COMMISSION STAFF WORKING DOCUMENT 3rd Biennal Report on Social Services of General Interest Accompanying the document COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT, THE COUNCIL, THE EUROPEAN ECONOMIC AND SOCIAL COMMITTEE AND THE COMMITTEE OF THE REGIONS Towards Social Investment for Growth and Cohesion – including implementing the European Social Fund 2014-2020
Date: 2013-02-20
Institutions: European Commission
Subjects: European social policy, State aid, administrative formalities, administrative transparency, economic and social cohesion, social assistance, social cost

EUROPEAN 
COMMISSION 

Brussels, 20.2.2013  
SWD(2013) 40 final 

Social Investment Package 

COMMISSION STAFF WORKING DOCUMENT 

3rd Biennal Report on Social Services of General Interest 

Accompanying the document 

COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN 
PARLIAMENT, THE COUNCIL, THE EUROPEAN ECONOMIC AND SOCIAL 
COMMITTEE AND THE COMMITTEE OF THE REGIONS 

Towards Social Investment for Growth and Cohesion – including implementing the 
European Social Fund 2014-2020 

{COM(2013) 83 final} 
{SWD(2013) 38 final} 
{SWD(2013) 39 final} 
{SWD(2013) 41 final} 
{SWD(2013) 42 final} 
{SWD(2013) 43 final} 
{SWD(2013) 44 final}

EN 

   EN 

 
 
 
 
 
  
 
Contents 

1. 

INTRODUCTION....................................................................................................... 2 

2.  THE  NEW  STATE  AID  PACKAGE  FOR  SERVICES  OF  GENERAL 

ECONOMIC INTEREST............................................................................................ 7 

2.1.  The  Communication:  clarifying  the  basic  concepts  to  make  it  easier  to 

apply State aid rules .......................................................................................... 9 

2.2.  The Decision: aid for social services does not need to be notified ................. 11 

2.3.  The Framework – when aid has to be notified ................................................ 15 

2.4.  The  SGEI  de  minimis  Regulation:  making  it  simpler  to  finance  small 

amounts ........................................................................................................... 16 

3.  MODERNISING PUBLIC PROCUREMENT RULES ........................................... 19 

3.1.  The rules currently in force: a light regime for social services ....................... 19 

3.2.  The 2011 Commission proposal: simpler, clearer and more adapted public 

procurement rules. ........................................................................................... 21 

4.  THE 2013 GUIDE..................................................................................................... 27 

5.  CONCLUSIONS....................................................................................................... 32 

1 

 
 
 
 
 
1. 

INTRODUCTION 

Investing in high-quality,  affordable and efficient social services  is needed today more than 
ever. This report, which is part of the Social investment Package, will help public authorities 
and  stakeholders  to  understand  and  implement  the  revised  EU  rules  on  social  services  and 
thus to invest in the sector in a safer way, in compliance with the EU legal framework.  

At the same time, by applying EU rules on State aid and public procurement in a correct way, 
as  shown  in  the  report,  public  authorities  will  be  able  to  reap  the  benefits  in  terms  of 
transparency, efficiency and responsiveness to social purposes that these rules offer: they will 
thus maximise the return of the resources that they are investing in social services.  

Social services of general interest at the heart of the EU policies 

In  2006,  for  the  first  time,  the  European  Commission  described  in  a  Communication1  what 
constitute Social Services of General Interest (SSGI). It identified two broad types of services, 
namely: 

•  statutory and complementary social security schemes covering the main risks of life; 

and 

•  services  provided  directly  to  the  person,  such  as  social  assistance  services, 
employment and training services, childcare, social housing or long-term care for the 
elderly and for people with disabilities. 

In  2007,2  the  Commission  refined  its  analysis  of SSGI  and  highlighted  a  certain  number  of 
objectives  that  social  services  pursue  —  such  as  responding  to  vital  human  needs, 
contributing  to  non-discrimination  and  creating  equal  opportunities.  The  Commission  also 
highlighted  the  principles  of  organisation  which  are  common  to  these  services  —  such  as 
solidarity,  proximity,  comprehensiveness,  personalisation  and  an  asymmetric  relationship 
between user and provider. 

Both  documents  show  that  social  services  play  a  prevention  and  social  cohesion  role 
in European  societies.  They  not  only  help  people  to  live  in  dignity  and  enjoy  their 
fundamental rights, but also to fulfil their potential and to take part in society.  

In recent years, moreover, the social services sector has shown its potential for creating jobs. 
The Commission highlighted this in its first and second Biennial Reports on social services of 
general interest published in July 20083 and October 20104 and in the Employment Package 
adopted  in April 2012.5  More  recently,  the  EU  Employment  and  Social  Situation  Quarterly 

1  

Implementing the Community Lisbon programme: Social services of general interest in the European Union, 
COM(2006) 177 of 26 April 2006. 

2   See  the  Commission  Communication  Services  of  general  interest,  including  social  services  of  general 

interest: a new European commitment, COM(2007) 725 final of 20 November 2007. 

3   SEC(2008) 2179 of 2 July 2008. 

4   SEC(2010) 1284 of 22 October 2010. 

5   See in particular the Communication Towards a job-rich recovery, COM(2012) 173 final of 18 April 2012, 

p.6. 

2 

 
 
 
                                                 
Review  of  December  20126  has  indicated  that  the  share  of  employment  in  the  ‘white  jobs’ 
sector7 grew from 8,4% to 10,1% between 1995 and 2011 and that this was among the very 
few  sectors  recording  a  net  job  creation  between  2008  and  2011,  when  employment 
dramatically declined in the EU.8 

Social  services  are  therefore  essential  for  fostering  inclusive  growth:  economically, 
expenditure  on  these  services  enhances  human  capital  and  thus  is  a  form  of  investment,  a 
social investment with mid- to long-term return to individuals, society and the economy as a 
whole.  

This is why the Annual Growth Survey 2013,9 when calling for additional efforts to promote 
social  inclusion  and  to  tackle  poverty,  asks  the Member  States  to  ensure  ‘broad  access  to 
affordable  and  high-quality  services  such  as  social  and  health  services,  childcare,  housing 
and energy supply’. 

The  contribution  social  services  can  make  to  the Europe 2020  Strategy10  has  also  been 
the  2011 
in  Country  Specific  Recommendations  adopted  as  part  of 
expressed 
and 2012 ‘European  Semesters’.  These  recommendations  were  addressed  to  18  Member 
States  and  covered  a  variety  of  social  services  (childcare,  long-term  care,  family  support 
services,  public  employment  services,  training  and  life-long  learning).  They  encouraged  the 
Member States to increase the provision of these services, to make them more effective and 
more efficient, to improve their quality and to ensure they are widely available and affordable. 

Moreover, ‘enhancing access to affordable, sustainable and high-quality services, including 
healthcare and social services of general interest’ is one of the ‘key actions’ for the European 
Social  Fund  (ESF)  —  according  to  the  Common  Strategic  Framework  drawn  up  by  the 
Commission11 to help Member States plan for the next structural fund programming period. 

In  recent  years  the  Commission  has  also  been  working  to  improve  the  quality  of  social 
services — for example by financing local authorities’ and stakeholders’ initiatives12 and by 
playing an active part in the work of the Social Protection Committee (SPC), which led to the 
adoption  in  October  2010  of  the  voluntary  European  Quality  Framework  for Social 
Services.13 

6   See: http://ec.europa.eu/social/main.jsp?langId=en&catId=89&newsId=1776&furtherNews=yes  

7   The ‘white jobs’ sector combines health and social services. 

8   According  to  the  EU  Employment  and  Social  Situation  Quarterly  Review  of  December  2012,  while 4.4 
million  jobs  were  lost  in  the  age  group  15-64  between  2008  and  2011,  more  than  1.4  million  jobs  were 
created in the health and social service sector. The growth was continuous from 2008 to 2011. 

9   COM(2012) 750 final of 28 November 2011. 

10   See  the  Commission  Communication  Europe  2020  —  A  strategy  for  smart,  sustainable  and  inclusive 

growth, COM(2010) 2020 of 3 March 2010. 

11   SWD(2012) final of 14 March 2012. 

12   These initiatives are set out in Chapter 2, section 2.4, of the Second Biennial Report, quoted in footnote 4 

above. 

13   SPC/2010/10/8  final,  6.10.2010.  The  voluntary  European  Quality  Framework  for  Social  Services  was  set 

out in the Second Biennial Report quoted in footnote 4 above. 

3 

 
 
                                                 
The on-going debate on the application of EU rules to SSGI 

The  political  recognition  of  the  social  services’  role  in  the  European  social  model,  the 
encouragement  for  Member  States  to  deliver  high-quality,  affordable  and  effective  social 
services and, more specifically, the promotion of social services’ quality do not exhaust the 
debate about social services at EU level. Another issue has dominated the scene for at least 
the  last  decade:  the  application  of  EU  rules  on State  aid,  internal  market  and public 
procurement to social services. 

