Public Contracting Authority Procurement Law 2026

Public contracting authority: who is subject to procurement law? Review scheme, body governed by public law, distinction from sector contracting authority under Art. 2 Dir 2014/24/EU.

Definition: A public contracting authority within the meaning of procurement law is any entity which qualifies under Art. 2 para. 1 no. 1 of Directive 2014/24/EU as the state, a regional or local authority, a body governed by public law or an association of such entities, and which is therefore obliged to comply with the procurement-law provisions when awarding works, supply and service contracts.

Last updated: January 2026 · Legal basis: Art. 2 para. 1 no. 1 Directive 2014/24/EU, § 3 BVergG 2018, § 99 GWB

What is a public contracting authority?

The concept of the public contracting authority is the central point of reference of procurement law: only those who qualify as a public contracting authority are subject to procurement-law obligations and must award public contracts in regulated procedures.

The question of who is a public contracting authority is determined not by the legal form of an entity, but by functional criteria. Companies organised under private law – for example a GmbH majority-owned by the public sector – may also be public contracting authorities if they meet the statutory constituent elements. This functional approach is the decisive feature of the EU-law concept of contracting authority.

Procurement law is addressed exclusively to public contracting authorities. Private companies that do not fall within this category are in principle free in their procurement. Exceptions apply to subsidised projects, in which public contracting authorities pass compliance with procurement-law requirements on to third parties.

Purpose and significance

The broad functional concept of contracting authority ensures that procurement law cannot be circumvented by a purely formal privatisation of public tasks.

If procurement law only applied to authorities in the administrative-law sense, public bodies could escape the competition and transparency requirements simply by outsourcing to private-law companies. The EU procurement directives and the national transposition laws prevent this risk by also covering entities structured under private law that act in the state interest and are state-financed or state-controlled.

Categories of public contracting authorities

Art. 2 para. 1 no. 1 of Directive 2014/24/EU distinguishes three categories of public contracting authorities; for each, a separate examination programme applies.

Classic contracting authorities: state and regional and local authorities

The first category includes the state, regional and local authorities and their bodies that directly carry out state tasks. In Austria: federation, federal states, municipalities and municipal associations. In Germany: federation, federal states, rural districts, municipalities and municipal associations. These entities are public contracting authorities without further examination, by virtue of their public-law constitution.

Bodies governed by public law

The most important and complex category in practice is bodies governed by public law. An entity qualifies as such if it cumulatively meets three conditions:

Establishment for the specific purpose of meeting needs in the general interest, not having an industrial or commercial character
Legal personality (own legal capacity as a legal person)
State dependency in the form of: predominantly state financing (more than 50 %) or state supervision over the management or majority state appointment of the administrative, management or supervisory bodies

The cumulative existence of all three features is mandatory. If even one is missing, there is no body governed by public law.

Associations of public contracting authorities

Associations and groupings of public contracting authorities are also public contracting authorities, insofar as they were established for the purpose of jointly carrying out tasks of the public sector. This includes special-purpose associations, joint procurement bodies and other forms of inter-municipal cooperation.

Review scheme: who is a public contracting authority?

For practice, a three-stage review scheme is recommended, which structures the categories of Art. 2 para. 1 no. 1 Directive 2014/24/EU.

Stage 1 – Classic contracting authorities: Is the entity the state, a regional or local authority, or another body governed by public law by virtue of its public-law constitution? → Public contracting authority.

Stage 2 – Body governed by public law: Are all three constituent elements cumulatively met (general interest of non-commercial nature + legal personality + state financing/control)? → Public contracting authority.

Stage 3 – Association: Is it an association of entities of stage 1 or 2? → Public contracting authority.

If none of the three stages is met, there is no public contracting authority – unless special national rules apply.

In its case law (inter alia Case C-44/96 – Mannesmann; Case C-237/99 – Commission/France), the CJEU has clarified that the classification is to be assessed by function and actual structure, not by formal designation. Decisive for the feature "not of an industrial or commercial nature" is in particular whether the entity operates in a competitive environment and bears the economic risk of its activity itself.

