Service Contract in Public Procurement

Service contract: public contract for services; EU threshold EUR 221,000 (other contracting authorities). Governed by Article 2(1)(9) of Directive 2014/24/EU.

Definition: A service contract is a public contract for the provision of services that do not fall within the concept of works or supply contracts, in accordance with Article 2(1)(9) of Directive 2014/24/EU.

Last updated: January 2026 · Legal basis: Directive 2014/24/EU, BVergG 2018, VgV

What is a service contract?

A service contract is a public contract whose subject matter is the provision of services that do not amount to either a works or a supply contract – it is the residual category among the three contract types in EU procurement law. Directive 2014/24/EU defines the concept negatively: anything that is not a works or a supply contract is a service contract (Article 2(1)(9)).

Typical examples of service contracts are:

Consultancy (legal advice, IT consultancy, management consultancy)
Cleaning services and facility management
Transport and logistics services
Security services
Maintenance and servicing
Catering and food services
Research and development services
Training and education services

Mixed contracts

Where a mixed contract combines elements of different contract categories, classification follows the main object of the contract, measured by the respective economic value. If the value of the service component predominates, the entire contract is classified as a service contract and awarded under the thresholds and procedural rules applicable to that category.

Significance and function

After works contracts, service contracts are the practically most significant contract category in public procurement, as state tasks are increasingly being delivered by external service providers.

EU thresholds (as at 2024/2025)

Contracting authority	Threshold
Central government authorities	EUR 143,000
Other public contracting authorities	EUR 221,000
Utilities (sector) contracting entities	EUR 443,000

These thresholds are reviewed by the European Commission every two years.

Social and other specific services

For social, health-related, cultural and educational services (so-called Annex XIV services), a separate, simplified procurement regime applies, with a higher threshold of EUR 750,000. These services are awarded under a simplified procedure that must, however, respect the principles of transparency and equal treatment (Articles 74–77 of Directive 2014/24/EU). They include, for example, welfare services, residential care, religious services, political services and hotel services.

Distinction from service concessions

A service contract differs from a service concession in that, under a contract, the contracting authority bears the full remuneration of the service provider, whereas under a concession the operating risk remains with the concessionaire. Service concessions are governed by Directive 2014/23/EU and are regulated separately.

Legal basis

The procurement-law treatment of service contracts is based on the EU procurement directives and their national implementation.

Article 2(1)(9) of Directive 2014/24/EU – Legal definition
Article 4(c), (d) of Directive 2014/24/EU – Thresholds
Articles 74–77 of Directive 2014/24/EU – Social and other specific services
Annex XIV to Directive 2014/24/EU – List of specific services

Austria

In Austria, the service contract is defined in § 5(1) BVergG 2018 (BGBl. I No 65/2018). The Act distinguishes between priority service contracts and non-priority service contracts (so-called Annex XVI services). The latter also benefit from a more lenient award regime above the thresholds. Procedural rules depend on whether the contract is above or below the thresholds.

Germany

In Germany, service contracts above the thresholds are governed by the Procurement Ordinance (VgV), §§ 28 et seq. Below the thresholds, the UVgO applies. The VOL/A has been replaced by the UVgO. For specific services (§§ 130 et seq. GWB) a simplified procedure applies.

Related terms

FAQ

What is the difference between a service contract and a service concession? Under a service contract, the contracting authority pays the full remuneration to the service provider. Under a service concession the concessionaire bears the operating risk and is mainly financed through user fees.

Which threshold applies to consultancy services for a municipality? For other public contracting authorities – which include municipalities – the EU threshold for service contracts is EUR 221,000. If this value is exceeded, an EU-wide tender via TED is required.

Are IT services service contracts? Yes, IT consultancy and development services are service contracts. Where, however, software is procured as a product (licence agreement without substantial customisation), it may be a supply contract. Classification follows the main object of the contract.

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