This issue has been so controversial as to be considered a ‘persistent irritant in the European 
public  debate’,  as  Mario  Monti  put  it  in  his  report  on  the  Single  Market  in May  2010.14 
Indeed, in recent years, several public authorities and civil society organisations representing 
service  users  and  providers  have  claimed  that  the  EU  rules  create  unnecessary  difficulties. 
They claim these rules make it harder to organise and finance the services; that they lead to 
the  liberalisation,  privatisation  and  deregulation  of  the  sector,  and  to  the  provision  of  poor-
quality services.  

For instance, in 2010, the Informal Network of Social Service Providers (INSSP) published a 
report of a seminar about the impact of EU legislation on social services which states that the 
EU rules ‘in many cases impact in a negative manner on the sector of social NGOs, part of 
the social economy, and specifically on the quality of social services’. INSSP admits however 
that the negative effects ‘are not only due to the EU rules but also linked to the way national 
and  local  authorities  implement  these  rules.  Some  authorities  misunderstand  the  rules  or 
implement them in a way that is more restrictive than necessary …’.15 

The Commission has argued against these views, explaining that EU rules already take into 
account the specific characteristics of social services and that, if the public authorities apply 
them  correctly,  these  rules  can  help  them  organise  and  finance  high-quality  cost-effective 
social  services  in  a  transparent  manner.  Member  States  have  an  ample  choice  of  modes  of 
organisations of the services in line with their traditions and cultural backgrounds.16 

The Commission has also published two sets of ‘frequently-asked questions’ (FAQs) offering 
guidance  on  State  aid  and  public  procurement.17  It  has  set  up  an  interactive  information 
service  (IIS),18  answering  questions  from  citizens,  public  authorities,  service  users,  service 
providers and other stakeholders. In December 2010, the FAQ documents were updated and 
put together as a Guide to the application of the European Union rules on state aid, public 

14   A new strategy for the single market at the service of Europe’s economy and society - report to the President 

of the European Commission José Manuel Barroso, by Mario Monti, 9 May 2010. 

15   For an overview of the doubts and misunderstandings about the application of EU rules to SSGI, see section 

4.3 of the first Biennial Report, quoted in footnote 3 above. 

16   For an overview of the Commission’s policy approach to this issue see Chapter 3, section 3.1, of the Second 

Biennial Report, quoted in footnote 4 above. 

17   SEC(2007) 1514 and SEC(2007) 1516 of 20 November 2007. The FAQs were presented in section 4.4 of 

the first Biennial Report quoted in footnote 3 above 

18   This service is accessible on the following webpage: 

http://ec.europa.eu/services_general_interest/registration/form_en.htm. 

4 

 
 
 
                                                 
 
procurement  and  the  internal  market  to  services  of  general  economic  interest,  and  in 
particular to social services of general interest.19 

To promote dialogue with all the stakeholders and to help them understand the EU rules, the 
Commission  (together  with  the  rotating  Presidencies  of  the Council)  organised  three SSGI 
Forums.  These  were  held  in  Lisbon  in  September  2007,  in  Paris  in October 2008  and 
in Brussels  in October  2010.  The  Commission  has  also  regularly  discussed  this  issue  with 
the Member States, in particular within the SPC.20 

In  the  same  logic,  in  2006,21  the Commission  undertook  to  establish  ‘a  monitoring  and 
dialogue  procedure  in  the  form  of  biennial  reports’  in  order  to  ‘improve  the  reciprocal 
knowledge  of  operators  and  the  European  Commission  of  questions  concerning  the 
application  of  Community  rules  to  the  development  of  social  services  and  to  deepen  the 
exchange of information between the operators and the European institutions’  

The contents of the third Biennial Report 

This third Biennial Report gives an account of the two most significant developments of the 
last  two  years  at  EU  level  affecting  SSGI.  First,  on  20  December  2011  the Commission 
published a comprehensive package which includes new State aid rules applying to services 
of  general  economic  interest  (SGEI  —  see Chapter  2  of  this  report)  and  proposals  for 
new Directives  on  public  procurement  and  concessions  (see Chapter  3).  The  package  was 
introduced  by  the Commission  Communication  ‘A Quality  Framework  for  Services  of 
General Interest in Europe’,22 which sets out in a comprehensive manner the Commission’s 
approach to services of general interest (SGI).  

The new set of rules both on State aid and public procurement23 represents real progress, as it 
brings the clarification and simplification that Member States and civil society organisations 
have  been  wishing  for.  Moreover,  these  new  rules  are  more  flexible,  predictable  and 
proportionate.  Being  simpler  to  comply  with,  the  new  rules  will  make  life  much  easier  for 
public authorities in the Member States and, at the same time, benefit citizens by making the 
organisation and financing of social services more efficient and effective. 

Second,  following  the  adoption  of  the  new  State  aid  rules,  the  Commission  updated 
in February 2013 the 2010 Guide on EU rules applying to SGEI and in particular to SSGI.24  

19   SEC(2010)  1545  final  of  7  December  2010.  The  2010  Guide  was  presented  in  section  3.6  of  the Second 
Biennial  Report,  quoted  in  footnote  4  above.  See  also  the  Commission  press  release  on  the 2010  Guide 
(IP/11/106 issued on 28 January 2011). 

20   See section 3.4 of the Second Biennial Report quoted in footnote 4 above. 

21   See the Commission Communication Implementing the Community Lisbon programme: Social services of 

general interest in the European Union quoted in footnote 1 above. 

22   COM(2011) 900 of 20 December 2011. 

23   The  proposals  of  the  Commission  for  a  directive  on  public  procurement  (COM(2011)  896  final 
of 20.12.20011) and on concessions (COM(2011) 897 final of 20.12.20011) are still under negotiation. See:
 http://ec.europa.eu/internal_market/publicprocurement/modernising_rules/reform_proposals_en.htm. 

24   Quoted in footnote 19 above. 

5 

 
 
 
                                                 
 
The  2013  Guide,25  like  its  predecessor  and  the  FAQs26,  is  a Staff  Working  Document 
prepared by the Commission’s services to help public authorities better understand and apply 
EU rules. Like the 2010 Guide, it covers the three main sets of EU rules applying to SGEI: 
State  aid,  public  procurement  and  internal  market  rules.  It  takes  the  form  of  very  concrete 
questions,  inspired  by  the  questions  that  the Commission  officials  receive  through 
the Interactive  Information  Service27  and  through  their  regular  contacts  with  public 
authorities,  service  users  and  providers  and  other  civil  society  representatives  and 
stakeholders, and simple, yet comprehensive, answers. These answers, while they do not bind 
the  European  Commission  as  an  institution,  express  the  position  of  the  services  responsible 
for monitoring the application of EU rules and having a thorough knowledge of such rules.  

The  2013  update  does  not  only  reflect  the  changes  on  State  aid  rules  but  also  takes  into 
consideration  the  work  done  by  the SPC  informal  working  group  on  the  application  of EU 
rules to SSGI,28 which was mandated by the Council to conduct an analysis of the new guide 
prepared by the  Commission  services on State  aid, internal market and public procurement 
rules.29 

This updated guide (see Chapter 4) is a further step in providing clarity and guidance to public 
authorities and service providers, helping them implement the new rules in a correct way and 
thus making it easier, more cost-effective and safer to invest in social services. 

****** 

The first two Biennial Reports30 had a section presenting data on employment trends in 
the  sector  and  on  social  services  expenditure.  These  data  are  now  presented  in  the EU 
Employment and Social Situation Quarterly Review of December 2012.31 

25   SWD(2013) 53. 

26   Quoted in footnote 17 above. 

27   See footnote 18 above. 

28   The analysis of the SPC informal working group was carried out through a questionnaire circulated in 2012 
to the Member States via the SPC. The result of the analysis will be published in the report of the informal 
working group to the SPC, due in September 2013. 

29   See Council Conclusions Social Services of General interest: at the heart of the European Social Model, 8 

December 2010, 17566/10 SOC 828. 

30   Quoted on footnotes 3 and 4 above. 

31   See footnote 6 above. 

6 

 
 
                                                 
2.  THE NEW STATE AID PACKAGE FOR SERVICES OF GENERAL ECONOMIC INTEREST

32 

As  stated  by  Commission  Vice-President  Joaquím  Almunia,  on  the  day  of  its  adoption,  the 
SGEI package ‘provides Member States with a simpler, clearer and more flexible framework 
for supporting the delivery of high-quality public services to citizens which have become even 
more necessary in these crisis times’. 

Often known as the ‘Almunia package’, it consists of four instruments. They apply whenever 
public  authorities  in  the  Member  States  (be  they  national,  regional  or  local  authorities) 
finance SGEI. They therefore apply to social services of an economic nature. 

