In-House Award in Procurement Law 2026

Definition: The in-house award is an exception to the duty to tender under procurement law that allows public contracting authorities to award contracts to legally independent entities without a competitive procedure, provided they exercise over those entities a control similar to that exercised over their own departments and the entities carry out the essential part of their activities for them.

Last updated: January 2026 · Legal status: Article 12 Directive 2014/24/EU; § 108 GWB; § 10 BVergG 2018; CJEU Case C-107/98 (Teckal)

---

Basis and development of the in-house award

The in-house award goes back to the CJEU judgment in Teckal (C-107/98, 1999) and was codified for the first time at the level of secondary EU law by Article 12 of Directive 2014/24/EU. In Teckal the CJEU developed two criteria which constitute cumulative requirements for the exception from the duty to tender: the control criterion and the essential-activities criterion. These criteria have been considerably refined by subsequent CJEU judgments (Stadt Halle, Carbotermo, Coditel, Stadtwerke Bremerhaven and others).

Codification in Article 12 of Directive 2014/24/EU provided for the first time a clear legal basis for the various forms of in-house award, thereby creating greater legal certainty for public contracting authorities.

Requirements for an in-house award (Teckal criteria)

An in-house award presupposes the cumulative fulfilment of three criteria: the control criterion, the essential-activities criterion and – in the case of private participation – the prohibition of private capital participation.

1. Control criterion

The contracting authority must exercise over the entity awarded the contract a control similar to that which it exercises over its own departments. This requires a decisive influence over the strategic objectives and significant decisions of the entity. A mere majority shareholding under company law is not sufficient; what matters is actual decision-making power.

In a multi-party relationship (joint control by several contracting authorities), all participating contracting authorities must exercise the control jointly; the decision-making bodies of the controlled entity must be composed of representatives of all participating contracting authorities.

2. Essential-activities criterion

The controlled entity must carry out the essential part of its activities for the controlling contracting authority or authorities; more than 80 % of its activities must consist of tasks entrusted to it by the controlling contracting authorities. The 80 % threshold is set by Article 12(1)(b) of Directive 2014/24/EU. The calculation is based on the average turnover of the last three years or on other suitable activity-related indicators.

3. No private capital participation

There must be no direct private capital participation in the controlled entity, unless such participation is required by law and exercises no controlling or blocking influence. Even a very small private participation will, as a rule, exclude the in-house exception (CJEU Case C-26/03 – Stadt Halle).

Forms of in-house award

Article 12 of Directive 2014/24/EU distinguishes between various in-house constellations:

• Classic in-house award: a contracting authority awards a contract to an entity it controls (§ 108 para. 1 GWB).
• Reverse in-house award: a controlled entity awards a contract to its controlling contracting authority (§ 108 para. 2 GWB).
• Horizontal in-house award (sister awards): a controlled entity awards a contract to another entity controlled by the same contracting authority (§ 108 para. 3 GWB).
• Joint control: several contracting authorities jointly control an entity (§ 108 para. 4 GWB).

Distinction from inter-municipal cooperation

A distinction must be drawn between the in-house award and inter-municipal cooperation, which is outside the scope of procurement law (§ 108 para. 6 GWB; Article 12(4) of Directive 2014/24/EU), where public contracting authorities cooperate to perform joint public tasks without giving rise to a contractual relationship under private law. This form of cooperation presupposes that only public interests are pursued, that there is no market exposure and that the cooperation does not distort competition between private economic operators.

Duty to document

Contracting authorities that make an in-house award must document the fulfilment of the requirements in the award file. Where the requirements are not met, the procedure constitutes an unlawful direct award, which may be challenged in review proceedings.

FAQ

Can a limited company wholly owned by a municipality always receive in-house contracts? Not automatically; what matters is whether the municipality in fact exercises a control similar to that over its own departments and whether the company carries out the essential part (>80 %) of its activities for the municipality.

What happens if a private investor holds even a small share? A direct private capital participation will, as a rule, completely exclude the in-house exception.

Does the 80 % threshold apply retrospectively over all three years? For the calculation of the essential-activities criterion, the average of the last three years is used; for newly founded entities, forecasts are permissible.

Is the in-house award also relevant below the EU thresholds? Although the exceptions apply chiefly above the EU thresholds, the principles can be applied by analogy below them.

---

Last updated: January 2026 All information is provided without warranty. For legally binding advice, please consult a law firm specialising in procurement law.