Ecodesign Regulation, the New Construction Products Regulation and the Packaging and Packaging Waste Regulation.

Following the adoption of the 2020 Circular Economy Action Plan, on 11 March 2020, the Commission published a working document on GPP criteria for data centres, server rooms and cloud services with the aim of ensuring that data centre equipment and services are procured in an environmentally friendly way in line with the EU’s energy, climate change and resource efficiency objectives.

In response to the COVID-19 pandemic, the Commission proposed the EU4Health programme, aimed at significantly increasing the budget for public health procurement, including medicines, vaccines and health data systems. A regulation establishing the EU4Health programme for 2021-2027 was effective from 1 January 2021. The Commission provided new guidance for public buyers for the rapid procurement of essential equipment, initiated five joint procurements of personal protective equipment with Member States, and emphasised the digitalisation of public procurement through national e-procurement platforms, as part of its broader post-COVID-19 recovery strategy.

On defence procurement, the EDIRPA Regulation was adopted in October 2023, establishing an instrument for the reinforcement of the European defence industry through common procurement. The regulation aims to substantially boost defence spending, promote collaborative investments in joint projects, enhance joint defence capabilities procurement, strengthen investment in diverse mission capabilities, harness synergies, spur innovation, and fortify the European defence industry, with an emphasis on supporting SMEs.

Role of the European Parliament

Parliament played a central role in adopting the 2014 public procurement package. It has consistently called for simpler rules, greater legal certainty, better access for SMEs, wider use of digital tools and stronger support for sustainability in public procurement.

Before adopting the public procurement package on 15 January 2014, Parliament had adopted several resolutions, including:

As part of efforts to further improve EU public procurement, Parliament adopted a resolution on the public procurement strategy package on 4 October 2018. The resolution, informed by an analysis of the legal framework of EU public procurement, called for improved uptake of digital technologies in public procurement in the EU, facilitation measures for SMEs and social economy enterprises, improved access for EU suppliers to the public procurement markets of non-EU countries, and the professionalisation of buyers. In November 2020, a study on national legal obstacles to single market rules found that disparities in professionalism in public procurement among Member States were a significant cause of uneven access to public procurement.

Research on EU public procurement has estimated that Parliament’s recent legislative activity generated up to EUR 2.88 billion annually. At the same time, the 2014 directives on public procurement led to an increase in total award values from less than EUR 200 billion to approximately EUR 525 billion.

In April 2020, a briefing on the EU’s public procurement framework examined how this framework contributes to the achievement of the objectives in the Paris Agreement and the Circular Economy Strategy. This research paper was requested by Parliament’s Committee on the Internal Market and Consumer Protection (IMCO) and informed a resolution entitled ‘Towards a more sustainable single market for business and consumers’, which was adopted on 25 November 2020.

On 22 February 2021, a study on COVID-19’s impact on the single market was shared with the IMCO Committee. It suggested policy approaches for future crises, including reserved funds for vaccine development and EU-level rule coordination. The study pointed out that Member States swiftly saw the importance of coordinated efforts in procuring medical and personal protective equipment owing to the intensity of the crisis.

On 1 December 2021, IMCO held a public hearing on sustainable public procurement with Parliament’s Committee on the Environment, Public Health and Food Safety. The objective was to see how public purchasing could support the European Green Deal’s goals.

In May 2022, a study for IMCO entitled ‘The Digital Single Market and the digitalisation of the public sector’ explored the potential of an EU GovTech platform to modernise the public sector.

On 9 September 2025, Parliament adopted a resolution on public procurement, calling on the Commission to simplify the current framework, reducing bureaucracy and regulatory burdens, while maintaining high social and environmental standards and boosting EU competitiveness.

On 14 October 2025, the Commission published its evaluation of the three EU public procurement directives. Covering the 2016-2024 period, the evaluation forms part of the preparations for the upcoming Public Procurement Act, expected in the second quarter of 2026, and follows the Better Regulation Guidelines. The evaluation was discussed by IMCO during an exchange of views with the Commission on 11 November 2025.

This fact sheet was prepared by the European Parliament’s Policy Department on Economy and Growth. For more information, please visit the website of the Committee on the Internal Market and Consumer Protection.

 

Georgios ATHANASIADIS