Threshold
A threshold in public procurement is a monetary value that determines which set of legal rules and procedures applies to a given contract. When the estimated value of a contract equals or exceeds the applicable threshold, specific legal obligations are triggered -- including publication requirements, mandatory procedures, minimum time limits, and remedies mechanisms. In the EU procurement framework, the most consequential thresholds are those set by Directive 2014/24/EU, above which the full suite of EU procurement rules applies. Member States also establish national thresholds for below-EU-level contracts, and individual organisations may set internal thresholds for approval processes.
How It Works
Thresholds function as regulatory triggers. The estimated value of a procurement is compared against the relevant threshold, and the result determines the applicable legal regime.
EU thresholds. The European Commission sets EU-wide procurement thresholds, revised every two years to reflect exchange rate fluctuations (thresholds are based on Special Drawing Rights defined by the WTO Government Procurement Agreement). The current thresholds for classical procurement under Directive 2014/24/EU (2024-2025 cycle) are:
| Category | Threshold |
|---|---|
| Works contracts | 5,382,000 EUR |
| Supply and service contracts (central government) | 143,000 EUR |
| Supply and service contracts (sub-central authorities) | 221,000 EUR |
| Social and other specific services (Annex XIV) | 750,000 EUR |
For utilities procurement under Directive 2014/25/EU, higher thresholds apply: 431,000 EUR for supplies and services, and 5,382,000 EUR for works. Defence and security procurement under Directive 2009/81/EC has its own thresholds.
Estimated value calculation. The threshold comparison uses the estimated value of the contract, calculated according to Article 5 of Directive 2014/24/EU. The estimated value is the total amount payable net of VAT, including all options, renewals, prizes, and payments to candidates or tenderers. For framework agreements and dynamic purchasing systems, the estimated value is the maximum estimated value of all contracts envisaged over the entire duration.
Anti-splitting rules. Article 5(3) prohibits contracting authorities from splitting a procurement into smaller contracts to avoid exceeding the threshold. The estimated value of a contract must encompass all related works, supplies, or services that form a single procurement. For contracts divided into lots, the value of each lot is aggregated to determine whether the threshold is met, though individual lots below certain sub-thresholds may be exempted from the directive (Article 5(10)).
Consequences of exceeding the threshold. When the estimated value equals or exceeds the EU threshold, the contracting authority must:
- Publish a contract notice in TED (via eForms)
- Follow one of the procedures defined in the directive (open, restricted, competitive dialogue, etc.)
- Respect minimum time limits for tender receipt
- Apply the directive's rules on selection criteria, award criteria, and exclusion grounds
- Observe the standstill period before contract conclusion
- Publish a contract award notice within 30 days of conclusion
- Be subject to the Remedies Directives (89/665/EEC and 92/13/EEC)
Below EU thresholds. Contracts below the EU thresholds are not subject to the directives but must still comply with the Treaty on the Functioning of the European Union (TFEU) principles of transparency, non-discrimination, proportionality, and mutual recognition. Member States establish national procurement laws for below-threshold contracts. These national regimes vary significantly:
- In Germany, below-threshold procurement follows the UVgO (Unterschwellenvergabeordnung), which establishes simplified procedures and national publication requirements. Different Laender may set different value levels for various procedure types.
- In France, the Code de la commande publique distinguishes between contracts below 40,000 EUR (simplified procedure without formal publication), contracts between 40,000 EUR and the EU threshold (publication on national platforms with adapted procedures), and above-threshold contracts (full directive compliance).
Internal thresholds. Beyond legal thresholds, many public organisations establish internal approval thresholds. These might require different levels of management sign-off, different numbers of quotations, or different documentation standards depending on the contract value. Internal thresholds are policy-driven rather than legally mandated and vary widely across organisations.
Legal Framework
Article 4 of Directive 2014/24/EU establishes the EU thresholds for classical procurement. The thresholds are differentiated by contract type (works vs. supply/service) and by contracting authority category (central government vs. sub-central authorities).
Article 5 sets out the methods for calculating the estimated value, including rules for mixed contracts, framework agreements, dynamic purchasing systems, and contracts divided into lots. Article 5(3) contains the critical anti-splitting prohibition, which the Court of Justice of the European Union has interpreted strictly in cases such as C-574/10, European Commission v Germany.
Article 6 sets the thresholds for defence and security procurement under Directive 2009/81/EC. Article 8 of Directive 2014/25/EU establishes the utilities thresholds. Article 8 of Directive 2014/23/EU sets the concession threshold (currently 5,382,000 EUR for both works and services concessions).
Delegated Regulation 2023/2495 (and its successors) implements the biennial threshold revision. The European Commission publishes the updated threshold values in EUR for all Member States, as well as equivalents in national currencies for non-eurozone Member States.
