Lot
A subdivision of a procurement contract into smaller parts, each of which can be bid on separately. Contracting authorities are encouraged to divide large contracts into lots to increase SME participation.
In Detail
In EU procurement, a lot is a distinct portion of a larger contract that has been subdivided to allow suppliers to bid on individual parts rather than the entire scope. Article 46 of Directive 2014/24/EU establishes a 'divide or explain' principle: contracting authorities must either divide contracts into lots or provide a written explanation in the procurement documents for why they chose not to. This policy is specifically designed to improve access for SMEs, which may have the capability to deliver a portion of a large contract but not the full scope.
Lots can be defined by category of product or service (e.g., Lot 1: IT hardware, Lot 2: IT software, Lot 3: IT support services), by geographic area (e.g., Lot 1: Northern region, Lot 2: Southern region), or by any other logical subdivision that reflects the market structure. Each lot has its own technical specifications, estimated value, and can have its own CPV code. Contracting authorities may allow suppliers to bid on multiple lots and may set rules about the maximum number of lots that can be awarded to a single supplier.
The use of lots has significant implications for contract value calculations and threshold determination. The estimated value for threshold purposes is the aggregate value of all lots combined, not the value of individual lots. However, there is a small lots exemption: lots with an estimated value below EUR 80,000 for supplies and services (or EUR 1 million for works) can be exempted from the full Directive procedures, provided their aggregate value does not exceed 20% of the total contract value.
Practical Context
How it works in practice
For suppliers, lot structures create strategic decisions about which lots to pursue. Bidding on multiple lots increases the chances of winning business but also multiplies the bid preparation effort. Some suppliers specialize in particular lot types (e.g., always bidding on the software lot in IT framework tenders), while others pursue broad coverage. On TenderRadar, each lot within a tender is indexed separately with its own CPV codes and estimated value, allowing suppliers to filter opportunities at the lot level rather than only at the contract level. This granularity is especially valuable for SMEs targeting specific niches within larger contracts.
Frequently Asked Questions
Can a supplier bid on multiple lots?
Yes, unless the contracting authority explicitly restricts this. The procurement documents must state whether suppliers can bid on all lots, a limited number of lots, or only one lot. Authorities may also set rules about the maximum number of lots that can be awarded to a single bidder, to ensure diversification of the supply base.
Are contracting authorities required to divide contracts into lots?
Under the EU Directives, authorities are strongly encouraged to divide contracts into lots through the 'divide or explain' principle. They are not absolutely required to do so, but if they choose not to divide, they must provide a written justification. Some member states have introduced stronger national requirements — for example, France requires lot division as a default rule with limited exceptions.
How does lot division affect the applicable procurement threshold?
The threshold is determined by the estimated total value of all lots combined, not the value of individual lots. This means a contract divided into small lots may still exceed the EU threshold when the lot values are aggregated. There is a limited 'small lots' exemption for individual lots below EUR 80,000 (supplies/services) or EUR 1 million (works), capped at 20% of the total contract value.
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