Life-cycle costing in EU tenders

Evaluation & award · This guide was generated with the help of an AI system. Its legal references were checked against the official EU texts listed under Sources on 10 October 2026. Next review due by 10 October 2027, or sooner if the law changes. EU rules only. Not legal advice.

Short answer. A buyer can compare tenders on cost rather than price: what it will pay over the life of the product, service or works, and in some cases the cost of environmental externalities (Articles 67(2) and 68). If it does, the documents must say which data you have to provide and the method that turns them into a life-cycle cost (Article 68(2)). That method is where tenders are won and lost. A higher purchase price can win on running costs, and the result can turn on details such as the period counted or the discount rate. Read the method as carefully as you would a price formula, give exactly the data it asks for, and make sure you can prove it.

EU law · What can be counted

The most economically advantageous tender is identified “on the basis of the price or cost, using a cost-effectiveness approach, such as life-cycle costing” (Article 67(2)). Life-cycle costing covers, “to the extent relevant”, some or all of these costs (Article 68(1)):

• Costs borne by the buyer or other users: acquisition; use, “such as consumption of energy and other resources”; maintenance; end of life, “such as collection and recycling costs”.
• Costs of environmental externalities linked to the product, service or works during its life cycle, “provided their monetary value can be determined and verified”. These may include greenhouse-gas and other pollutant emissions and other climate change mitigation costs.

Cost can be the only award criterion, or it can be combined with quality in a best price-quality ratio, just as price can (Article 67(2)).

EU law · What the buyer must publish

Where a buyer uses life-cycle costing, the documents must indicate “the data to be provided by the tenderers and the method which the contracting authority will use to determine the life-cycle costs on the basis of those data” (Article 68(2)).

For environmental externalities, the method must meet three further conditions (Article 68(2)):

1. it is based on objectively verifiable and non-discriminatory criteria, and, if it wasn’t established for repeated or continuous use, it must not unduly favour or disadvantage certain operators;
2. it is accessible to all interested parties;
3. the data can be provided “with reasonable effort by normally diligent economic operators”, including operators from third countries party to the WTO Government Procurement Agreement or other agreements binding the EU.

Unlike the price formula, which the buyer doesn’t always have to publish (see must the buyer publish its scoring formula?), the life-cycle costing method must be in the documents.

Common EU methods. Where an EU act makes a common calculation method mandatory, that method must be used. Those acts are listed in Annex XIII (Article 68(3)). Annex XIII still lists only Directive 2009/33/EC on clean road transport vehicles. The current consolidated text of that Directive (20 May 2024), as amended in 2019, sets minimum procurement targets (Article 5). It has no Article 6 or 7, and we found no life-cycle cost calculation method in it. As far as these texts show, the method you’ll meet is the one in the documents.

What the case law adds

Nothing direct yet. In the 194 judgments and orders linked to Directives 2014/24 and 2004/18 that we searched on 10 October 2026, the only mentions of life-cycle costing quote the text of Article 67 (method: our analysis of the scoring formula).

Our analysis · Two machines, and what the discount rate does

Two bids for equipment the buyer will run for eight years. The figures are made up.

• Bid A: purchase €100,000, running costs (energy and maintenance) €20,000 a year.
• Bid B: purchase €150,000, running costs €11,000 a year.

On purchase price alone, A wins easily: with 40 points under the proportional formula, A gets 40.00 and B gets 26.67. On life-cycle cost, the answer depends on how future costs are counted. A method may discount future years, so that a euro spent in year 8 counts for less than a euro spent today. Whether and how to discount is for the method in the documents.

The two bids cost the same at a rate of about 8.9%. Below that B wins, above it A wins. The higher the rate, the less the running-cost savings count, and the more the purchase price matters again. The period counted works the same way: count fewer years and the cheaper machine to buy does better.

If the life-cycle cost is then scored like a price, the scoring formula applies to the cost figure instead. At 4%, the proportional formula gives B 40.00 points and A 38.19. You can use the scoring calculator for that step by entering each bid’s life-cycle cost in place of its price, as long as the documents score cost that way.

Practice · Bidding when cost, not price, is scored

1. Find the method and its inputs. Which costs are counted, over how many years, at what discount rate, with which energy prices or usage assumptions? The documents must say (Article 68(2)). If something is missing, ask before the deadline (see clarification questions).
2. Run the method on your own figures, and on a rival’s. Small changes in an assumption you can influence, such as guaranteed energy consumption or maintenance intervals, can move the result more than a price cut.
3. Give exactly the data asked for, in the form asked for. The buyer computes your cost from your data. Missing or ambiguous data may not be fixable after the deadline (see when the buyer asks you to clarify your tender).
4. Make sure every figure can be verified. Externality costs must be verifiable (Article 68(1)(b)), and buyers must be able to check information in tenders (Article 67(4)). Test reports, certified consumption figures and maintenance contracts are your evidence.
5. Remember the promises. A low running cost you promised is part of what you offered. Check whether the documents turn it into a contractual guarantee.

What this page doesn’t cover

Sector methods outside Annex XIII. Utilities contracts under Directive 2014/25/EU. Quality scoring alongside cost (see how quality is scored). National rules on discount rates or standard values.