functional specification

A functional specification is a requirements specification where the contracting authority describes what the delivery must achieve — desired outcomes and effects — rather than dictating how the supplier should deliver the solution. This approach differs from a prescriptive (detailed) specification, which explicitly defines technical solutions, materials, and methods. Under EU Directive 2014/24/EU (Article 42), functional specifications are the preferred method for formulating requirements in public procurement.

How does a functional specification work?

The contracting authority formulates its needs as measurable outcomes rather than detailed descriptions. Instead of requiring "a ventilation system with three 50 kW units," the tender documents might specify "indoor climate with temperature between 20–22 °C and CO₂ levels below 800 ppm." Suppliers then propose the technical solution that meets these criteria. Article 42(3) of the Directive allows specifications to be drafted as functional or performance requirements, by reference to technical standards with "or equivalent," or as a combination of both.

When should you use a functional specification?

• Complex procurements — where the need can be met by multiple different solutions
• Innovative procurement — where the authority seeks new solutions from the market
• Green procurement — where environmental criteria like "zero emissions" or "low energy consumption" are central
• Service contracts — where the outcome matters more than the method

A prescriptive specification may be more appropriate for standardised off-the-shelf products where the solution is already known.

Risk allocation

A key distinction from prescriptive specifications is how risk shifts: when the authority describes the need and purpose, the supplier bears the risk that the solution actually meets the requirement. With prescriptive specifications, the authority bears the risk that the specified solution achieves the desired outcome. Suppliers must demonstrate in a suitable manner that their bid meets the stated functional requirements, in accordance with the applicable rules. Tools like Cobrief can help suppliers quickly analyse functional specifications and understand what outcomes the authority expects.

A functional specification gives suppliers the freedom to apply their expertise and creativity, often resulting in better solutions and lower life cycle costs. For contracting authorities, it is the key to ensuring procurement solves the actual need — not just meets technical requirements.