Privatisation in Public Procurement Law 2026

Definition: Privatisation refers to the full or partial transfer of tasks, undertakings or assets previously performed by the state to private entities; it may trigger or eliminate procurement obligations, depending on whether the contracting party loses its status as a public contracting authority as a result.

Last updated: January 2026 · Legal basis: GWB, BVergG 2018, Directive 2014/24/EU, ECJ case law

---

Privatisation and procurement law

The privatisation of public services touches procurement law in several respects: the transfer itself may be a transaction subject to procurement rules, and the privatised undertaking may continue to be subject to procurement obligations depending on its design. Public contracting authorities must therefore examine, already at the planning stage of a privatisation, what procurement-law consequences the chosen form will have.

Forms of privatisation

A distinction is made between various forms of privatisation with differing procurement-law relevance:

• Formal privatisation: Transformation of a public authority or in-house operation into a private-law company (GmbH, AG) without the public sector relinquishing control. The undertaking remains subject to procurement rules as a public contracting authority.
• Material privatisation: Complete transfer of the task and ownership to private hands. The procurement obligation lapses for the privatised undertaking.
• Functional privatisation: Private companies perform public services without ownership being transferred (e.g. concessions, public-private partnership). This form generally requires a procurement procedure for the selection of the private partner.
• Asset privatisation: Sale of state property (land, shareholdings). Depending on the design, procurement law may apply.

Procurement obligation for the privatisation transaction

The selection of a private partner within the framework of a functional privatisation or public-private partnership is in principle subject to procurement law where the conditions of a public contract or concession are met. In numerous judgments, the ECJ has clarified that the formation of mixed economy undertakings or the award of concessions may not take place outside procurement law.

Remunicipalisation

The counterpart to privatisation is remunicipalisation, the transfer of privately provided services back into public hands. This process can also raise procurement-law questions, in particular where existing contracts are to be terminated and the service performed by a newly formed municipal company (so-called in-house award).

FAQ

Must a privatisation be put out to tender? It depends on the form. A material privatisation (sale) is generally not a contract subject to procurement rules. The selection of a private partner for joint service provision may, however, be subject to procurement rules.

Does a privatised undertaking remain subject to procurement rules? With formal privatisation (state-controlled GmbH), yes. With full material privatisation, no, provided that no other characteristics of a public contracting authority are present.

What is an in-house award? An in-house award exists where the public contracting authority awards a contract to its own company, which it controls like an internal department. Under certain conditions, this is exempt from procurement rules.

---

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