public contract

A public contract in procurement law is a mutually binding agreement between a contracting authority and one or more economic operators. Under EU Directive 2014/24/EU, a public contract involves the acquisition of works, supplies, or services for consideration — meaning both parties assume obligations towards each other.

How does a public contract work?

The defining feature is that both parties have reciprocal obligations — the supplier commits to delivering goods, works, or services, and the contracting authority commits to paying for them. This mutual obligation distinguishes a public contract from grants or subsidies, which fall outside procurement rules. What matters is the substance of the arrangement, not what the document is called — a grant agreement may in reality constitute a public contract if the recipient commits to a specific performance in return.

EU procurement rules apply when a public contract's estimated value meets or exceeds the relevant threshold values. For supplies and services, the thresholds are EUR 143,000 for central government and EUR 221,000 for sub-central authorities. For works, the threshold is EUR 5,538,000 (from 1 January 2024). The European Commission revises these thresholds every two years.

The three contract types

EU procurement law distinguishes three main categories:

• Supply contract — purchase, lease, or rental of goods, which may include installation
• Service contract — provision of services such as consulting, cleaning, or IT support
• Works contract — execution of construction or civil engineering projects

The classification determines which rules and thresholds apply. For mixed contracts containing elements of more than one type, the main subject matter determines the classification. Concession contracts, where the supplier receives the right to exploit a service as payment, are governed by a separate directive (2014/23/EU).

Contract terms must be specified in the tender documents so that suppliers know the conditions before submitting their bids. Tools like Cobrief can help suppliers find relevant public contracts and keep track of deadlines and requirements throughout the tender process.

A public contract is the legal foundation of every procurement. Understanding what constitutes a mutually binding agreement — and how the three contract types differ — is essential for navigating procurement rules correctly.