Advance payments

Until recently, advance payments in public contracts were not a common occurrence. The general principle remains that contracting authorities are not required to make advance payments, except in two key hypotheses. In these two cases, certain contracting authorities are required to pay an advance. These are the State, the Regions, the Communities and the local authorities, as well as the entities whose activities are mainly financed by one of the contracting authorities and whose management is subject to their supervision.

In the hypotheses below, these contracting authorities are obliged to make an advance payment.

Negotiated procedure without prior publication

When the negotiated procedure without prior publication is used in one of the following cases:

  • the expenditure to be approved is less than EUR 143,000 excluding VAT;
  • no or no suitable request for participation or tender has been submitted under an open or restricted procedure;
  • it concerns a contract for the supply of products manufactured exclusively for research, experiment, study or development purposes.

In this hypothesis the mandatory advance payment is 15% of the reference value, which is calculated based on the contract amount.

The successful tenderer is an SME

When a procedure other than the negotiated procedure without prior publication is used and the succesful tenderer turns out to be an SME.

In this hypothesis, the amount of the advance payment depends on the type of SME to which the contract has been awarded:

  • For a micro enterprise: 20% of the reference value
  • For a small enterprise: minimum 10% and maximum 20% of the reference value
  • For a medium enterprise: minimum 5% and maximum 20% of the reference value

The contracting authority may also provide a higher advance payment, up to a maximum of 20% of the reference value.

Conditions and exclusions

As a rule, the amount of the advance payment cannot exceed EUR 225,000.

The law provides five exceptions to the above two hypotheses in which the contracting authority is not required to make an advance payment:

  • Public contracts having as their object both the financing and the execution of works and, where appropriate, any service in connection therewith;
  • Public contracts relating to leasing, rental or instalment plans;
  • Public contracts for insurance services;
  • Public contracts concluded on a subscription basis or public contract where payment is made on the basis of periodic consumption;
  • Public contracts with a performance period of less than two months.

The advance payment provisions apply since 1 January 2024.

Bid indemnities

Bid indemnities were sometimes provided in public procurement procedures where tenderers had to make considerable investments for preparing a bid. Most often, these indemnities do not cover the costs or there is no indemnity at all.

Following the SME Procurement Act, tenderers will receive a bid indemnity if their bids must be accompanied by samples, models, prototypes, drawings, other graphic designs or any other design in the fields of the plastic arts, musical arts, cinematographic arts or the performing arts.

Paying a bid indemnity to tenderers becomes mandatory, except when the contracting authority uses the open procedure or the negotiated procedure with prior publication. In addition, the contracting authority may include in the contract documents that no bid indemnity or a lower amount will be awarded to bidders whose bids are substantially irregular or unacceptable. There are no rules on the amount of the bid indemnities.

These new bid indemnity regulations will apply to all contracts published as of 1 February 2024. It can be feared that bid indemnities will remain symbolical amounts in many cases. However, it will at least force contracting authorities to think before they ask tenderers to make substantial investments for their bids, which is a positive evolution.

Place in the ranking

Immediately after the opening of the bids, the contracting authority must simultaneously communicate to all tenderers their individual and provisional place in the ranking of bids when the following conditions are met:

  • The estimated value of the contract is below the threshold for EU-wide publication;
  • The contract is being awarded by means of an open or restricted procedure;
  • The most economically advantageous offer is determined solely on the basis of price;
  • The contract does not concern sectors with an increased risk of anti-competitive agreements.

The tenderer should be aware that the place in the ranking is provisional and therefore uncertain. This place may be subject to changes, for example due to substantially irregular bids or abnormal prices.

This measure should enable bidders to assess whether or not they have a chance of actually being awarded the contract, and to adapt their planning accordingly. The measure increases transparency. As it is limited to procedures where there is only one tender round, the risk of strategic behaviour by bidders seems limited. It would be helpful for SMEs if contracting authorities would also be systematically obliged to communicate on the timing of the award.

The obligation to communicate the individual place in the rankings will apply as of 1 June 2024.


The SME Procurement Act includes some helpful changes that mark a more tenderer-friendly approach. Some changes do not just benefit SMEs but also tenderers generally. If the experience with these measures is positive, this may hopefully prompt further changes to increase their scope. The measures are taken against the backdrop of recent numbers from the EU Court of Auditors that show an evolution towards less competition for public procurement contracts.