procurement contract nature - procure-project/EU-Contract-Hub GitHub Wiki

Contract Nature Guide

Overview

The nature of a contract in EU procurement defines the core subject matter and categorizes what is being procured. Understanding contract nature is essential for both contracting authorities and suppliers, as it determines applicable procedures, thresholds, and regulations.

Contract nature is one of the first classifications made in the procurement process and helps in selecting the appropriate procurement procedure and legal framework.

Primary Contract Nature Categories

EU procurement regulations recognize three fundamental contract nature categories:

1. Works Contracts

Contracts having as their object the execution or design and execution of works related to construction activities.

Characteristics:

  • Result in a complete structure or civil engineering project
  • Include building, civil engineering, and installation work
  • May involve design, planning, and construction management
  • Usually involve physical infrastructure development

Examples:

  • Construction of buildings, bridges, roads
  • Renovation of existing structures
  • Civil engineering projects
  • Installation of structural components

2. Supply Contracts

Contracts having as their object the purchase, lease, rental, or hire-purchase of products, with or without an option to buy.

Characteristics:

  • Focus on the procurement of tangible goods
  • May include installation and fitting operations
  • Often involve standardized products
  • Typically have straightforward specifications

Examples:

  • Purchase of office equipment
  • Procurement of vehicles or machinery
  • Acquisition of medical supplies
  • Software licenses (where classified as products)

3. Service Contracts

Contracts having as their object the provision of services other than those related to works contracts.

Characteristics:

  • Provision of intellectual or manual services
  • May be ongoing or one-time deliverables
  • Often involve professional expertise
  • Include a wide range of non-tangible deliverables

Examples:

  • Consultancy and advisory services
  • Maintenance and cleaning services
  • IT and software development services
  • Technical assistance and training

Mixed Contracts

Many procurement activities include elements of more than one contract nature. In such cases, the "main subject" rule applies to determine the appropriate classification.

Main Subject Rule

For mixed contracts, the classification depends on which element (works, supplies, or services) constitutes the main subject of the contract.

Determining factors:

  • Economic value of each component
  • Primary purpose of the procurement
  • Essential elements needed to fulfill the contract
  • Technical complexity of various components

Example: A contract for the supply and installation of specialized medical equipment where the equipment value is €800,000 and installation services cost €200,000 would be classified as a supply contract since the supply element represents the main economic value.

Special Cases

Concessions

While similar to traditional contracts, concessions involve transferring the right to exploit works or services, with the operating risk transferred to the concessionaire.

Types:

  • Works concessions
  • Service concessions

Framework Agreements

These are agreements with suppliers that establish terms for contracts to be awarded during a given period, particularly concerning price and quantity.

Framework agreements may encompass multiple contract natures depending on their scope.

Impact on Procurement Process

The classification of contract nature affects several aspects of the procurement process:

  • Applicable thresholds: Different value thresholds apply to different contract natures
  • Available procedures: Some procedures are more suitable for specific contract natures
  • Required notices: The type and content of notices to be published
  • Timeframes: Minimum periods for submission of tenders
  • Selection criteria: Qualification requirements for economic operators

References and Resources

For detailed information on contract nature classifications, consult these official resources:

Related Wiki Pages