When does an agreement count as public procurement despite its label?

Short answer

EU procurement classification follows the agreement's substance. A written, reciprocal arrangement under which a contracting authority selects an economic operator and acquires works, supplies or services for consideration is normally a public contract. Calling it a grant, cooperation agreement, land transaction or memorandum does not remove that character.

But not every public payment or agreement is procurement. Mere financing without acquisition, acquisition or rental of existing land, a genuine transfer of public competence, qualifying public-public cooperation, and an open authorisation scheme with no selective award can fall outside the procurement directives. Their conditions are factual and narrow.

The authority should identify what enforceable performance it receives, what consideration the operator receives, whether an operator is selected, and whether an exclusion genuinely fits. Splitting connected documents or relying on public-law labels will not prevent review of their overall economic and legal effect, including linked agreements signed at different times or stages.

The core test is an acquisition for consideration

Directive 2014/24 defines a public contract as a written contract for pecuniary interest between one or more economic operators and one or more contracting authorities, having works, supplies or services as its object. “Procurement” involves acquisition through a public contract from operators chosen by the authority.

Each element matters:

• Contracting authority: a state, regional or local authority, or a qualifying body governed by public law.
• Economic operator: interpreted broadly; it can include public, private, nonprofit or university bodies offering works, supplies or services on a market.
• Reciprocal enforceable obligations: the operator must owe identifiable performance and receive consideration.
• Acquisition: the authority obtains the benefit of works, supplies or services; ownership need not transfer.
• Selection: the authority chooses one or a limited group of operators rather than admitting everyone who meets published conditions.

Consideration need not be a conventional price or profit. Cost reimbursement, rights, land, risk-bearing opportunities or other economic value can support pecuniary interest. Conversely, regulatory permission or financing alone is not necessarily an acquisition.

A grant can be procurement in substance

Recital 4 of Directive 2014/24 says mere financing through grants does not usually fall within procurement. A genuine grant supports the recipient's activity, often subject to purpose, audit and repayment conditions, without buying defined output for the authority.

The line changes where the “grant agreement” requires the recipient to deliver specified services, supplies or works that the authority acquires, with payment tied to that legally enforceable performance. Relevant indicators include:

• detailed authority-defined deliverables or service levels;
• enforceable acceptance, performance and remedy provisions;
• payment calculated as consideration for output rather than support;
• the authority or identified users receiving the service; and
• competitive selection of a provider to meet the authority's need.

Public-policy purpose and nonprofit status do not answer the question. Procurement, grant and State-aid rules may overlap; satisfying one regime does not exclude another.

NFŠ, Case C-28/23, illustrates the combined-transaction approach. A stadium grant and a state undertaking to purchase could together be a public works contract where they created reciprocal obligations, required construction to state specifications and shifted commercial failure risk to the state. Commission approval of the package as compatible State aid did not decide its procurement classification, and requiring the developer to tender its own suppliers did not discharge the contracting authority's procurement duty.

Existing land is excluded, commissioned development is not

Article 10(a) excludes acquisition or rental of land, existing buildings or other immovable property and related rights. That reflects the location-specific nature of property. The exclusion should not be stretched to cover construction ordered through a land arrangement.

A development arrangement can be a public works contract where the authority receives immediate economic benefit, the developer has a legally enforceable obligation to realise works, and the authority specifies the work or exercises decisive influence over its design.

In Helmut Müller, the Court rejected procurement on the particular facts because a land sale and hoped-for later development created no enforceable construction obligation. Mere exercise of planning powers was not enough:

A works contract requires the contractor to assume a “direct or indirect obligation to carry out the works” that is legally enforceable. — Helmut Müller, C-451/08, operative point 2

The case does not create a land-sale safe harbour. A sale agreement, development agreement, lease and infrastructure commitment may be assessed together where they form one legally and economically connected transaction. Authority requirements going beyond ordinary planning control, buy-back or lease commitments, and enforceable construction duties are warning signs.

A “cooperation agreement” needs real cooperation

Public bodies can procure from one another. Public status on both sides does not by itself avoid competition. Article 12(4) nevertheless excludes qualifying public-public cooperation where:

• the contract establishes or implements cooperation to ensure public services they must perform, pursuing objectives they have in common;
• implementation is governed solely by public-interest considerations; and
• participating authorities perform less than 20% of the activities concerned on the open market.

