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Plain-language definitions of every Contract Types & Structures (EU/UK) term that shows up in government tender work.
Build-Operate-Transfer is a project delivery model in which a private consortium finances, constructs, and operates a public infrastructure asset for a concession period, then transfers the asset to the public authority at the end of that period. It is regulated in Europe under the EU Concessions Directive 2014/23/EU.
Read definitionA cost-reimbursement contract pays a supplier for all allowable, verified costs incurred in performing the work, plus an agreed fee or margin. It transfers cost risk to the contracting authority and is used in Europe for complex, uncertain-scope requirements where a fixed price cannot be reliably established at tender stage.
Read definitionA design-build contract engages a single supplier to both design and construct a facility or infrastructure asset under one integrated contract, transferring design risk to the contractor. It is a widely used procurement model across Europe for public buildings, civil engineering works, and infrastructure projects where the contracting authority provides output-based requirements rather than a completed design.
Read definitionA fixed-price contract sets a firm total price for a defined scope of work, transferring cost risk to the supplier. It is the default contract structure for most public procurement in Europe where scope can be fully specified in advance, and is common across all EU procurement directives.
Read definitionAn indefinite quantity contract establishes agreed rates, terms, and conditions for a category of goods, works, or services without committing to a fixed total volume, allowing the contracting authority to call off orders as demand arises within a defined ceiling value and contract period. It is the European equivalent of the US IDIQ model and is structurally similar to a framework agreement under Directive 2014/24/EU.
Read definitionA lump-sum contract pays a single indivisible price for the complete defined scope of work, regardless of the actual resources or time expended by the supplier. It is the most common contract form for well-specified construction projects and defined professional services assignments across Europe.
Read definitionA measured term contract engages a supplier for a defined period at agreed schedules of rates, with individual works orders issued as required and payment based on the actual quantities of work measured and valued against those rates. It is a standard vehicle for planned and reactive maintenance in UK public sector construction and facilities management.
Read definitionA multi-supplier contract (or multi-supplier framework) establishes terms and conditions with several approved suppliers for a defined category of requirement, with individual call-offs competed among those suppliers through mini-competitions or direct allocation rules. It is a standard aggregation vehicle in European public procurement, providing buyers with competition, flexibility, and pre-vetted supplier pools.
Read definitionAn output-based contract defines what a supplier must deliver in terms of measurable outcomes rather than the inputs or methods used to achieve them, giving the supplier flexibility in how it organises delivery. It is a standard model in European public service contracting where contracting authorities want to encourage innovation and efficiency in service delivery.
Read definitionA performance-based contract ties a portion of the supplier's payment to measurable outcomes, creating a direct financial incentive to exceed minimum standards rather than merely meeting them. It is used across European public procurement for complex services and infrastructure where the contracting authority wants to align the supplier's commercial interests with improved public outcomes.
Read definitionPF2 was the UK government's reformed version of the Private Finance Initiative, introduced in 2012 with a public equity stake in project companies, reduced soft service scope, and greater cost transparency. It replaced PFI for new UK central government projects but was itself discontinued in 2018 with only a handful of contracts signed.
Read definitionThe Private Finance Initiative was the UK government's primary model for privately financed public infrastructure from the early 1990s until 2018, under which private consortia designed, built, financed, and operated public assets such as schools, hospitals, and prisons in exchange for long-term availability payments from contracting authorities.
Read definitionA public-private partnership is a long-term contractual arrangement in which a private party designs, builds, finances, and operates a public service asset, with the public authority paying for outcomes or availability over the contract period. PPP structures are used across Europe to procure schools, hospitals, roads, and other public infrastructure with private finance and integrated lifecycle management.
Read definitionA service level agreement defines the measurable performance standards a supplier must achieve under a service contract, including response times, availability, quality thresholds, and the financial consequences of non-compliance. SLAs are central to output-based and performance-based contracting across European public procurement.
Read definitionA single-supplier contract awards the entire contract to one supplier, either as a standalone procurement or as a single-supplier framework from which call-offs are placed directly without further competition. It is the simplest contracting structure in European public procurement and is appropriate where one supplier best meets the requirement or where a single-supplier framework provides a more efficient vehicle than repeated competition.
Read definitionA spot contract is a one-off, ad hoc procurement for an immediate or specific requirement, concluded outside a standing arrangement such as a framework agreement or term contract. In European public procurement, spot contracts are used for unforeseen or occasional needs that cannot practicably be covered by an existing vehicle, and are subject to full thresholds and procedural requirements where applicable.
Read definitionA term service contract engages a supplier to provide defined services continuously over a fixed period for an agreed periodic payment, as distinct from a project-based contract that covers a single discrete piece of work. It is the standard structure for ongoing operational services in European public procurement, covering everything from building maintenance to IT support and security guarding.
Read definitionA time and materials contract pays the supplier at agreed rates per unit of time worked and at agreed prices for materials consumed, without fixing the total cost in advance. It is used in European public procurement for services or works where the scope cannot be fully defined before delivery begins.
Read definitionA turnkey contract requires the supplier to design, build, equip, and commission a fully operational facility or system, handing it over ready for immediate use at a single agreed price. It is used across Europe for infrastructure, industrial plant, and technology projects where the contracting authority wants a complete solution from a single point of responsibility.
Read definitionA unit-price contract establishes a fixed price for each defined unit of work or supply, with the total contract value determined by the actual quantities delivered. It is widely used in European public procurement for civil engineering, maintenance, and supply contracts where quantities are estimated but not guaranteed.
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