Distinction from the sector contracting authority

Sector contracting authorities under Directive 2014/25/EU are not identical with classic public contracting authorities – separate procedural rules with further flexibilisation apply to them.

Sector contracting authorities are entities active in the areas of water, energy, transport and postal services, which enjoy special or exclusive rights or are controlled by the state. The Sector Directive 2014/25/EU grants them more leeway: longer deadlines, more flexible choice of procedure, broader possibilities for direct awards.

Public contracting authorities within the meaning of Directive 2014/24/EU may simultaneously act as sector contracting authorities; in that case, the subject of the contract determines which regime applies.

Legal basis

Art. 2 para. 1 no. 1 Directive 2014/24/EU: Definition of the public contracting authority
Art. 4 para. 1 Directive 2014/25/EU: Definition of contracting entities in the sector area
§ 3 BVergG 2018 (Austria): Transposition of the contracting authority concept into Austrian law
§ 99 GWB (Germany): Definition of the public contracting authority in German law
§ 100 GWB (Germany): Sector contracting authority

National transposition

Austria (BVergG 2018)

§ 3 BVergG 2018 transposes the EU-law definition of the public contracting authority into Austrian law and lists the classic contracting authorities as well as bodies governed by public law.

§ 3 para. 1 BVergG 2018 lists as public contracting authorities: the federation, the federal states, the municipalities, municipal associations and other legal persons under public law. § 3 para. 1 no. 2 BVergG 2018 covers bodies governed by public law according to the three cumulative criteria of the directive. Associations of these entities also fall under the contracting authority concept pursuant to § 3 para. 1 no. 3 BVergG 2018.

In practice, the classification is particularly complex for outsourced companies, e.g. universities, hospitals under public ownership or outsourced infrastructure companies. The Federal Procurement Commission (BVK) and the Federal Administrative Court (BVwG) have specified the concept in their case law for the Austrian context.

Germany (GWB / VgV / UVgO / VOB)

§ 99 GWB transposes the European concept of contracting authority into German law; the extensive case law of the public procurement chambers and higher regional courts has specified the concept for numerous case groups.

§ 99 no. 1 GWB names regional and local authorities and their special funds. § 99 no. 2 GWB regulates bodies governed by public law with the three cumulative constituent elements. § 99 no. 3 GWB covers associations of public contracting authorities.

Practically relevant case groups include: municipal own-companies and own-enterprises, hospitals under public ownership, state universities, cultural institutions under public ownership and housing companies majority-owned by the public sector. In Germany, there are also state procurement laws which may contain supplementary definitions for the below-threshold area.

Related terms

FAQ

Is a GmbH owned by the city always a public contracting authority? Not automatically. A municipal GmbH is a public contracting authority if it cumulatively carries out an activity in the general interest of non-commercial nature, has legal personality and is predominantly state-financed or state-controlled. If, on the other hand, it is primarily market-oriented and bears the economic risk of its activity itself, there is generally no body governed by public law.

Does procurement law also apply to universities? In Austria and Germany, the question of the contracting authority status of universities after their outsourcing from the state administration is not conclusively resolved and is assessed differently in the literature and case law. Decisive are the specific circumstances of the respective university – in particular financing structure, state control and area of activity.

Can private companies be public contracting authorities? Yes. If a company organised under private law is active in the general interest, has legal personality and is predominantly state-financed or state-controlled, it is to be qualified as a body governed by public law and thus as a public contracting authority – regardless of its legal form.

What is the difference between public contracting authority and sector contracting authority? Public contracting authorities under Directive 2014/24/EU are state bodies and bodies governed by public law; the rules of the Classical Directive apply to them. Sector contracting authorities under Directive 2014/25/EU are entities (including private ones) that carry out activities in certain supply sectors (water, energy, transport, postal services); more flexible rules apply to them.

How is the state control of an entity assessed? State control exists where the state appoints the majority of the administrative, management or supervisory bodies, e.g. provides the majority of supervisory board members or has the majority of votes in the shareholders' meeting. Predominant state financing (more than 50 % of revenue from state funds) also creates dependency.

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