Principle of Proportionality

Proportionality is the principle that keeps procurement requirements grounded in the real needs of the contract. It prevents contracting authorities from using procurement rules as a tool to favour large incumbents by imposing requirements so burdensome that only the current holder of the contract can realistically meet them. A proportionate process is one where every requirement, from financial turnover thresholds to experience certificates to insurance levels, can be justified by reference to the actual contract being procured.

What is the Principle of Proportionality?

The principle of proportionality is a general principle of EU law, derived from the Treaty on the Functioning of the European Union (TFEU), that has been explicitly incorporated into procurement law. In the context of Directive 2014/24/EU, it operates at several points in the procurement process.

In selection criteria, proportionality requires that financial capacity requirements are reasonable relative to the contract value. The European Commission's guidance and court decisions have consistently held that requiring annual turnover of more than twice the estimated contract value is generally disproportionate. Similarly, requiring ten years of experience for a routine contract, or demanding unnecessary certifications for simple services, is disproportionate.

In technical specifications, proportionality means that specifications must be necessary to achieve the legitimate objective. Requiring a particular brand of equipment (when equivalent products exist) or specifying performance characteristics so narrow that only one supplier can meet them crosses from specification into unjustified restriction.

In contract conditions, proportionality applies to insurance requirements, warranty periods, liability caps, and payment terms. A contract condition that imposes unlimited liability on a small supplier for a low-value contract is disproportionate.

In award criteria, proportionality means that the criteria must be connected to the subject matter of the contract and weighted in a way that reflects genuine priorities, not designed to produce a predetermined result.

The UK Procurement Act 2023 codifies proportionality as a general duty, requiring contracting authorities to have regard to it throughout the procurement process.

Why it matters for bidders

Disproportionate requirements are one of the most common barriers to competition in public procurement, particularly for smaller companies. Recognising when a requirement is disproportionate gives you grounds to challenge it before the tender closes (through the clarification process or a formal complaint) rather than simply declining to bid. Markets that should be contestable become entrenched when buyers are allowed to set requirements that only incumbents can meet.

Example

A Portuguese municipal authority procures cleaning services for a single building with an annual contract value of 80,000 euros. It requires bidders to demonstrate annual turnover of five million euros and ten years of experience in cleaning contracts valued above one million euros. Both requirements are disproportionate: the turnover threshold is more than 60 times the contract value, and the experience requirement is calibrated to a contract scale far beyond what is being procured. A smaller local cleaning company can challenge these requirements through the pre-award review mechanism.

Frequently Asked Questions

How do I identify whether a requirement is disproportionate?

The test is whether the requirement is genuinely necessary to ensure the contracting authority gets what it needs. Ask whether a supplier that meets the requirement is necessarily better placed to perform this specific contract than a supplier that does not. If the answer is no, the requirement is likely disproportionate. Specific Commission guidance on financial standing provides useful reference points.

Can a contracting authority justify high turnover requirements for complex contracts?

Yes, proportionality is assessed relative to the contract. For a high-value, technically complex infrastructure project, demanding substantial financial capacity is justified. The problem arises when the same high bars are applied to routine, low-value, or low-risk contracts. The requirement must match the risk profile and nature of the specific contract being procured.

What can I do if I think a requirement is disproportionate before the deadline?

Submit a formal clarification question through the procurement portal asking the contracting authority to justify the requirement. If the response is unsatisfactory, you can file a complaint with the national procurement oversight body before the contract is awarded. Many European countries have dedicated procurement review bodies that can examine selection criteria before the process is concluded.