The EU Public Procurement Act: The Commission proposes a European preference framework

On 9 September 2026, the European Commission (the “Commission”) presented its proposal for a new Public Procurement Act, a significant reform of the EU public procurement framework, which was last comprehensively overhauled in 2014. The proposal would repeal the three existing procurement directives (Directives 2014/23/EU, 2014/24/EU and 2014/25/EU) and replace them with a single Regulation which, if adopted, would apply directly in all Member States. 

The proposed reform, part of the Commission’s broader competitiveness and simplification agenda, seeks to harness the substantial purchasing power of EU public authorities to support the EU’s strategic interests. Public procurement represents around 15% of EU GDP annually, making it a powerful lever for strengthening European competitiveness, economic security, resilience and strategic autonomy.

Two major features of the proposed new framework are the introduction of what is called “European preference” (for economic operators, goods and services from the EU and from “covered” third countries) and a shift away from awarding contracts on price alone, towards greater emphasis on quality criteria that capture environmental, social and resilience considerations. Elevating the use of quality and non-price criteria may in practice also indirectly favour European or “covered” suppliers. 

This shift in the use of public procurement as a strategic tool is not entirely new. European preference requirements have already begun to appear in sector-specific acts, including in the soon to be adopted Critical Medicines Act and the proposed Industrial Accelerator Act, which introduces mandatory EU Origin and low-carbon procurement requirements (see our previous article). The European preference framework in the proposed Public Procurement Act, is also intended to serve as a model for future EU acts establishing preference mechanisms based on origin.

The increased focus on the potential of public procurement as a way of improving economic resilience and advancing wider strategic interests is consistent with similar policy activity in the UK under the UK's Procurement Act 2023 (see our blog post on this).

I. EUROPEAN PREFERENCE 

The proposed European preference framework, set out in Chapter 5, Articles 70-77 of the proposed Regulation, would allow public buyers to favour European operators, goods, services and works, as well as those from “covered” third countries. “Covered” operators, goods, services and works are those originating from countries bound by the WTO Government Procurement Agreement (GPA) or by EU bilateral or multilateral trade agreements or by an agreement establishing a customs union, covering the relevant category of procurement. This will allow for all other third country operators, goods, services and works to be excluded from a procurement.

It should be noted that “new generation” EU free trade agreements and economic partnership agreements generally contain public procurement disciplines, including the EU’s trade agreements with the UK, Canada, Japan, Korea, Singapore, Vietnam, Chile, Central and Latin America States. Also, many other countries, including the United States, Australia, New Zealand and Hong Kong are party to the WTO Government Procurement Agreement and many of their suppliers, goods and services would qualify as “covered”.

To help contracting authorities determine what suppliers, goods and services qualify as “covered” in a given procurement, the Commission would establish a free, publicly accessible online tool, which will set out the EU’s public procurement commitments under international agreements.

This authorisation to exclude non-covered content from a procurement builds on the case law of the EU Court of Justice, in its Kolin (Case C-652/22) and Qingdao (Case C-266/22) judgments, which held that third country operators not covered by EU international procurement agreements cannot claim the same rights under EU procurement law as EU or covered third country operators, and that regulation of their access to the EU procurement market is a matter of EU exclusive competence. 

The European preference toolbox

Public buyers could apply European preference through several measures (set out in Article 73). In particular, they may:

• restrict participation to EU and covered operators or, in the case of consortia, to groups composed solely or in their majority of EU and covered operators;
• require goods, services or works to originate entirely or to a specified degree in the EU or a covered country, or a specific component to originate in the EU or covered country
• apply evaluation preferences at award stage, either through a percentage reduction to the evaluated price or through additional award points for EU or covered tenders, or for tenders with higher EU or covered content; or
• reject tenders where EU or covered goods, services or works accounts for less than 50% of the estimated tender value

Where public buyers use one or more of the measures, they would have to state them clearly upfront in the procurement notice so that bidders know how European preference will affect the competition.

