European Commission Proposes Overhaul of EU Public Procurement Rules

On September 9, 2026, the European Commission proposed a new Public Procurement Act that would fundamentally change the way that public procurement is regulated across the EU. In this alert we look at what changes have been proposed, and discuss how those changes would affect companies – whether EU-based or not — that wish to participate in European public procurement.  

A Single Rulebook to Replace Three Directives 

The European Commission’s proposed new Public Procurement Act would repeal Directives 2014/23/EU (concessions), 2014/24/EU (public sector) and 2014/25/EU (utilities), replacing all three with a single, directly applicable regulation.  

This is a fundamental change. Under the current system, the three directives had to be transposed into national law by each Member State, and this has led to divergent implementing regimes across 27 countries that companies operating cross-border have had to navigate separately. A directly applicable regulation, by contrast, creates a uniform EU-wide framework. For businesses that bid in multiple EU markets, this should translate into greater legal predictability and reduced compliance costs. 

Defense and security contracts within the scope of Directive 2009/81/EC remain outside the proposed regulation, however. The reform of the rules for defense and security procurements is following a separate track. The Defense Readiness Omnibus provides for targeted simplifications of defense and security procurement procedures, which should become applicable in 2028. Meanwhile, the European Commission is preparing a more comprehensive reform, which is expected to become applicable in 2029-2030. 

Simpler Procedures 

The Commission proposal would replace the five current procurement procedures with only three: an open procedure, a dynamic procedure and an innovation procedure. In addition, the proposed regulation maintains a direct award procedure, without competition or prior publication, for specific circumstances such as sole-source situations and emergencies.  

The open and dynamic procedures may each be used with or without selection criteria and with or without negotiation — at the buyer's discretion and as stated upfront in the procurement notice.  

The innovation procedure is designed for situations where a public buyer faces a need for which no existing solution is available. It allows the buyer to procure both research and development and the resulting product or service in a single process. Intellectual property developed in the course of the procedure would generally remain with the innovating company, unless there are overriding public-interest reasons that would justify otherwise, and those reasons are clearly stated in the procurement detail. 

For SMEs and new entrants, the proposal would ease the participation requirements. Minimum turnover requirements would normally be capped at 50% of the estimated annual contract value, and requirements for prior public-sector experience would generally be impermissible unless specifically justified.  

An EU-wide Digital Marketplace would connect national e-procurement platforms, enabling companies to access procedures across the EU, submit information only once and benefit from automated eligibility checks.  

A Shift Away from Lowest-Price Competition 

Perhaps the most significant change for all bidders is the shift away from lowest-price competition. Under the 2014 directives, contracting authorities had discretion to award on price alone or on the “most economically advantageous tender” (MEAT) with no mandated minimum for quality.  

Under the proposal, Best Price-Quality Ratio (BPQR) would become the default award method. It introduces an EU-wide quality-weighted standard: quality criteria must represent at least 30% of the total points in the award evaluation, rising to at least 50% for labor-intensive contracts. However, derogations from the BPQR quality-weighting requirement would be permitted where public buyers demonstrate that they can ensure quality through other means, such as technical specifications, performance conditions or a combination of such measures. 

Quality criteria may include technical merit, environmental and social performance, innovation, security and public safety, resilience and security of supply, personnel qualifications, etc. The regulation also promotes life-cycle costing, including consideration of costs imputable to climate and environmental externalities. 

Companies would therefore be expected to demonstrate not only competitive pricing but also measurable quality, sustainability and resilience credentials in their tenders. 

European Preference 

For companies headquartered outside the EU, the most consequential innovation is the introduction of a European preference framework.  

The proposal distinguishes between three categories of operator: 

• Union operators and products originating in an EU Member State; 
• "Covered" third-country operators and products, originating in a country party to the WTO Government Procurement Agreement (GPA) or a country with a trade agreement with the EU, but only where the specific procurement falls within that agreement's commitments; and 
• Non-covered third-country operators and products, for which the regulation would guarantee neither equal treatment nor access rights. 