The interaction between thresholds and the WTO Government Procurement Agreement (GPA) is significant. EU thresholds are calibrated to correspond to the GPA thresholds expressed in Special Drawing Rights (SDR). This alignment ensures that EU procurement above the thresholds is accessible to suppliers from GPA signatory countries (including the United States, Japan, Canada, and others), and vice versa.
The Remedies Directives apply only to above-threshold contracts. For below-threshold procurement, the remedies framework is determined by national law and the general principles of effective judicial protection under EU law.
Practical Examples
A municipal government plans to procure a new fleet of refuse collection vehicles estimated at 4.5 million EUR. Since this is a supply contract for a sub-central authority, the applicable EU threshold is 221,000 EUR. The estimated value far exceeds this threshold, so the full Directive 2014/24/EU framework applies: TED publication, formal procedure, EU-wide competition, and standstill period.
A university (sub-central contracting authority) needs to procure laboratory chemicals estimated at 180,000 EUR per year under a two-year framework agreement. The estimated total value is 360,000 EUR, exceeding the 221,000 EUR threshold. The university must follow the full EU procurement procedure. If the university had artificially split the procurement into two separate annual contracts of 180,000 EUR each, this would violate the anti-splitting rule.
A central government ministry procures consultancy services estimated at 130,000 EUR. Since the central government threshold for services is 143,000 EUR, the contract falls below the EU threshold. The ministry follows national procurement rules but must still ensure transparency and non-discrimination. If the estimated value had been 145,000 EUR, full EU rules would apply.
A regional authority divides a construction project into 10 lots. The total estimated value is 8 million EUR (exceeding the works threshold of 5,382,000 EUR). Under Article 5(10), individual lots below 1 million EUR may be exempted from the directive, provided their aggregate value does not exceed 20 percent of the total. The authority exempts two lots valued at 400,000 EUR and 500,000 EUR respectively (total 900,000 EUR = 11.25 percent of total), which qualifies for the exemption. These lots may be procured under national rules, while the remaining lots follow the directive.
Key Considerations for Suppliers
Monitor both EU and national opportunities. The EU thresholds determine TED publication, but substantial volumes of public spending occur below these thresholds through national platforms. Suppliers that focus exclusively on TED miss a significant portion of the market. In Germany and France, national below-threshold markets are particularly active and may offer less competition than EU-wide procurement.
Understand threshold implications for your market. The threshold level determines the competitive landscape. Above-threshold procurement attracts pan-European competition, with standardised procedures and longer timelines. Below-threshold procurement may offer faster timelines, simpler procedures, and a more localised competitor set. Suppliers should calibrate their go-to-market strategy accordingly.
Watch for threshold manipulation. While anti-splitting rules prohibit artificial fragmentation, some contracting authorities may still attempt to structure procurements to stay below thresholds. If a supplier notices suspiciously small contract values or artificial separation of related requirements, it may have grounds to challenge the procurement under Treaty principles or national law.
Plan for threshold cycles. Thresholds are revised every two years. A contract that falls below the threshold in one cycle might exceed it in the next (or vice versa) due to exchange rate adjustments. Suppliers should be aware of upcoming threshold changes when planning their market approach.
Consider the lot exemption. When contracting authorities use the lot exemption under Article 5(10), individual lots may follow simplified national rules even though the overall procurement exceeds the EU threshold. SMEs may find these exempted lots more accessible than full EU-procedure lots.
Related Concepts
Thresholds interact directly with the EU threshold concept (the specific monetary values) and the estimated value of the procurement (the amount compared against the threshold). Above-threshold procurement and below-threshold procurement describe the resulting regulatory regimes. Lots affect threshold calculation through aggregation and exemption rules. The contract notice publication obligation is triggered by threshold exceedance. Selection criteria and award criteria requirements are more prescriptive above the threshold. The standstill period applies only above the threshold under EU law.
Frequently Asked Questions
What happens if the actual contract value differs from the estimated value that determined the threshold?
The threshold comparison is made at the time of procurement planning, using the estimated value. If the actual contract value turns out to be higher or lower, this does not retroactively change the applicable rules. However, if a contracting authority deliberately underestimates the value to avoid the threshold, this constitutes a violation of Article 5 and the anti-splitting principle, which may be challenged by economic operators or flagged by audit bodies.
Do EU thresholds include or exclude VAT?
EU thresholds apply to values excluding VAT. Article 5(1) of Directive 2014/24/EU specifies that the estimated value is calculated net of VAT. This is a common source of confusion: a contract worth 250,000 EUR including 20 percent VAT has a net value of approximately 208,333 EUR, which may fall below the sub-central authority threshold of 221,000 EUR.
How often are the EU thresholds revised?
The European Commission revises the thresholds every two years, with the new values typically taking effect on 1 January of even-numbered years. The revision aligns EUR values with the SDR-denominated GPA thresholds to account for exchange rate movements. The 2024-2025 thresholds will be revised for the 2026-2027 period. Suppliers should check the Official Journal for updated values before each cycle.