Voluntary in principle, but subject to Commission intervention

Applying European preference in a given procurement would be voluntary. However, it is proposed that the Commission would have the power, through delegated acts, to require public buyers to apply European preference measures to operators, goods, services or works where doing so would be "in the interest of the Union." This deliberately broad formulation is intended to allow a simplified mechanism of adaptation to changing geopolitical or economic circumstances without reopening the entire Regulation. It is likely however that it will be made subject to stricter conditions during the legislative process.

The proposal also allows Commission to remove "covered" status from operators, goods, services or works that would otherwise qualify, where, for instance, the relevant third country has not delivered on its national treatment commitments to EU companies, where restrictions are needed to avoid strategic dependencies or threats to security of supply or where another exception permitted under the relevant international agreement applies.

Nevertheless, the proposal contains safeguards to prevent European preference from making procurement impracticable or disproportionately costly. Even in those situations where European preference has become mandatory, public buyers can still disapply it where the contract falls within the emergency and crisis framework, where no suitable EU or covered suppliers exist, where no suitable tenders have been received, including after a repeat procedure, or where applying the requirements would result in disproportionate cost.  

Rules for determining origin

Establishing the origin of economic operators, goods, services and works is often a difficult exercise, especially in the case of bidders with complex international supply chains that may need to trace origin several tiers down the supply chain.

Article 74 of the proposal lays down different origin rules depending on what is being assessed. The origin of economic operators would be determined in accordance with the EU’s International Procurement Instrument (Regulation (EU) 2022/1031); that of goods would be determined by means of the non-preferential rules of origin under the Union Customs Code (Regulation (EU) No 952/2013); services would be considered to have the origin of the  operator providing them; and likewise works would be considered to have the origin of the operator performing them, although public buyers may separately examine the origins of goods incorporated into those works.

II. EMPHASIS ON QUALITY

The proposed Regulation would also place greater emphasis on quality in contract awards, by making the best price-quality ratio (BPQR) the standard award method, instead of relying on price alone. With the proposed reform, the quality criteria, which must be linked to the subject-matter of the contract, would generally have to account for at least 30% of the award points, rising to 50% for labour-intensive contracts. Buyers could depart from those minimum weighting requirements where quality can be secured through technical specification or contract requirements.

Quality is defined broadly and, depending on the subject matter of the contract, may encompass technical merit, environmental and climate performance, social considerations, innovation, security and public safety, resilience and security of supply, staff quality and after-sales or delivery conditions. Examples of how quality can be measured in a fair and objective way include compliance with measurable performance criteria, recognised standards and labels such as the EU Ecolabel, life-cycle costing, and total cost of ownership methodologies. 

Where a contracting authority implements European preference through additional award points, that preference can itself count as part of the quality assessment. Therefore, European preference does not operate only at the participation stage, i.e. who may bid and on what terms, but also at the evaluation stage, i.e. how a tender is scored against competing bids. More broadly, by elevating quality criteria that reflect stricter requirements on environmental standards, climate obligations, and social conditions, the BPQR framework may in practice favour EU (and “covered”) suppliers.

The move away from price as the predominant award criterion in public procurement will allow public buyers much more freedom in the award of a public contract.

III. NEXT STEPS

The Commission proposal now needs to be examined by the Council of the European Union and the European Parliament and may change materially during this process. The stated objective is to reach agreement by the end of 2027, but this would ultimately depend on the extent of changes and the political debate. This debate will not only relate to procurement policy and its role in industrial policy but also to the powers that are proposed to be delegated of the Commission, including the scope for challenges to determinations of the suppliers, goods and services that are to be considered as “covered” by European preference.

Interested parties can communicate their views by responding to the Commission’s call for public feedback in relation to the proposals which will be transmitted to the Council and European Parliament. The feedback period runs until 16 November 2026.

Our Competition, Regulatory and Trade team will continue to monitor developments in relation to the European preference in the proposed Public Procurement Act and sector-specific legislation as the proposals progress through the legislative process. Please contact any of the authors for further information or if you would like to discuss implications for