The contents of the Almunia package 

–  the Communication33 clarifies the basic concepts of State aid which are relevant for SGEI; 

–  the revised Decision34 defines the conditions under which financing for a SGEI (the ‘public 
service  compensation’)  is  compatible  with  the  internal  market  and  does  not  need  to  be 
notified to the Commission; 

–  the revised Framework35 sets out the rules the Commission will use when assessing SGEI 
compensation  that  is  not  exempted  from  notification  by  the  Decision.  All  such 
compensation  has  to  be  notified  to  the  Commission  that  will  then  decide  on  its 
compatibility with the internal market; 

–  the SGEI de minimis Regulation36 provides that SGEI compensation which amounts to less 
 500 000  per  undertaking37  over  three  fiscal  years  does  not  fall  under  State  aid 

than  €
scrutiny. 

32   On the new package see: Nicola Pesaresi, Adinda Sinnaeve, Valérie Guigue-Koeppen, Joachim Wiemann, 
Madalina Radulescu, The New State Aid Rules for Services of General Economic Interest, and, by the same 
authors,  The  New  State  Aid  Rules  for  Services  of  General  Economic  Interest  (SGEI):  the  Commission 
Decision and Framework of 20 December 2011 and The SGEI Communication, published in Competition 
Policy Newsletter 2012/1 

 (http://ec.europa.eu/competition/publications/cpn/cpn_2012_1_en.html).

These articles have been a source of inspiration for the redaction of this chapter of the 3rd Biennial Report. 

33   Communication  from  the  Commission  on  the  application  of  the  European  Union  State  aid  rules  to 
compensation granted for the provision of services of general economic interest, OJ C 8, 11.01.2012, p. 4. 

34   Commission Decision of 20 December on the application of Article 106(2) of the Treaty on the Functioning 
of  the  European  Union  to  State  aid  in  the  form  of  public  service  compensation  granted  to  certain 
undertakings entrusted with the operation of services of general economic interest, OJ L 7, 11.01.2012, p. 3. 

35   European  Union  framework  for  State  aid  in  the  form  of  public  service  compensation  (2011),  OJ  C 8, 

11.01.2012, p. 15. 

36   Commission Regulation on the application of Articles 107 and 108 of the Treaty on the Functioning of the 
European Union to de minimis aid granted to undertakings providing services of general economic interest, 
OJ L 114, 26.4.2012, p. 8. 

37   ‘Undertaking’ refers to the economic unit. Therefore different legal entities forming part of a group would 

constitute one undertaking.  

7 

 
 
                                                 
 
  
The  Almunia  package  is  the  updated  version  of  a  package  adopted  by  the  Commission 
in 2005 in the aftermath of the Altmark judgment.  

The Altmark judgment 

In  the  Altmark  judgment38  the  Court  of  Justice  held  that  the  public  service  compensation 
granted by public authorities to the providers of services of general interest does not constitute 
State aid if four cumulative criteria are met: 

–  first,  the  service  provider  must  actually  have public service obligations  to  discharge,  and 

the obligations must be clearly defined; 

–  second,  the  parameters  on  the  basis  of  which  the  compensation  is  calculated  must  be 

established in advance in an objective and transparent manner; 

–  third,  the  compensation  cannot  exceed  what  is  necessary  to  cover  all  or  part  of  the  costs 
incurred in the discharge of the public service obligations, taking into account the relevant 
receipts and a reasonable profit; 

–  finally,  where  the  service  provider  is  not  chosen  pursuant  to  a  public  procurement 
procedure  which  would  allow  for  the  selection  of  the  bidder  capable  of  providing  those 
services  at  the  least  cost  to  the  community,  the  level  of  compensation  needed  must  be 
determined on the basis of an analysis of the costs which a typical service provider, if well 
run and adequately equipped, would have incurred. 

In other words, the Court ruled that financing an SGEI is not State aid if it is meant to fund a 
well-identified  task  (the  first  criterion),  if  the  financing  conditions  have  been  defined  in  a 
clear and transparent way, ensuring that it does not exceed the costs of the SGEI (the second 
and  third  criteria),  and  if  the  service  is  provided  in  a  cost-efficient  manner  (the  fourth 
criterion). 

If these four criteria are not met, the financing of a social service of economic nature (e.g. a 
grant given by a local authority to an NGO providing long-term care to the elderly) constitutes 
State aid. Such State aid could be illegal and the NGO that received the grant would have to 
repay it to the public authority. 

Following the Altmark judgment, the Commission, aware that in many instances the financing 
of SGEI in  the  Member States  might not have met the four Altmark  criteria and might  thus 
constitute  State  aid,  decided  to  provide  legal  certainty  and  to  clarify  the  conditions  under 
which  State  aid  for  the  provision  of  SGEI  would  be  compatible  with  the  internal  market.  It 
therefore  published  in 2005  a  first  package,  known  as  the  ‘Monti-Kroes’  or  ‘Altmark’ 
package, consisting of a Decision39 and a Framework.40 

38   Case C-280/00 Altmark [2003] ECR I-7747. 

39   Commission Decision of 28 November 2005 on the application of Article 86(2) of the EC Treaty to State aid 
in the form of public service compensation granted to certain undertakings entrusted with the operation of 
services of general economic interest, OJ L 312, 29.11.2005, p. 67. 

40   Community Framework for State aid in the form of public service compensation, OJ C 397, 29.11.2005. 

8 

 
 
                                                 
The  experience  gained  with  the  application  of  the 2005  package  led  to  its  revision  in 2011, 
following a wide-ranging consultation of stakeholders.41 

The  four  instruments  of  the  new  package  are  explained  in  greater  detail  below.  They  are 
particularly relevant for social services as these services are highly dependent on public 
financing.42  Social  service  providers  regularly  receive  grants  and  other  forms  of  financing 
that might not fulfil the four Altmark criteria and could thus constitute potentially illegal State 
aid.  

Complying with the State aid package is therefore a must to ensure the legality of such 
public financing and thus secure the investment needed for social services. 

2.1.  The Communication: clarifying the basic concepts to make it easier to apply 

State aid rules 

The Communication is a novel feature of the 2011 package as for the first time a document in 
the package clarifies the basic concepts, a need expressed on various occasions by the public 
authorities in the Member States and by the service providers. 

On  the  basis  of  the  rulings  of  the  Court  and  of  the  Commission’s  decision  practice, 
the Communication  explains  some  general  concepts,  such  as  ‘undertaking’  and  ‘economic 
activity’, ‘State resources’ and ‘effect on trade’ relevant for the application of State Aid rules. 

The Communication underlines that, just because a service is financed in a particular way, or 
the service provider is a non-profit organisation, this does not mean that the financing of the 
service  by  a  public  authority  falls  outside  State  aid  control: State  aid  rules  apply  to  the 
financing of social services of an economic nature even if the body providing the service 
has a non-profit status. 

When  clarifying 
the  distinction  between  economic  and  non-economic  activities, 
the Commission presents an overview of Court rulings on social security schemes. It refers to 
the  criteria  used  by  the  Court  to  determine  whether  a  social  security  scheme  is  solidarity-
based and therefore does not involve an economic activity and does not fall within the scope 
of  State  aid  rules.  The  Court  considers,  for  example,  whether  membership  of  the  scheme  is 
compulsory or voluntary, whether it has a social purpose, whether the benefits depend on the 
contributions  made  or  are  proportionate  to  the  earnings  of  the  person  insured,  and  whether 
there is State supervision of the scheme. 

The Commission also provides guidance on meeting the four Altmark criteria —which, if 
complied with, means that the financing of a social service does not count as State aid. 

In  relation  to  the  first  Altmark  criterion  (the  existence  of  a  service  of  general  economic 
interest), the Communication explains that: 

–  SGEI  are  services  with  special  characteristics that  distinguish  them  from  other  economic 

activities;  

41   On  the  review  process  that  led  to  the  adoption  of  the  SGEI  package  currently  in  force,  see: 

http://ec.europa.eu/competition/state_aid/legislation/sgei_archive_en.html. 

42   On the weight of public expenditure in financing social services see section 2.2.1 of the first Biennial Report 

quoted in footnote 3. 

9 

 
 
                                                 
–  Member States have a wide margin of discretion in defining an SGEI and the Commission 

only checks for manifest error;  

–  a  public  service  obligation  cannot  be  imposed  for  an  activity  which  already  is  or  can  be 
satisfactorily  provided  by  the  market  ‘under  conditions,  such  as  price,  objective  quality 
characteristics, continuity and access to the service, consistent with the public interest, as 
defined by the State’;  

–  a SGEI must be addressed to citizens or be in the interest of society as a whole. 