Coverage would be determined separately for each procurement by reference to the buyer, the contract subject matter, the applicable thresholds and the relevant international commitments. The Commission would provide an online tool to identify the applicable coverage for each procurement, giving businesses a practical way to establish whether they qualify as covered operators for a given tender. 

The European preference framework enables public buyers to: 

• limit participation to EU and covered operators (including subcontractors); 
• require all or specified parts of the goods, services or works to originate in the EU or a covered country; 
• apply evaluation advantages to EU or covered tenders; or 
• reject tenders in which less than 50% of the estimated contract value is attributable to EU or covered-origin goods, services or works. 

The application of European preference requirements would generally be optional and not mandatory for public buyers. However, the draft regulation empowers the Commission to adopt delegated acts requiring buyers to apply European preference requirements to non-covered third-country operators, products, services and works where this is deemed in the Union's interest. Although buyers could still disapply the preference in certain cases (such as lack of suitable EU or covered supply, failed competition or disproportionate cost), the default position in strategic sectors could become materially less favorable to non-EU suppliers. 

Security and Resilience 

Beyond European preference, the proposal also introduces a new dedicated security and resilience chapter that has no prior equivalent in the 2014 directives. Contracts performed by entities designated as critical under the Critical Entities Resilience Directive (2022/2557/EU) would be able to require supply-chain diversification, Union stockpiling, continuity plans, surge capacity and restrictions on dependence on a single third country or supplier. The chapter also introduces new grounds for exclusion and contract termination on security and public safety grounds.  

Non-EU companies should not assume that establishing an EU subsidiary will automatically resolve these issues. The proposal focuses on origin and, in security-sensitive contexts, also permits scrutiny of ownership, control, financing and exposure to third-country laws. Companies should assess as soon as possible whether their EU entities, goods, technology and subcontractors would satisfy the applicable origin and security requirements.  

Under the proposed regulation, the grounds for exclusion would also be expanded. New mandatory exclusion grounds would cover, among other matters, environmental criminal offenses, violations of EU restrictive measures (i.e., sanctions), and fraudulent use of non-cash payment instruments. Optional exclusion grounds would include insufficient reliability regarding security or public-safety risks and certain distortive foreign subsidies. Critically, self-cleaning — the mechanism by which companies can demonstrate rehabilitation and avoid exclusion — would no longer be available for mandatory exclusion grounds, although it would remain available in relation to optional exclusions grounds.  

Of particular relevance for companies in the technology sector is that suppliers designated as high-risk under the forthcoming revision of the Cyber Security Act would be subject to a mandatory exclusion without possibility of self-cleaning. 

What Companies Should Do Now 

The practical implications of this proposal are significant for any business — whether EU-based or not — that participates or intends to participate in European public procurement: 

• All bidders should review their tendering strategies to ensure they can credibly demonstrate quality, sustainability and resilience credentials, since lowest-price bids will carry less weight across the board. 
• Non-EU companies and multinationals should map their supply chains, manufacturing locations, corporate ownership structures and subcontracting arrangements to assess how origin and security requirements would apply to their key product and service categories. Non-EU companies should also track the legislative negotiations closely, since the final scope and use of European preference mechanisms could materially alter competitive conditions in particular sectors. 
• Technology companies should pay particular attention to the provisions on IP rights and cybersecurity.  

Next Steps and Timeline 

The proposal is subject to the ordinary legislative procedure, under which the European Parliament and the Council of the EU must negotiate and jointly adopt the final text before it can enter into force. The text may be amended substantially during these negotiations. 

Negotiations are unlikely to conclude before the end of 2027, and therefore the regulation is unlikely to enter into force before 2028. The regulation would then apply two years after its entry into force. Until then, existing national procurement rules implementing the 2014 directives remain applicable.