works contract

A works contract is a contract for the execution — or both the execution and design — of building or civil engineering works. In public procurement, this is one of three main contract categories alongside supply contracts and service contracts. The classification determines which procurement rules and threshold values apply.

How does a works contract work?

EU Directive 2014/24/EU defines a works contract as covering three scenarios: contracts related to activities listed in Annex II of the directive, contracts for the execution of a building or civil engineering work, and contracts where the contracting authority has a decisive influence on the type or design of the work. The third category is particularly relevant when a public body specifies detailed requirements — for example, that a new school must meet a specific floor plan and technical standard.

An important distinction is that leases of real property are generally exempt from procurement rules, while works contracts are fully covered. If the contracting authority has a decisive influence on the building's design, the contract will typically be classified as a works contract — even if it is formally structured as a lease.

Thresholds and publication

Works contracts have significantly higher EU thresholds than supply and service contracts. For the 2026–2027 period, the threshold is €5,404,000 excluding VAT. Below this value, national procurement rules apply. Above it, the contract must be published in the TED database to ensure EU/EEA-wide competition.

Correct classification is critical. Misclassifying a supply contract as a works contract — or vice versa — can result in the procurement being deemed an illegal direct award. The determining factor is the contract's main element: in mixed contracts combining works and supplies, the dominant component decides the classification.

Tools like Cobrief make it easier to monitor published works contracts and identify relevant opportunities early.

Works contracts represent a significant share of public spending across the EU/EEA. Understanding the classification rules and applicable thresholds is essential for both contracting authorities and suppliers looking to participate in these competitions.