The third element of clarification in the above list is very useful for social services. Take, for 
instance, services that are provided satisfactorily under normal market conditions to address a 
demand  from  the  general  public.  Normally,  there  would  be  no  room  for  a  public  service 
obligation. However, if the same type of service is provided for vulnerable or disadvantaged 
people,  the  public  authorities  may  have  specific  requirements  regarding  its  price,  quality, 
continuity and accessibility that differ from the conditions under which the service is provided 
by  the  market.  Such  requirements  would,  in  particular,  aim  at  making  sure  the  service 
responds to the needs of the vulnerable or disadvantaged people and that they can afford it. 
Therefore,  as  the  requirements  of  the  public  authority  are  not  met  by  the  market,  the 
public  authority  may  consider  the  provision  of  the  service  to  these  people  as  being  of 
‘general interest’.43 

A typical case 

Home  cleaning  services  are  normally  provided  by  the  market  to  the  general  public.  At  the 
same  time,  they  can  be  part  of  the  delivery  of  social  policies,  such  as  long-term  care 
programmes,  aiming  to  ensure  that  the  elderly  or  people  with  disabilities  continue  living 
within  their  communities  and  not  in  institutions.  In  these  circumstances,  home  cleaning 
services  for  the  elderly  or  for  people  with  disabilities  could  acquire  a  ‘general  interest’ 
character that they do not have when they are provided to the rest of the population. A public 
authority could therefore define such home cleaning services as SGEI and could organise and 
finance  their  provision  so  as  to  ensure  that  these  users  have  access  to  these  services  (for 
example, by providing them free of charge or at a price lower than the market price). 

The Communication provides guidance on ‘the’ essential tool for the definition of a SGEI — 
the  act  of  entrustment  that  defines  the  obligations  of  the  service  provider.  It  reminds  the 
reader that this act may take a variety of forms, depending on the legislation in force in the 
Member  State  concerned,  and  that  it  must  include  a  certain  number  of  elements  (clear 
identification of the obligations of the service provider; parameters for calculating, controlling 
and reviewing the compensation; arrangements for recovering any overcompensation). 

The  Communication  also  provides  clarification  on  the  compensation  parameters,  which 
have to be established in advance in an objective and transparent manner. No specific formula 
is required, but it must be clear from the outset how the compensation will be calculated. 

In order to avoid overcompensation, the amount of the public service compensation must be 
limited  to  what  is  necessary  to  cover  the  costs  incurred  in  discharging  the  public  service 
obligation, taking into account receipts and a reasonable profit. The reasonable profit should 
be  taken  to  mean  the  rate  of  return  on  capital  required  by  a  typical  company  considering 
whether or not to provide the service, taking into account the risk level. 

43   It is worth recalling that not all SSGI are addressed to vulnerable or disadvantaged people. 

10 

 
 
                                                 
The  Communication  also  deals  with  the interplay  between  State  aid  and  public 
procurement rules when it comes to meeting the fourth Altmark criterion. This section offers 
guidance on the degree to which the use of the different public procurement procedures and 
the different award criteria foreseen in the Public Procurement Directives can ensure that the 
service is provided ‘at the least cost to the community’ and therefore satisfy the first leg of the 
fourth Altmark criterion.  

The guidance can be summarised as follows:  

• 

• 

• 

the open procedure is sufficient to ensure compliance with the first leg of the fourth 
Altmark criterion; 

the restricted procedure is in principle sufficient to do so; 

the  negotiated  procedure  with  prior  publication  and  the  competitive  dialogue  are 
sufficient only in rather exceptional cases; 

• 

the negotiated procedure without publication is not sufficient.  

As regards award criteria, the ‘lowest price’ criterion is generally sufficient. The criterion of 
the ‘most economically advantageous tender’ (MEAT - which can include criteria relating 
to the quality of the service as well as environmental and social criteria) is sufficient provided 
that the award criteria are closely related to the subject-matter of the service provided. 

A typical case 

A local authority which uses an open call for tender to select a provider of training services 
for  the  long-term  unemployed  can  safely  presume  that  the  compensation  it  gives  to  this 
provider complies with the 4th Altmark criterion. 

The Communication also provides guidance for situations where the provider is not selected 
through  a  public procurement procedure and therefore a comparison with a typical well-run 
provider is necessary to ensure the cost-effectiveness check that the fourth Altmark criterion 
requires. 

2.2.  The Decision: aid for social services does not need to be notified 

The  Decision  sets  out  the  conditions  under  which  public  service  compensation  (i.e.  the 
financing  of  a  service  of  general  interest  by  a  public  authority)  that  constitutes  State  aid  is 
compatible with the internal market and does not need to be notified to the Commission. 

This is the component of the 2011 package which brings the most significant simplification 
for  the  providers  of  social  services.  Under  the  2005  Decision,  the  only  services  exempted 
from prior notification regardless of the level of financing were social housing and hospitals.44 
The  2011  Decision  in  Article  2(1)(c)  extends  the  scope  of  this  exemption  to  all  services 
‘meeting  social  needs  as  regards  health  and  long  term  care,  childcare,  access  to  and 

44   For  all  other  services,  including  social  services  other  than  social  housing,  the  2005  Decision  set  a  public 
service compensation threshold of € 30 million per year. This threshold was complemented by a threshold 
of €  100  million  for  the  service  provider’s  average  annual  turnover  before  tax.  Public  financing  which 
exceeded €  30  million  per  year,  or  which  was  granted  to   a  provider  having  a  turnover  higher  than €  100 
million, had to be notified to the Commission. Such a large amount was considered likely to affect trade and 
competition  to  such  an  extent  that  a  specific  analysis  by  the  Commission  services  was  deemed  to  be 
necessary. 

11 

 
 
                                                 
reintegration  into  the  labour  market,  social  housing  and  the  care  and  social  inclusion  of 
vulnerable groups’.45 

For  the  remaining  SGEI,  the  notification  threshold  of  the Decision  has  been  lowered 
from € 30 million to € 15 million of annual co mpensation per SGEI and the threshold for the 
turnover of the service provider has been eliminated. 

This  alleviates  the  administrative  burden  for  the  public  authorities  in  the  Member 
States: when they finance social services, they no longer have to go through the process of 
notifying  the  financing  measures  to  the Commission.  This  is  also  good  news  for  the  social 
service providers as they too are spared the burden of following the notification process. 

The  exemption  of  notification  for  SSGI  reflects  the  diversified  and  proportionate  approach 
followed by the Commission in its reform of State aid rules:46 the degree of the Commission’s 
State aid scrutiny depends on the nature and scope of the service provided. In other words, the 
Commission  recognises  that  the  risks  for  competition  are  much  greater  for  large-scale 
activities  with  a  clear EU-wide  dimension  than  for  social  services  often  organised  at  local 
level.  

To achieve as much legal certainty as possible for public authorities and service providers, the 
exemption  applies  to  an  exhaustive  list  of  social  services.  However,  this  list  (see  above)  is 
very broad and explicitly covers the most important areas of social services such as health and 
long term care, childcare, services for the access to and reintegration into the labour market 
and social housing. Moreover, the terms ‘care and social inclusion of vulnerable groups’ have 
a  very  broad  meaning  and  allow  the  Member  States  the  necessary  flexibility  to  include 
different types of services intended for the social groups who most need them, in accordance 
with the variety of needs and preferences of users that may result from different geographical, 
social or cultural situations among the Member States.47  

45   The  3rd  SSGI  Forum  had  recommended  enlarging  the  number  of  SSGI  benefiting  from  the  exemption  of 
notification  (See  Summary  Report  of  the  3rd  Forum  on  Social  services  of  General  Interest  (SSGI), 
coordinated by Manuel Paolillo and Stéphane Rodrigues, p. 191).  

46   See  the  Commission  Communication  Reform  of  the  EU  State  aid  rules  on  Services  of  General  Economic 

Interest, COM(2011) 146 final of 23 March 2011. 

47   See Protocol No 26 to the Treaty on European Union and to the Treaty on the Functioning of the European 

Union. 

12 

 
 
                                                 
The  term  ‘care  and  social  inclusion  of  vulnerable  groups’  could  encompass,  for 
example:48 

- 

- 

- 

- 

- 

- 

- 

social integration services for people with disabilities; 

shelters and other services for the homeless; 

centres assisting women or children who are victims of violence; 

services to support over-indebted persons; 

social assistance to migrants; 

parenting support services for disadvantaged families; 
social services for the LGBT49 community. 

While the public authorities do not have to notify their financing of social services, they must 
nevertheless  establish  a  clear  and  precise  act  of  entrustment  and  ensure  that  the  service 
provider does not receive any overcompensation. Indeed, the 2011 Decision confirms the two 
main conditions for compatibility set out in the 2005 Decision: entrustment and absence 
of overcompensation, verified by regular checks. 

The duration of the entrustment period (the period during which the service is entrusted to 
a given provider by a decision of the public authority) has been limited to a maximum of 10 
years,  unless  the  provision  of  the  service  of  general  interest  requires  significant  investment 
which  needs  to  be  amortised  over  a  longer  period.  This  may  be  the  case  for  instance  in  the 
social  housing  sector.50  This  condition,  which  was  not  laid  down  in  the  2005  Decision,  is 
justified because the extent to which a particular compensation measure affects trade depends 
not only on the sector concerned and the average amount of compensation per year but also 
on the overall duration of the entrustment.  

