In-house Award in Procurement Law

Definition: The in-house award is an exception to the scope of procurement law that permits public contracting authorities to award contracts to their own legal entity without conducting a procurement procedure, provided that the control and essential-activity criteria codified in Art. 12 of Directive 2014/24/EU (the so-called Teckal criteria) are met.

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

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What is an in-house award?

The in-house award enables the public sector to procure services within its own organisational sphere without having to go through the competitive procurement procedures – provided that the legal independence of the contractor is merely formal but the control exercised by the contracting authority is substantive.

The term goes back to the judgment of the Court of Justice of the European Union in the Teckal case (CJEU, Case C-107/98) of 1999, in which the Court first defined the conditions for a tender-free in-house award. This case law has been refined by numerous subsequent decisions (including Case C-26/03, Stadt Halle; Case C-458/03, Parking Brixen; Case C-295/05, Asemfo) and was ultimately codified in Art. 12 of Directive 2014/24/EU.

Significance and function

The in-house award is one of the practically most significant exceptions to procurement law and is used by public contracting authorities to commission municipal undertakings, in-house companies or inter-municipal cooperations without competition.

The Teckal criteria under Art. 12 Directive 2014/24/EU:

1. Control criterion: The public contracting authority exercises a control over the legal entity that is similar to that which it exercises over its own departments. The control must include decisive influence over both the strategic objectives and the significant decisions of the controlled legal entity. Purely formal supervision is not sufficient; the contracting authority must actually be able to intervene in a directive manner.

2. Essential-activity criterion (turnover criterion): The controlled legal entity must carry out more than 80 % of its activities for the controlling public contracting authority or authorities. Private third parties as principals may account for less than 20 % of the turnover. This value is calculated on the basis of the average total turnover of the last three years or a credible projection.

3. No private capital participation: The controlled legal entity must have no direct private capital participation, with the exception of non-controlling holdings required by law that do not grant decisive influence.

Joint control (horizontal cooperation): Art. 12 para. 3 of Directive 2014/24/EU also extends the in-house exception to cases in which several public contracting authorities jointly exercise control over a legal entity. In addition, Art. 12 para. 4 allows tender-free horizontal cooperation between public contracting authorities, provided that the cooperation pursues exclusively public interests and does not favour any private service providers.

National implementation:

• Austria: § 10 BVergG 2018 governs the in-house exception; awards to affiliated undertakings as well as inter-municipal cooperation are regulated separately.
• Germany: § 108 GWB contains the in-house rules; § 108 para. 6 GWB regulates horizontal cooperation between public contracting authorities.

Legal basis

Since the procurement law reform of 2014, the in-house award has been explicitly anchored in Directive 2014/24/EU and implemented in national law.

• EU: Art. 12 Directive 2014/24/EU; Art. 28 Directive 2014/25/EU; Art. 17 Directive 2014/23/EU
• CJEU case law: Case C-107/98 (Teckal); Case C-26/03 (Stadt Halle); Case C-458/03 (Parking Brixen); Case C-480/06 (Commission/Germany); Case C-159/11 (ASL Lecce)
• Austria: § 10 BVergG 2018
• Germany: § 108 GWB (in-house award and horizontal cooperation)

Related terms

• Direct award
• Procurement procedure
• Procurement law
• Principle of equal treatment
• Non-discrimination
• Cascade principle
• Review procedure
• Concession award

FAQ

What happens if an in-house company starts to carry out more than 20 % of its activities for private principals? If the in-house company exceeds the 20 % threshold for external activities, it no longer meets the essential-activity criterion. Future commissioning by the public contracting authority would then no longer be permitted as an in-house award and would be subject to the regular procurement rules. Existing contracts are not affected by this change, provided that they were concluded in accordance with the law applicable at the time of the award.

Can an in-house award also be made to a subsidiary of the in-house company? In Case C-295/05 (Asemfo), the CJEU ruled that the in-house exception can also be extended to awards to subsidiaries of the controlled entity, provided that the public contracting authority also exercises control over the subsidiary that corresponds to the control criterion. This must be carefully examined on a case-by-case basis.

Does the in-house exception also apply if the in-house company itself purchases services from private undertakings? When purchasing services from third parties, the in-house company itself in principle remains subject to its own procurement-law obligations, insofar as it qualifies as a public contracting authority or sector contracting authority. The in-house exception refers to the relationship between the controlling public contracting authority and the in-house company, not to downstream procurements.

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Last updated: January 2026 All information without guarantee. For legally binding advice, please consult a law firm specialised in procurement law.