Utilities Contracting Entity in Procurement Law

Utilities contracting entities are public and private companies with special rights in water, energy, transport and postal services, subject to special procurement rules.

Definition: Utilities contracting entities are public undertakings and undertakings granted special or exclusive rights by a Member State, in so far as they pursue activities in the water, energy, transport or postal services sectors and exceed the thresholds of the Utilities Directive.

Last updated: January 2026 · Legal basis: Directive 2014/25/EU; AT: BVergG 2018 Part 4; DE: SektVO

What is a utilities contracting entity?

The term "utilities contracting entity" (Sektorenauftraggeber) refers to a specific category of purchasers that are not subject to the general procurement law of Directive 2014/24/EU but to the separate utilities procurement regime under Directive 2014/25/EU. The decisive difference lies not in the status of the contracting entity as such but in the type of activity pursued: as soon as an entity pursues activities in one of the four defined sectors, its procurement for those activities falls under the utilities procurement regime.

Utilities contracting entities can be:

Public contracting authorities (e.g. municipalities, regional authorities, state-owned undertakings) carrying out utilities activities
Public undertakings, i.e. undertakings over which public contracting authorities exercise direct or indirect controlling influence
Private undertakings with special rights, granted by the state special or exclusive rights for carrying out a utilities activity (e.g. concessions for water supply or energy grids)

Significance and function

The utilities procurement regime reflects the particular market structure in the sectors concerned: water, energy, transport and postal markets are often characterised by natural monopolies or statutory special rights, which is why a more flexible but still transparent procurement regime applies.

The four sectors

Directive 2014/25/EU defines the following utilities activities:

Gas, heat and electricity: provision or operation of fixed networks supplying the public, and the supply of those networks
Water: provision or operation of drinking-water supply networks; drainage and sewage treatment
Transport services: provision or operation of rail, tram, trolley-bus, bus or cable networks
Postal services: collection and delivery of letters and related services

Higher thresholds and more flexible procedures

Compared with classic public contracting authorities, utilities contracting entities benefit from higher thresholds. For supplies and services the current threshold is EUR 443,000, for works EUR 5,538,000 (status 2024, with regular biennial adjustment by the Commission).

The utilities procurement regime also offers more procedural flexibility:

The negotiated procedure with prior call for competition is available to utilities contracting entities without any special justification
Internal procurement rules ("procurement orders") can be approved and applied under certain conditions

Exemptions: Article 34 of Directive 2014/25/EU

Where the activity of a utilities contracting entity is directly exposed to competition on markets to which access is not restricted, an exemption from the Utilities Directive may be granted on request. The European Commission decides on such requests.

Legal basis

Utilities procurement law is comprehensively codified at European and national level.

EU: Directive 2014/25/EU on procurement by entities operating in the water, energy, transport and postal services sectors
Austria: BVergG 2018, Part 4 (§§ 175 et seq.) – above-threshold utilities procedures; Part 5 for below-threshold
Germany: Sectors Procurement Ordinance (SektVO); §§ 100, 102 et seq. GWB

Related terms

FAQ

Does the same procurement law apply to utilities contracting entities as to classic public contracting authorities? No. Utilities contracting entities are subject to Directive 2014/25/EU and the corresponding national implementing laws (AT: BVergG 2018 Part 4; DE: SektVO), not Directive 2014/24/EU. The procedural rules are similar but offer more flexibility, e.g. on the choice of the negotiated procedure.

Can one undertaking be both a classic public contracting authority and a utilities contracting entity? Yes. An undertaking can be subject to both regimes depending on the type of procurement. Procurement for utilities activities is subject to the utilities regime; other procurement falls under the classic regime. The correct classification must be assessed carefully in each case.

What are "special or exclusive rights" within the meaning of the Utilities Directive? Special or exclusive rights are rights granted by a competent authority on the basis of a legislative or administrative provision that reserve the pursuit of an activity to one or more entities, i.e. that substantially affect competition. Typical examples are concessions for electricity or gas network infrastructure.

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