 1 
For  instance,  a  fifteen-year  entrustment  with  an  annual  public  service  compensation  of €
million  is  likely  to  affect  competition  and  trade  more  than  several  consecutive  shorter 
entrustments with  the  same annual compensation  amount. This  is  because short consecutive 
entrustments give the public authority repeated opportunities to switch provider, in a context 
of competing service offerings.  

The  2011  Decision  introduces  another  novelty  in  relation  to  the  act  of  entrustment:  it  must 
contain a reference to the Decision itself. This has been added to enhance transparency and 
compliance with the rules. 

As  in  the  2005  Decision,  the  amount  of  compensation  must  not  exceed  the  net  costs, 
including a reasonable profit. Above this limit, the provider receives an ‘overcompensation’ 
which cannot be justified by the need to provide the SGEI. 

48   Insofar as these can be considered as economic activities. 

49   Lesbian, Gay, Bisexual, Transgender. 

50   See recital 12 of the Decision. 

13 

 
 
                                                 
The  Decision  proposes  two  methodologies  to  calculate  the  net  cost:  (i)  as  the  difference 
between  the  costs  incurred  in  providing  the  SGEI51  and  the  revenue  earned  from  it  (i.e.  the 
methodology based on cost allocation), or (ii) as the difference between the net cost for the 
providers of operating with the public service obligation and the net cost or profit of the same 
provider  operating  without  the  public  service  obligation  (i.e.  the  net  avoided  cost 
methodology).  

To  calculate  the  reasonable  profit,  the  Decision  refers  to  the  rate  of  return  on  capital  that 
would be required by a provider considering whether or not to provide the service, taking into 
account the degree of risk. The Decision then provides a safe harbour: profit below the swap 
rate plus a liquidity premium of 100 basis points is considered to be reasonable in any event. 
Moreover, to discourage the use of ex post full compensation schemes, the 2011 Decision lays 
down that this safe harbour becomes a profit cap if the provision of the SGEI is not connected 
with a substantial commercial or contractual risk, in particular when the net cost incurred in 
providing the SGEI is essentially compensated ex post in full.  

The change of indicator for the reasonable profit compared to the 2005 Decision reflects the 
shift from an accounting approach to an economic approach. It also matches the way public 
authorities  go  about  deciding  what  budget  to  allocate  to  an  SGEI.  However,  where  it  is  not 
feasible to use the rate of return on capital, other profit indicators are allowed. 

Finally, for controlling the overcompensation, the Decision takes a multi-annual rather than 
an  annual  approach,  with  checks  carried  out  every  three  years.  This  had  been  a 
recommendation of the 3rd SSGI Forum.52 

A typical case 

 45 million per year for a period of seven years to 
A public authority wishes to pay an NGO €
provide services for the homeless. Under the Decision, it can safely do so if it imposes on the 
NGO  a  clear  legal  obligation  to  provide  specific  services  for  the  homeless.  The  document 
stating this obligation does not need to be called ‘act of entrustment’ but it has to include a 
reference  to  the  Decision  and  has  to  clearly  state  the  tasks  the NGO  has  to  perform,  the 
parameters used to calculate the amount of compensation involved, the systems that will be 
put  in  place  afterwards  to  control  the  compensation  and  ensure  that  there  is  no 
overcompensation and the arrangements set out to recover any overcompensation that might 
occur. Assuming the NGO has no revenue for providing the service, which is totally free for 
the  beneficiaries,  the  amount  of  compensation  can  be  calculated  quite  simply  as  the  sum  of 
the costs that the NGO will incur in providing the services requested by the regional authority. 

A  notification  to  the  Commission  is  not  needed  insofar  as  this  financing  is  in  line  with 
the 2011 Decision. Before the 2011 Decision, the Member State would have had to notify this 
 30 million  threshold  laid  down  in  the 2005 
financing  to  the Commission,  as  it  exceeds  the  €
Decision. 

51   If a service provider is providing not only an SGEI but also a purely commercial service, the costs incurred 

include an appropriate contribution to the costs common to the provision of both services. 

52   See Summary Report of the 3rd Forum on Social services of General Interest (SSGI), quoted in footnote 45 

above, p. 192. 

14 

 
 
                                                 
2.3.  The Framework – when aid has to be notified 

The Framework sets out the rules that the Commission will follow to assess aid to SGEI that 
is not exempted from notification by the Decision and that therefore the Commission has to 
analyse to decide on its compatibility with the internal market. 

The compatibility conditions set by the Framework are more stringent than those laid down in 
the Decision as the Framework covers aid which a priori has a bigger impact on competition 
and  trade.  This  is  because  the  amount  of  aid  is  higher  than €
 15  million  and  it  does  not 
concern  hospitals  or  social  services.  This  again  illustrates  the  diversified  and  proportionate 
approach the Commission adopted in the 2011 package. 

The table below highlights the main changes introduced in the 2011 Framework as compared 
to the 2005 Framework. Moreover the compatibility conditions underlined in the table below 
are required only in the 2011 Framework and not in the 2011 Decision: this is because of the 
higher degree of scrutiny in the Framework as compared to the Decision. 

Framework 2005 

Framework 2011 

Compatibility conditions: 

Compatibility conditions: 

•  Genuine SGEI 
•  Entrustment act  
•  Overcompensation test (annual 

check) 

•  Genuine SGEI  
•  Entrustment act 
•  Duration of the entrustment period  
•  Public consultation 
•  Compliance with the 

Transparency Directive 
•  Compliance with EU public 

procurement rules 

•  Absence of discrimination 
•  Overcompensation test based on 

ex ante multi-annual approach, 
efficiency incentives and the ‘net 
avoided cost methodology’ 
•  Strengthened transparency 
•  Possibly additional requirements 
for particularly distortive aid 

Given the focus on social services, this report will not provide a detailed description of these 
changes  or  of  the  more  stringent  compatibility  conditions  set  out  in  the Framework:  in  line 
with  its  proportionate  and  diversified  approach,  the  Commission  decided  that  some  of  the 
provisions  of  the  Framework  should  not  apply  to  public  service  compensations  that  would 
normally  be  covered  by  the  Decision  but  which  failed  to  fulfil  all  the  conditions  of  the 
Decision.53 

53   See paragraph 61 of the Framework. 

15 

 
 
 
 
 
 
 
 
                                                 
In such cases of simplified assessment the following compatibility conditions do not apply:  

• 

• 

• 

• 

• 

• 

the public consultation on the public service needs;  

the compliance with Union public procurement rules;  

the absence of discrimination;  

the compulsory use of the net avoided cost methodology; 

the inclusion of efficiency incentives in the compensation mechanism;  

the additional requirements for particularly distortive aid. 

2.4.  The  SGEI  de  minimis  Regulation:  making  it  simpler  to  finance  small 

amounts 

Adopted  in  April  2012,  the  SGEI  de  minimis  Regulation  is  a  novelty  introduced  by 
the Almunia package. Under this new Regulation, which complements the general de minimis 
 500 000 per undertaking55 
Regulation,54 public service compensation amounting to less than €
over three fiscal years is deemed not to constitute State aid. This threshold is higher than the 
one in the general de minimis Regulation,56 based on the consideration that an SGEI provider 
incurs  costs  which  are  directly  associated  with  its  public  service  obligation  under  the 
entrustment  act.  The  aid  element  in  the  compensation  is  therefore  presumably  much  lower 
than the amount actually granted, and the Commission assumes that a €
 500 000 compensation 
does not affect trade in the internal market. 

This new SGEI de minimis Regulation makes it considerably easier for local public authorities 
to comply with State aid rules when financing small social services. 

than  under 
The  act  of  entrustment  under 
the 2011 Decision and Framework.57 It does not have to contain all the information set out in 
the Decision and in the Framework: it just has to entrust the provider with a specific task and 
make clear that the financing is granted for this task. 

the  de  minimis  Regulation 

is  simpler 

Unless  the  Member  State  concerned  has  established  a  register  of  de  minimis  aid,  the  public 
authority has to inform the service provider in writing of the de minimis character of the aid, 
obtaining its confirmation that it is not getting any other financing that would make the total 
amount exceed the de minimis threshold. 

54   Commission Regulation (EC) No 1998/2006 of 15 December 2006 on the application of Articles 87 and 88 

of the Treaty to de minimis aid, OJ L 379, 28.12.2006, p. 5. 

55   See clarification on ‘undertaking’ in footnote 37 above 

56  

 200 000 over three fiscal years. 

57   See recital (6) of the Regulation. 

16 

 
 
                                                 
€
A typical case 

A municipality wishes to pay an NGO to provide parenting support services. The cost of these 
services over a period of three years is less than €
 500 000. All the local council has to do is 
clearly identify this service as a service of general economic interest and make sure that the 
beneficiary does not get any other financing covered by the SGEI de minimis Regulation. 

If it does so, its financing will comply with EU State aid rules. 