Genuine cooperation normally involves mutual commitments and a joint public-service objective. A one-way purchase of ordinary services for a fee is harder to distinguish from procurement. Private participation or advantage also demands care.

In Commission v Germany, the Court accepted inter-municipal waste cooperation involving reciprocal capacity and assistance commitments, reimbursement rather than commercial profit, public-interest implementation and no private participant.

EU law does not require public authorities to use “any particular legal form in order to carry out jointly their public service tasks”. — Commission v Germany, C-480/06, paragraph 47

Article 12 now codifies and structures this area. Older judgments must be applied through the current statutory conditions.

In Informatikgesellschaft für Software-Entwicklung, Case C-796/18, free software transfer plus reciprocal sharing of later adaptations could itself be a contract for pecuniary interest. Article 12(4) can cover cooperation on ancillary activities that contribute to each partner's public services, but the arrangement must not advantage a private undertaking over competitors.

A genuine competence transfer is different from outsourcing

An agreement reorganising public authority may fall outside procurement where responsibility and the powers necessary to perform a public task are genuinely transferred. The recipient authority must act autonomously and under its own responsibility, with decision-making and financial autonomy.

Remondis distinguishes that from entrusting material tasks while the original authority retains primary responsibility, financial control or approval of operational decisions.

A transfer must include both the task responsibilities and “the powers that are the corollary thereof”. — Remondis, C-51/15, operative part

If the supposed transferee is simply paid to perform specified tasks under retained supervision, the arrangement may be a service contract. Creating a new public-law body does not itself establish a competence transfer.

Open schemes without selection may not be public contracts

In Falk Pharma, a public body offered identical contracts to every supplier satisfying fixed conditions and kept the scheme open throughout its life. Because it selected no successful operator and awarded no exclusivity, the Court held that it was not a public contract under the then directive.

Choice of a tender and successful tenderer is “intrinsically linked” to the concept of a public contract. — Falk Pharma, C-410/14, paragraph 38

This does not permit disguised selective awards. The scheme must genuinely admit every qualified operator on fixed terms. If capacity is capped, bids are ranked, work is allocated through authority discretion, or accession closes after an initial round, procurement rules may apply. Even a non-procurement authorisation scheme with certain cross-border interest remains subject to Treaty equality, non-discrimination and transparency requirements.

Labels, thresholds and mixed arrangements

Once classified as procurement, the authority must determine estimated value, applicable directive, threshold, exclusions and procedure. Artificial splitting cannot be used to avoid thresholds. Below-threshold contracts may still be governed by national procurement law and, where there is certain cross-border interest, Treaty principles.

Mixed arrangements require identification of separable components and the main subject. The authority's preference to combine procurement and excluded elements is not decisive. Objective technical or economic reasons must support inseparability.

Practical classification record

• Identify every document and connected transaction.
• State the authority's need and the performance it acquires.
• Map enforceable obligations, consideration, risk and remedies.
• Record whether and how an operator is selected.
• For land, distinguish existing property from authority-influenced future works.
• For grants, distinguish financing conditions from purchased deliverables.
• For cooperation, evidence common objectives and reciprocal public-service commitments.
• For competence transfers, evidence responsibility, powers and financial autonomy.
• Test market activity, private participation, value and cross-border interest.
• Apply current national implementation and review remedies.

Conclusion

EU procurement law is functional. It captures reciprocal acquisitions from selected operators even when a document is styled as a grant, sale or cooperation agreement. It excludes genuine financing, existing-property transactions, open non-selective schemes and authentic public-sector organisation only when their substantive conditions are met.

The safest approach is a written classification before signature, based on the combined transaction, enforceable duties and real economic benefit. That record is far more persuasive than the agreement's title.

Sources

• Directive 2014/24/EU on public procurement
• Court of Justice judgment in Helmut Müller, C-451/08
• Court of Justice judgment in Commission v Germany, C-480/06
• Court of Justice judgment in Falk Pharma, C-410/14
• Court of Justice judgment in Remondis, C-51/15
• Court of Justice judgment in NFŠ, C-28/23 (CURIA case page)
• Court of Justice judgment in Informatikgesellschaft für Software-Entwicklung, C-796/18 (CURIA case page)