Social Services of General Interest (SSGI)

Eilmansberger/Herzig
obligations must be clearly defined; the parameters on the basis of which the compensation is
calculated must be established in advance in an objective and transparent manner; the
compensation cannot exceed what is necessary to cover all or part of the costs incurred in the
discharge of public service obligations; and, finally, where the undertaking which is to
discharge public service obligations is not chosen pursuant to a public procurement
procedure, the level of compensation needed must be determined on the basis of an analysis
of the costs which a typical undertaking, well run and adequately equipped, would have
incurred in discharging those obligations.
In its policy package the Commission makes no use of the option outlined by the
Court Justice, namely to examine more closely or even refuse to approve compensation which
fails to comply with hypothetical net costs. Rather, the policy package only requires
fulfilment of the first three Altmark criteria and excludes over-compensation unless the
amount exceeds what is necessary to cover the costs incurred, taking into account reasonable
profit for discharging those obligations. Benchmarking is not required.
4. Public procurement rules
Public procurement rules can be of relevance to the social sector in two respects.
Social entities may be considered public contracting bodies under certain circumstances. This
is the case whenever they perform tasks in the general interest of a non-industrial or noncommercial
nature and are under the influence of the State.
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
social services. Under the Community’s public procurement system they are classified as socalled
non-priority services subject to only a very lean public procurement regime.
No formal public procurement procedure needs to be conducted if compensation for
the service demanded by public authorities is not paid by the latter but by third parties which
also bear the economic risk of the activity in question. In terms of public procurement law this
could be a service concession, and case-law maintains that the contracting entities concluding
them are bound to comply with Treaty rules which imply an obligation of ensuring adequate
transparency.
A public contracting body may, without conducting any public procurement
procedure, if this is so warranted, buy social services from an entity which, though formally
distinct, is closely related in organisational and procurement terms. Awarding contracts under
this in-house entity exception are subject to very strict rules according to case-law, which
have turned out to frequently impede the organisation of administrative cooperation by
divestment.
Public contracting parties are also subject to very tight rules when they want to
privilege non-profit entities over profit-making undertakings in a public procurement
procedure.
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