********** 

The  graph  below  summarises  the  steps  to  be  followed  in  the  analysis  of  public  financing 
to SSGI.  It  shows  the  conditions  under  which  it  is  possible  to  finance  social  services  in 
compliance with EU State aid rules. 

No State aid 

Is one of the following three situations applicable?  

•  non-economic activity   

No

•  no effects on trade 

• 

the four (cumulative) criteria of the Altmark judgment 
are met: 
1.  entrustment act 
2.  parameters for calculating compensation – 

objective and transparent 

3.  no overcompensation 
4.  open / restricted public procurement procedure, 
OR compensation based on costs of a well-run 
undertaking 

Yes 

Yes 

No 

Financing lower  
than € 500 000 over 3 years 
(SGEI de minimis) 

No 

Are all the conditions 
of the Decision met? 

Yes 

No 

Compatible aid 
No

Notification and 
overcompensation test 
(section 2.11 of  
the Framework) 

Yes 

No 

Incompatible aid 

Thanks  to  the  differentiated  and  proportionate  approach  followed  in  the  reform  of  State  aid 
rules, the procedures for financing social services have been further simplified and clarified. 

17 

 
 
 
 
 
 
The  Commission  has  taken  in  due  consideration  the  fact  that,  in  the  present  economic 
conditions,  social  services  are  particularly  needed  and  require  financial  support  from  public 
authorities. At the current stage of development of the internal market, such financial support, 
even for large amounts, does not necessarily produce a great risk of distortion of competition. 

Public  authorities  will  thus  fully  reap  the  benefits  that  EU  State  aid  rules  can  offer  for  the 
organisation and financing of high-quality, cost-effective social services: ensuring that public 
money is well used to fulfil clearly identified social policy objectives and is not diverted to 
cross-subsidise other activities. 

The State aid rules analysed in this chapter deal with the definition of the level of financing 
that a social services provider will receive from the public authority responsible for organising 
that service. The service in question could be long-term care for the elderly, or for people with 
disabilities. It might be childcare, or social housing, or training people to help get them back 
to work. 

However,  when  organising  and  financing  social  services,  public  authorities  must  not  only 
identify  the  amount  of  the  financing,  but  also  address  another  type  of  questions:  Who  will 
provide the service: the public authority itself or an external provider? If an external provider, 
how will it be selected? It is in this context that public procurement rules may come into play.  

All too often, public authorities assume that by complying with State aid rules they have 
ensured  the  legality  of  their  financing  arrangements,  even  without  applying  public 
procurement rules. In fact, the correct application of State aid rules does not exclude as 
such the need to comply with public procurement rules. 

18 

 
 
3.  MODERNISING PUBLIC PROCUREMENT RULES 

3.1.  The rules currently in force: a light regime for social services 

Public authorities in the Member States have to apply EU public procurement rules to social 
services  when  they  decide  to  outsource  their  provision  to  an  external  provider  against 
remuneration  (i.e.  in  return  for  being  paid).  However,  it  remains  entirely  up  to  them  to 
decide whether to outsource the service or to provide it themselves, either directly or via 
an ‘in-house’ service provider.58 

A typical case 

A  municipality  is  not  obliged  by  EU  rules  to  outsource  the  provision  of  childcare  in  its 
territory to private companies. It can have its own publicly-owned childcare centres and staff 
them with its own employees.  

It  can  also  create  and  finance  an  ‘in-house’  structure  which  will  organise  and  manage  the 
childcare centres. 

Moreover,  public  authorities  can  outsource  and  finance  the  provision  of  social  services  in 
ways that do not entail signing a public contract: they can, in an open, transparent and non-
discriminatory  way,  grant  licences  or  authorisations  to  all  service  providers  that  meet  the 
conditions for service provision it lays down beforehand.59 

It is also possible that a public authority is merely financing an initiative – for instance by an 
NGO - to provide a social service to the community.60 

The EU public procurement rules therefore apply only when a public authority has decided to 
outsource the provision of a service to an external provider – whether profit or non-profit – 
that the public authority pays for providing the service.61  

The  rules  at  present  in  force62  already  take  into  account  the  specific  characteristics  of  the 
social  services’  sector:  a  public  authority  that  decides  to  outsource  a  social  service  against 

58   With the term ‘in-house provision’, the Court refers to a situation where a public authority, or various public 

authorities jointly, provide a service themselves, albeit acting through a legally distinct entity which  

(i)  the  public  authority/ies  controls/control  in  a  way  similar  to  its/their  own  departments,  and 
(ii) carries/y  the  essential  part  of  its  activities  with  the  controlling  public  authority/ies. 

In  this  case,  the  public  authority/ies  and  the  legally  distinct  entity  are  regarded  as  one  and  public 
procurement rules do not apply to their relation. See Q&A 199 of the 2013 Guide for further details on the 
concept of ‘in-house provider’. 

59   For further details on this alternative approach, see Q&A 216 of the 2013 Guide. 

60   On the notion of ‘mere financing’ see Q&A 218 of the 2013 Guide. 

61   Q&A 218 of the 2013 Guide describes the criteria which can help to establish whether the relation between 
the public authority and the service provider implies an obligation to provide a service against remuneration 
and therefore triggers the application of EU public procurement rules. 

19 

 
 
                                                 
 
 
 
 
 
remuneration  and  intends  to  conclude  a  public  service  contract  has  to  comply  only  with  a 
very  limited  number  of  rules  laid  down  in Directive 2004/18/EC63  and  therefore  enjoys 
considerable latitude in terms of choice of procedures compared to other sectors.  

Public authorities nevertheless have to comply with the Treaty principles of transparency, 
equal treatment and non-discrimination, mutual recognition and proportionality.64 This 
means, in particular, that the authority must: 

•  adequately advertise its intention to outsource the provision of the social service and 

to conclude a public service contract with an external provider; and 

•  deal  in  a  non-discriminatory  and  impartial  way  with  all  the  providers  that  have 

shown an interest in such a contract.65 

If it wants to outsource the provision of social services by granting a concession,66 it will have 
to comply with the Treaty principles of transparency, equal treatment and non-discrimination, 
mutual recognition and proportionality.67 

Public authorities can also, at various stages of the public procurement procedures, introduce 
requirements  concerning  the  quality,  continuity  and  comprehensiveness  of  the  service  in 
question.68 

This  shows  that  public  procurement  rules  currently  in  force  not  only  guarantee 
transparency  in  selecting  the  service  provider  and  cost-effectiveness  for  the  benefit  of 
the service users and the tax payer, but also that they do so while ensuring the quality of 
the social services concerned. 

A typical case 

A  regional  authority  intends  to  outsource  the  delivery  of  its  long-term  care  services  for  the 
elderly. It intends to do so by signing a public service contract with an external provider, who 
it will pay for doing the work. The regional authority therefore has to draw up the ‘technical 
specifications’, clearly stating the object of the contract (i.e. the exact nature of the services to 

62   See  Directive  2004/18/EC  of  the  European  Parliament  and  of  the  Council  of  31  March  2004  on  the 
coordination  of  procedures  for  the  award  of  public  works  contracts,  public  supply  contracts  and  public 
service contracts, OJ L 134, 30.4.2004, p. 114. 

63   See  Article  21  of  the  Directive  2004/18/EC  which  sets  out  that  only  the  provisions  of  two  articles  of 
that Directive apply to non-priority (Annex II B) services, such as social services. These provisions require 
that technical specifications must be laid down at the start of the procurement process and that the results 
of the award procedure must be published. It is also worth recalling that the Directive applies only if the 
contract at stake exceeds the threshold for its application, i.e. € 200 000. 

64   The Treaty principles already apply even if the Directive threshold is not exceeded as long as the contract 

has a cross-border interest (On the notion of cross-border interest, see Q&A 201 of the 2013 Guide). 

65   For more details on the obligations deriving from the principles of transparency and non-discrimination, see 

Q&A 202 of the 2013 Guide. 

66   On the distinction between a public service contract and a concession see Q&A 200 of the 2013 Guide. 

67   See footnote 65 above. 

68   See Q&A 204 of the 2013 Guide. 

20 

 
 
                                                                                                                                                         
be provided,  the level of quality that must  be ensured and the level of qualification that the 
staff providing the service must have). 

The regional authority can either define its requirements in a very detailed way or, if it wishes 
to  avoid  standardisation  and  promote  innovative  solutions,  it  can  define  performance  or 
functional  requirements  that  allow  it  to  clearly  identify  its  objective  but  leave  a  certain 
amount of flexibility as to how that objective is to be achieved. It can thus open up scope for 
innovative solutions. 

The regional authority has to define the criteria it intends to use when choosing the provider. 
It  does  not  necessarily  have  to  accept  the  cheapest  offer  but  can  set  ‘award  criteria’  which 
combine  the  price  with  other  criteria,69  such  as  supplementary  quality  levels  on  top  of  the 
requirements  laid  down  in  the  section  of  the technical  specification  describing  the  object  of 
the  contract.  These  supplementary  quality  requirements  will  help  it  select  the  winner  from 
among all the candidates. 

