Breaking one large IT or construction contract into several smaller ones, each just under the EU tendering threshold, isn't a clever workaround — it's a specifically prohibited practice, and Spain has already paid a real financial price for it.
The rule against artificial splitting
Article 5 of Directive 2014/24/EU explicitly prohibits designing a procurement with the intention of excluding it from the Directive's scope or artificially narrowing competition. In practical terms: an authority cannot split what is functionally a single, related requirement into several smaller contracts specifically to keep each one below the relevant EU threshold and avoid the full tendering process that threshold would otherwise trigger.
How the value calculation actually works
The estimated value of a procurement must include the total amount payable over the contract's full duration, including any optional extensions and renewal periods — a three-year service contract worth €60,000 a year with a two-year optional extension is valued at €300,000 across the full five years, not just the initial term. When a procurement is divided into lots — which the law actively encourages for genuine reasons, like giving smaller suppliers a fair chance to bid on a manageable portion — the values of all lots must still be aggregated to determine which threshold regime applies to the overall procurement.
A real, costly example: Spain v Commission
In a 2013 ruling (Case T-384/10), the EU's General Court upheld a European Commission decision to reduce cohesion and structural fund contributions to several water management infrastructure projects in Andalusia, Spain, specifically because of artificial contract splitting designed to avoid EU procurement rules. This wasn't a theoretical warning — it was a real, enforced financial penalty against actual Spanish public infrastructure funding, and the ruling confirms that even indirect EU funding is at risk when this rule is broken, not just the underlying contract itself.
Legitimate lot division versus illegitimate splitting
The key distinction: dividing a large contract into lots for genuine reasons — like making sections accessible to SMEs, or splitting distinct types of work — is lawful and even encouraged, provided the total value of all lots is still correctly aggregated for threshold purposes. What's prohibited is structuring the division specifically to keep pieces below the threshold and avoid the fuller competitive process, or structuring it to unduly favour or disadvantage particular suppliers.
How to spot a suspected splitting pattern
- Search your national or EU transparency portal for the same authority awarding multiple, closely-timed contracts to the same supplier for closely related work.
- Check whether the combined value of those related contracts would have crossed the relevant EU threshold if treated as a single procurement.
- Look for contracts with suspiciously similar scopes awarded just below the threshold repeatedly to the same small set of suppliers.
- If you suspect this pattern, this is grounds for the special procurement appeal/review mechanism (recurso especial en materia de contratación in Spain, or the equivalent in your own country) rather than a general complaint.
What this means practically
- Deliberately splitting a contract to stay under an EU procurement threshold is explicitly illegal under Article 5 of Directive 2014/24/EU, not just poor practice.
- Contract value calculations must include optional extensions and renewals, and lot values must be aggregated — both are common places threshold calculations get manipulated or simply miscalculated.
- Spain's own cohesion fund reduction in Case T-384/10 shows this isn't a rule enforced only in theory — real public money has been lost over exactly this pattern.
- A pattern of repeated, closely related, just-under-threshold awards to the same supplier is the specific signal worth investigating through a formal procurement appeal.
Sources
- How to Crack a Nut — Avoidance of EU public procurement rules by artificial contract split (Case T-384/10, Spain v Commission): howtocrackanut.com
- TenderWolf — European thresholds and estimation rules, splitting prohibition: tenderwolf.com
Related Kibbo Tools
- Public Procurement Bid Checklist — confirm requirements before bidding, including for contracts that may involve lot division.
- Public Procurement Portals Directory — check award history and patterns across EU transparency portals.