Demarking the lines: public (concession) contracts v. other legal instruments such as limited authorisation schemes, subsidies and open-house systems

The scope and set-up of (social) services of general [economic] interest vary considerably between EU Member States, depending on their different traditions and cultures with regard to state intervention. As a consequence, a broad range of services of general economic interest exists. The differences in needs and preferences of users can vary according to differences in the geographical, social and cultural situation. Indeed, it is to a large degree the responsibility of (national, regional or local) public authorities to determine the nature and scope of a particular service (of general [economic] interest).

In accordance with the subsidiarity and proportionality principles, the role of the EU is limited to those competences which have been conferred on it under the TFEU, and as far as this is necessary. In its actions the Union shall respect the diverging situations of the various Member States and the role which national, regional and local public authorities have been given to ensure the wellbeing of their citizens and to promote social cohesion, accompanied by the necessary guarantees for democratic choices as regards inter alia the quality level of service provision. It is up to the public authorities in the Member States to classify a service as a service of general interest. This broad discretionary power of the Member States is limited when the European Union harmonises certain sectors by adopting secondary legislation. However, that is not (yet) the case with regard to many services of general interest, such as for examples healthcare services. This discretionary power can also be limited by the case law of the Court of Justice of the European Union.  

This raises the question under which conditions the EU public procurement rules apply.  

It is important to realise that the European rules on public contracts do not require (national) public authorities to externalise the performance of services to the free and competitive market. The national authority always retains the prerogative to decide for itself whether it wishes to perform the service itself (either directly (i) or by way of an in-house construction) (ii) or in cooperation with other public authorities (iii). In those cases the European public procurement rules are not applicable. In the case of a social service of which the performance is entrusted by a public authority to a third party against remuneration, the fact that the specific activity is termed 'social' is not in itself enough for it to be excluded from being regarded as an 'economic activity' within the meaning of the Court's case law or to avoid the application of public procurement law. This depends on the first choice made by the public authority to provide the service in-house or to externalise it.  

The EU law provisions only apply if the public authority decides to externalise the service provision by entrusting it to a third party against remuneration in the form of a public service contracts (iv) or in the form of a public service concessions (v). Public authorities can choose from a wide range of legal options. Next to contracts and concession contracts, they can choose for externalisation through subsidies (vi), authorisation schemes (vii) and an open contracting schemes (viii) as well. This last form is similar to an authorisation scheme and is in the Netherlands also referred to as: ‘openhousemodel’. In this open contracting scheme, contracts are granted to all interested economic operators that fulfill basic requirements, without prior selection by governments and the choice for one of the operators is left to third parties, the users.  
 
Choosing responsibly from the various legal instruments is therefore an important opportunity for public contracting authorities to design our society. Making conscious and effective choices between all aforementioned legal options is of great importance as this choice affects the achievement of the pursued objectives and thus the quality of the performed tasks.

Focussing now on social services (of general [economic] interest), it must be noted that they have been the subject of debate for decades. This debate has focussed mainly on how these concepts should be defined and who should ensure their performance under which conditions. This debate is also ongoing in the Netherlands. Newspapers and academic journals regularly report on problematic procurement procedures in the area of social care services such as home care services. A recurring question in such reports is whether it would have been better to let public authorities perform these tasks themselves instead of subjecting them to free market forces by way of public procurement or to abolish competitive tender procedures. In that sense, the issue goes beyond the old dilemma of deciding on the best actor for performing tasks in the general interest: public authorities or market parties?  

The topic ‘how to make responsible choices’ is approached At UUCePP from a general legal and economic perspective. Some of our scholars conduct research in this field of law by focusing on social services. The aim is to clarify some of the above mentioned issues to finally contribute to a coherent and consistent application of the different legal instruments. In this line, the research project “Choosing responsible legal instruments to organise social care services” (see: 2.1 Innovative organizational structures for social services (of general interest), aims at contributing to a good organisation of social care services.