The duration of the contract, that can be longer than one year so as to ensure continuity, must 
also be stated. 

Then, the regional authority has to make known its intentions to conclude a contract for the 
provision of long-term care services for the elderly, and has to publicise the document which 
spells out those intentions. It can do so, for instance, via the press or on its own website. The 
level of publicity will depend on the size of the contract. 

Once  it  receives  offers  from  potential  providers,  the  regional  authority  can  negotiate  with 
them  to  further  refine  its  requirements  and  to  find  out  more  about  their  offers.70  In  these 
negotiations, however, the regional authority will have to treat all the candidates in a fair and 
non-discriminatory way, without giving any advantage to one of them. 

Once  the  regional  authority  has  chosen  one  provider  on  the  basis  of  the  criteria  set  out  in 
advance, it will then have to publish the information that the contract has been concluded with 
that provider. 

The regional authority can also select more than one provider, so as to give the people living 
in that region the chance to choose the provider that suits them best. 

3.2.  The  2011  Commission  proposal:  simpler,  clearer  and  more  adapted  public 

procurement rules. 

The  current  EU  legislation  on  public  procurement,  which  is  already  very  flexible,  could  be 
further  improved  thanks  to  the  reform  of  public  procurement  rules  that  the Commission 
launched in December 2011.  

Overcoming 
services 
in Directive 2004/18/EC, the Commission proposal for a new Public Procurement Directive71 

non-priority 

distinction 

between 

priority 

and 

the 

69   The Most Economically Advantageous Tender (MEAT) criterion already mentioned in section 2.1 above. 

70   National  public  procurement  might  however  not  allow  for  a  negotiated  procedure  and  impose  instead  an 

open procedure.  

71   Quoted in footnote 23 above. 

21 

 
 
                                                 
sets  out  a  specific,  lighter  and  simpler  regime  for  social  services,  more  suited  to  their 
specific characteristics and to the need to ensure quality. The proposed Directive justifies 
this approach by pointing out in recital (11) that social services contracts have a limited cross-
border dimension and that the particular context in which these services are organised ‘varies 
widely  amongst  Member  States,  due  to  different  cultural  traditions’.72  The  Commission 
argues that the Member States should enjoy a wide margin of discretion in the organisation of 
the  choice  of  the  service  providers,  given  the  importance  of  the  cultural  context  and  the 
sensitivity of social services. 

The main components of the proposed regime are the following: 

•  a threshold of € 500 000,  higher than for other goods or services, below which EU public 
procurement rules will not apply.73 Contracts below this threshold are presumed not to be 
of interest for providers based in other Member States unless there are concrete indications 
of  the  contrary.74  This  implies  that,  below  this  threshold,  in  the  absence  of  cross-border 
interest,  the  Directive  would  not  apply.  Nor  would  the Treaty  principles,  such  as  the 
transparency  requirement  and  the  obligation  to  treat  economic  operators  equally  without 
discrimination. This clarification on cross-border interest for social services contracts had 
been sought i.a. by the Council in 2010.75  

This specific threshold reflects a proportionate approach as it excludes the application of 
EU  public  procurement  rules  to  the  outsourcing  of  social  services  of  a  very  low 
economic value. It thus simplifies life for public authorities that organise small social 
services.  

•  flexibility in the Member States’ choice of procedures as long as the Treaty principles 
of transparency and non-discrimination are complied with. Member States remain free 
to  determine  the  procedural  rules  applicable,  while  respecting  the  basic  principles  of 
transparency and equal treatment.76 

72   See  the  following  extracts  of  Recital  (11):  ‘Other  categories  of  services  continue  by  their  very  nature  to 
have a limited cross-border dimension, namely what are known as services to the person, such as certain 
social, health and educational services. These services are provided within a particular context that varies 
widely  amongst  Member States,  due  to  different  cultural  traditions.  A  specific  regime  should  therefore  be 
established  for  public  contracts  for  these  services,  […]  Contracts  for  services  to  the  person  above  this 
threshold should be subject to Union-wide transparency. Given the importance of the cultural context and 
the sensitivity of these services, Member States should be given wide discretion to organise the choice of the 
service providers in the way they consider most appropriate. The rules of this directive take account of that 
imperative, imposing only observance of basic principles of transparency and equal treatment and making 
sure  that  contracting  authorities  are  able  to  apply  specific  quality  criteria  for  the  choice  of  service 
providers […]’. 

73   See Article 4(d) of the Directive which reads as follows: ‘This Directive shall apply to procurements with a 
value exclusive of value-added tax (VAT) estimated to be equal to or greater than the following thresholds: 
[…] (d) EUR 500 000 for public contracts for social and other specific services listed in Annex XVI’. 

74   See Recital (11): ‘Services to the person with values below this threshold will typically not be of interest to 
providers from other Member States, unless there are concrete indications to the contrary, such as Union 
financing for transborder projects’. 

75   See Council Conclusions of 8 December 2010 quoted in footnote 29 above. 

76   See  Article  76.1  (‘Member  States  shall  put  in  place  appropriate  procedures  for  the  award  of  contracts 
subject to this Chapter, ensuring full compliance with the principles of transparency and equal treatment of 
economic operators […].’) and Article 75 (‘1. Contracting authorities intending to award a public contract 

22 

 
 
 
 
                                                 
 
The  new  proposal  spells  out  the  obligations  to  ensure  transparency:  public  authorities 
must  publish  a  contract  notice  and  a  contract  award  notice.  In  other  words,  a  public 
authority  that  intends  to  outsource  a  social  service  must,  by  means  of  a  contract  notice, 
adequately publicise its intention so that potential providers from other Member States can 
express  their  interest  in  this  contract.  In  addition,  the  public  authority  must  publish  the 
notice  of  the  award  decision,  once  it  is  taken,  to  ensure  that  any  aggrieved  party  can 
challenge this decision in the appropriate courts. As for the principle of equal treatment, 
the public authority must treat in a non-discriminatory manner all potential providers that 
have shown interest in the contract. 

The new proposal enhances legal certainty as the obligations of the public authorities 
are now clearer.  

•  increased attention to the specific characteristics of social services.77 As spelled out in 
Article  76,  Member  States  are  invited  to  define  procedures  which  are  suited  to  the 
specificities of social services and which ensure their quality, continuity, and accessibility. 
To facilitate the task of the public authorities in defining what a good-quality social service 
is,  recital  (11)  adds  a  reference  to  the  quality  criteria  set  out  in  the  voluntary  European 
Quality Framework for Social Services adopted by the SPC in 2010.78  

•  the right for Member States to prohibit their public authorities from awarding social 
services  solely  on  the  basis  of  the  price  and  to  maintain  only  the  possibility  of 
awarding  such  services on the basis of criteria combining quality and price.79 Using 
the MEAT award criterion80 - which at present is just an option - might become therefore 
compulsory in the Member States that choose to do so. This change in the rules follows the 
recommendation  to  promote  the  MEAT  expressed  i.a.  at  the  3rd  SSGI  Forum,81  by  the 
Council82 and by the Informal Network of Social Service Providers.83 

for the services referred to in Article 74 shall make known their intention by means of a contract notice. 2. 
Contracting authorities that have awarded a public contract for the services referred to in Article 74 shall 
make known the results of the procurement procedure by means of a contract award notice. […].’) 

77   See  Article  76  (‘1.  Member  States  shall  put  in  place  appropriate  procedures  for  the  award  of  contracts 
subject  to  this Chapter  […]  allowing  contracting authorities  to  take  into account  the specificities  of  the 
services in question. 2. Member States shall ensure that contracting authorities may take into account the 
need  to  ensure  quality,  continuity,  accessibility,  availability  and  comprehensiveness  of  the  services,  the 
specific needs of different categories of users, the involvement and empowerment of users and innovation 
[…]’). 

78   The  relevant  extracts  of  Recital  (ii)  read  as  follows:  ‘The  rules  of  this  directive  take  account  of  that 
imperative, imposing only observance of basic principles of transparency and equal treatment and making 
sure  that  contracting  authorities  are  able  to  apply  specific  quality  criteria  for  the  choice  of  service 
providers, such as the criteria set out in the voluntary European Quality Framework for Social Services 
of the European Union’s  Social Protection Committee’. The voluntary European Quality Framework for 
Social Services adopted by the SPC is quoted in footnote 13 above. 

79   See Article 76 in fine: ‘Member States may also provide that the choice of the service provider shall not be 

made solely on the basis of the price for the provision of the service’. 

80   See section 2.1 above. 

81   See Summary Report of the 3rd Forum on Social services of General Interest (SSGI), quoted in footnote 45 

above, p. 194. 

82   See Council Conclusions quoted in footnote 29 above. 

23 

 
 
 
 
 
 
                                                                                                                                                         
This  –  and  the  previous  change  -  is  meant  to  address  an  often  heard  criticism  that 
public  procurement  procedures  for  social  services  lead  to  cheap  and  poor-quality 
services. 

