New EU Public Procurement Regulation replaces 2014 directives

From three Directives to one Regulation

Public procurement accounts for a substantial share of the EU's GDP, and the Commission has long flagged that the current framework, dating from 2014, no longer serves its role effectively. The Court of Auditors and the Council have pointed to declining competition for public contracts, limited SME and cross-border participation, and an increasing reliance on single-bid procedures. Parallel evaluations found that the 2014 Directives created legal uncertainty, left procedures too rigid, and failed to equip public buyers to deal with today's geopolitical and economic security concerns.

The Commission's answer is radical in form, if incremental in places in substance: the three 2014 Directives on public contracts, utilities and concessions are repealed and replaced by a single Regulation, directly applicable across all Member States without the need for national transposition. Concessions are folded into the same instrument, with specific rules preserved only where the nature of concessions genuinely requires them. The proposal also absorbs a wide range of procurement-related provisions that were previously scattered across more than a dozen sectoral instruments (from the Ecodesign Regulation to the Corporate Sustainability Due Diligence Directive), in what the Commission describes as a "regulatory deep cleaning" exercise.

Because the instrument is a Regulation rather than a Directive, Member States will lose the room they currently have to gold-plate or diverge in transposition. This is likely to be one of the most closely watched aspects of the file as it moves through the European Parliament and the Council.

New and fewer procedures, less paperwork upfront

The current, more rigid catalogue of procedures makes way for a leaner set of options. Each can be used with our without selection criteria and with or without negotiation. The open procedure becomes the main route: any interested economic operator may express interest and (first) tender from the outset.

The dynamic procedure is aimed at recurring purchases: economic operators join a pre-constituted pool for the duration of its validity and are then invited, contract by contract, to tender and/or negotiate, with random selection where too many suppliers come forward for a given call. A wholly new innovation procedure allows public buyers to put forward a societal challenge rather than a fixed specification, then work through market consultation, selection, testing, validation and assessment, before finally purchasing the resulting solution directly from the successful participant(s).

Interestingly, procurement of research and development services, including pre-commercial procurement, is excluded from the Act altogether: it is instead reserved for a parallel proposal, the European Innovation Act, running through the legislative process at the same time. Market consultations remain encouraged as a standard preparatory tool.

Selection criteria are trimmed back: turnover requirements may not exceed 50% of the estimated contract value, and prior public-sector experience can no longer be required as a prerequisite, unless justified by the contract’s complexity.

Best Price-Quality Ratio becomes the norm

Price-only awards are curtailed. Contracts must, as a rule, be awarded on the basis of the Best Price-Quality Ratio (BPQR), with quality criteria required to represent at least 30% of the total score (rising to 50% for labour-intensive contracts). Public buyers may only depart from this "comply or explain" logic where quality can already be secured through specifications or contract performance clauses. This effectively operationalises the strategic ambitions that the 2014 framework merely permitted but never structured.

Green, social, innovation, security: four strategic chapters

The proposal groups the Union's strategic procurement priorities into dedicated chapters rather than leaving them scattered across sectoral acts:

• Green public procurement: clearer legal bases for environmental criteria throughout the procurement cycle, a stronger link to circularity and energy efficiency, and a framework for the Commission to impose mandatory green requirements for specific product categories by implementing act.
• Socially responsible procurement: clarified social outcomes (labour market integration, working conditions, gender equality, human rights in supply chains), together with reserved contracts and tailored rules for social, health and educational services.
• Innovation procurement: beyond the innovation procedure, clearer rules on intellectual property (suppliers generally retain ownership of IP developed under the innovation procedure, subject to overriding public interest exceptions), and a new mandatory use of Building Information Modelling for works contracts above EUR 25 million.
• Security and resilience: a broad, non-exhaustive list of "security and public safety interests" that public buyers must factor in throughout the procurement cycle, including harmful strategic dependencies, cybersecurity and critical infrastructure. The proposal also introduces a dedicated regime for terminating contracts or excluding operators during performance on security grounds.

A new "European preference" toolbox

Perhaps the most politically sensitive element is the codification of "European preference”. Building on the CJEU's Kolin and Qingdao case law, the proposal distinguishes between "covered" economic operators, goods, services and works (those benefiting from the EU's international procurement commitments, such as the GPA or free trade agreements) and everyone else. Public buyers will be able to restrict participation to EU or covered operators, require a minimum share of EU or covered content, or apply price or scoring advantages in favour of EU or covered tenders. The Commission, for its part, is empowered to close specific procurements to non-covered operators altogether, where the Union's strategic interests so require, and to restrict coverage where a third country fails to grant reciprocal market access.

This framework is designed to operate horizontally, so that sector-specific EU legislation imposing similar preferences (as already flagged in the Industrial Accelerator Act plugs into the same rules of origin and modalities, rather than each creating its own regime.

A fully digital procurement ecosystem

On governance, Member States will need to designate a national coordinating authority and put in place national professionalisation strategies and support structures. They be subject to a reinforced, data-driven monitoring obligation reported to the Commission.

An important simplification is worth flagging for contract management: contract modifications of up to 15% of the initial contract value are explicitly deemed "non-substantial" and require no new procedure, modifications above a 50% threshold trigger a prior publication obligation.

What comes next

The proposal now enters the ordinary legislative procedure, with the European Parliament and the Council as co-legislators. Based on the Commission's own timeline, the Regulation will enter into force 20 days after publication, but would only become applicable two years later, reflecting the scale of the digital and institutional build-up required.

Given the number of open political questions, most notably how far "European preference" should go, some issues already flagged by the Regulatory Scrutiny Board, the legislative process is likely to be closely contested.

Contracting authorities, contracting entities and economic operators active across the EU should start assessing how the new procedures, the BPQR default, the European preference toolbox and the digital ecosystem obligations will affect their procurement strategies, well before the framework becomes directly applicable.

We would like to discuss your questions regarding the new framework during our live events, which will be set up in each of our offices in the Netherlands, Belgium and Luxembourg.  If you would like to get involved, please reach out to one of our lawyers below.