Social Services of General Interest (SSGI)

Eilmansberger/Herzig
In the social sector basically all these options may apply. For instance, when public
authorities devolve general-interest tasks to organisations or associations, the divested entity
retains its public contract-awarding status as long as it is controlled by public authorities.
Some general form of State supervision, such as through the supervisory powers of competent
Austrian bodies (Vereinspolizei in this case), will not be enough to substantiate sufficient
government influence. But one will have to presume sufficient government influence
whenever the entity in question is subject to control by the Court of Audit. This can be
inferred from the fact that it features on the list of Annex III to Directive 2004/18/EC. 152 This
list, however, only has declaratory effect. Also entities not subject to control by the Court of
Audit may meet the criteria of public contracting bodies.
Of special significance at first sight is the condition under which public financing is to
be regarded as for the most part. In quantitative terms, this requirement is met whenever more
than half of its activity is so financed. 153 There are quite a few social entities which are
economically dependent on public authorities in this way. However, an entity meeting needs
in the general interest, not having an industrial or commercial character, will not
automatically become a public contracting body if it exceeds this funding threshold. Under
the rationale underlying this provision, the requirement of an entity being financed for the
most part by the State or its management being subject to supervision by the State refers to
types of entities which are particularly dependent on public contracting bodies and are thus
put on an equal footing with them under public procurement rules. This is why also case-law
applies a restrictive interpretation. Public funding only refers to payments which finance or
support the activities of the entity in question and are not made in consideration for specific
services, whereas amounts paid by public authorities in consideration for specific contract
services provided by the entity are not taken into account. Although even the latter contractual
relationship may also make the body concerned dependent on the contracting authority, this is
analogous to the dependency that exists in normal commercial relationships formed by
reciprocal contracts freely negotiated between the contracting parties. It is thus of a quality
that differs from that generated by a ‘pure’ subsidy or grant. In the case in question the Court
of Justice classified as public financing the grants paid to the University of Cambridge to
finance teaching and research activities of the university. The position is quite different in the
case of sums paid in consideration for contractual services provided by the university, such as
the execution of particular research work or the organisation of scientific seminars and
conferences, since the contracting authority has in fact an economic interest in providing the
service. 154
This permits to draw conclusions as to the kind of funding framework to be
established by the State in respect of social services. If the intended subsidies are linked to
tangible and identifiable service delivery by the NPO, the resultant services of the NPO and
their finances need not be subjected to public procurement rules.
4.2. Social entities as public contractors
4.2.1. Obligation to conduct a public procurement procedure
If the State enters into service relationships with providers by purchasing social
services from them, as a rule it will have to conduct a public procurement procedure
whenever this is a payable exchange of services. This will primarily concern healthcare and
152 OJ 2004 C 134/114, 179..
153 Case C-380/98, Cambridge, ECR 2000, I-8035, par. 30.
154 Case C-380/98, Cambridge, ECR 2000, I-8035, par. 24.
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