Recital (11) also reminds the reader that the Public Procurement Directive does not make it an 
obligation  to  outsource  social  services,  that  alternatives  to  public  procurement 
procedures  are  possible84  and  that  public  procurement  rules  do  not  apply  to  ‘mere 
financing’.85 

Annex  XVI  of  the  proposal  lists  in  a  rather  comprehensive  way  the  services  to  which  this 
specific, light regime would apply if they are outsourced by public authorities in the Member 
States: 

•  health and social services; 

•  administrative educational, healthcare and cultural services; 

•  compulsory social security services; 

•  benefit services; 

•  other community, social and personal services; 

•  services furnished by trade unions; 

• 

religious services.86 

Further clarification comes also from the codification of the rulings of the European Court of 
Justice concerning the exceptions to the application of public procurement rules for ‘in-house 
provision’87 and for certain other forms of cooperation among public authorities aimed at 
carrying out tasks in the public interest.88 This codification89 does not specifically concern 
social  services  but  is  particularly  interesting  for  them:  indeed,  in  the  social  services  sector, 
local public authorities might wish to cooperate in providing social services to achieve certain 
economies of scale or to complement each other’s offers. The codification will enhance legal 
certainty  and  facilitate  such  cooperation.  This  is  again  a  positive  answer  to  the  invitation 

83   See Report quoted in the Introduction. 

84   The Council had recommended this clarification. See Council Conclusions quoted in footnote 29 above. 

85   See the following extracts of Recital (11): ‘Member States and/or public authorities remain free to provide 
these  services  themselves  or  to  organise  social  services  in  a  way  that  does  not  entail  the  conclusion  of 
public  contracts,  for  example  through  the  mere  financing  of  such  services  or  by  granting  licences  or 
authorisations to all economic operators meeting the conditions established beforehand by the contracting 
authority, without any limits or quotas, provided such a system ensures sufficient advertising and complies 
with the principles of transparency and non-discrimination’. 

86   All these services are currently covered by Annex II B of the Directive 2004/18/EC. 

87   On the meaning of ‘in house provision’, see footnote 58 above. 

88   See the judgment in Case C-480/06 Commission v Germany [2009] ECR I-4747, often known as Hambourg 

case. 

89   See Article 11 of the proposal. 

24 

 
 
 
                                                                                                                                                         
addressed  by  Mario  Monti  ‘to  address  the  perceived  areas  of  friction  with  the  policy 
autonomy of national and local authorities’.90 

The  legislative  proposal  on  public  procurement  also  provides  for  an  increased  number  of 
possibilities  to  take  account  of  social  considerations  in  procurement  procedures. 
Although this does not apply only to procurement of social services but also of other services 
as well as of goods and works, these features of the proposal are also worth pointing out in 
this report. 

•  First, the Commission proposes that, among the criteria for the award of a contract, 
public authorities should be able to specify  characteristics relating to the working 
conditions of persons participating directly in the process of production or supply 
of  the  good  or  service  involved.91  The  working  conditions  may  concern  the 
protection of health and favouring the social integration of disadvantaged persons 
or  members  of  vulnerable  groups.92  Such  award  criteria  should  be  applied  in 
accordance with Directive 96/71/EC on the posting of workers.93 

•  Second,  it  has  also  extended  the  possibilities  of  reserving  public  contracts  for 
certain  types  of  actor  in  the  social  economy,  those  committed  to  the  social  and 
professional integration of people with disabilities and of disadvantaged workers, such 
as the long-term unemployed.94 

The aim is to ensure that when public authorities buy the goods and services they need, they 
can  use  procurement  strategically  to  promote  employment  and  social  inclusion.  This 
approach  is  therefore  fully  in  line  with  Article  9  of  the TFEU,  which  calls  on  the Union, 
when defining and implementing its policies and activities, to ‘take into account requirements 
linked  to  the  promotion  of  a  high  level  of  employment,  the  guarantee  of  adequate  social 
protection  and  the  fight  against  exclusion’.  This  is  also  consistent  with  the  Europe  2020 
Strategy and the attention it pays to inclusive growth. Since public authorities spend around 
18% of the EU’s GDP on buying goods, works or services, they should be able not only to 
obtain them in a transparent and efficient way, but also to use that significant amount of funds 
as leverage for inclusive growth. 

This  goes  hand  in  hand  with  the  increased  possibility  of  supporting  other  common  societal 
goals  such  as  the  protection  of  the  environment,  higher  resource  and  energy  efficiency, 
combating climate change as well as promoting innovation.  

On  20  December  2011  the  Commission  also  adopted  a  proposal  for  a Directive  of 
the European Parliament and of the Council on the award of concession contracts95 which 
follows  by  and  large,  as  far  as  social  services  are  concerned,  the  same  diversified  and 
proportionate  approach  as  the  proposal  on  public  procurement.  As  social  services  are  often 

90   See report quoted in footnote 14 above. 

91   See Article 66 and recital (41) of the proposal. 

92   See recital (41) of the proposal. 

93   OJ L 18, 21.1.1997, p.1. 

94   See Article 17 of the proposal. 

95   Quoted in footnote 23 above. 

25 

 
 
                                                 
outsourced through concessions, the proposal is very pertinent and has the merit of clarifying 
for the first time the rules which apply in this field. 

The  co-decision  procedure  for  the  adoption  of  the  Directives  on  public  procurement  and 
concessions progressed well in 2012: on  10  December  2012 the Council adopted a ‘general 
approach’ on the concerned proposals. The European Parliament’s Committee for the Internal 
Market  and  Consumer  Protection  (IMCO)  adopted  its  report  on  the Directive  on  public 
procurement on 18 December 2012; the report on the Directive on concessions was adopted 
on 24 January 2013. Both the Council and the IMCO Committee of the Parliament accept the 
proposed  extension  of  the  provisions  on  reserved  contracts  and  the  new  proposed  lighter 
regime for social services, but with an increase of the corresponding threshold from € 500 000 
to € 750 000. 

26 

 
 
4.  THE 2013 GUIDE  

Following the adoption of the SGEI package, the Commission published on 15 February 2013 
an updated version of its Guide to the application of the European Union rules on state aid, 
public  procurement  and  internal  market  to  services  of  general  interest  (SGEI),  and  in 
particular to social services of general interests (SSGI).  

The  update  of  the  Guide96  does  not  introduce  major  changes  to  its  structure.  However,  to 
make  it  easier  to  read  and  to  refer  to  the  answers,  the  numbering  of  the  questions  is  now 
continuous from 1 to 237 instead of being split per chapter and section. The Guide gives more 
straightforward  answers  to  a  certain  number  of  questions.  It  also  provides  an  increased 
number of examples based on the Commission decision practice and case law.  

While  the  chapter  which  has  been  more  heavily  redrafted  is  the  one  on  State  aid,  a  few 
modifications have also been made to Chapter 2 on ‘Concepts of SGEI’. In particular: 

•  Q&A  11  on  the  possibility  of  classifying  a  service  as  a  SGEI  even  when  other 
operators  are  providing  it  in  the  market  has  been  redrafted  to  take  into  account  the 
guidance on this issue provided in the Commission Communication on the application 
of State aid rules which is part of the package;97 

• 

the  issue  of  provision  at  market  conditions  in  the  near  future  has  been  addressed 
in Q&A 12. 

These Q&As on the classification of SGEI address in particular questions on this issue posed 
by Member States’ experts in the SPC informal working group. 

Chapter  3  on  State  aid,  now  called  ‘The  new  State  Aid  SGEI  package’  and  structured 
according to the different documents included in the package, starts with a number of Q&As 
(14  to 19)  which  broadly  present  the  package  documents.  Moreover,  to  guide  public 
authorities  in  their  analysis,  a  graph  has  been  added,98    presenting  the  different  questions  a 
public authority must ask to determine which instrument of the SGEI package it should apply 
to  public  service  compensation.  A  simplified  version  of  that  scheme,  specific  to  social 
services, is included at the end of Chapter 2 of this report.99 

Two  new  Q&As  that  are  particularly  relevant  for  service  providers  have  also  been  added: 
Q&A 22 clarifies the fact that the package does not impose obligations on service providers 
and Q&A 21 explains that the SGEI provider can ask the entrusting authority on what legal 
basis  a  financing  has  been  granted.  Both  Q&As  will  help  therefore  service  providers 
understand better the implications of the State aid package on them and are particularly useful 
as  the  providers  ultimately  bear  the  risk  of  having  to  reimburse  compensation  granted  in 
violation of the State aid rules. 

96   Quoted in footnote 25 above. 

97   See section 2.1 above and in particular page 10. 

98   See Q&A 20 of the Guide. 

99   See page 17 above. 

27 

 
 
                                                 
The  concepts  of  ‘economic’  and  ‘non-economic  activity’  have  also  been  further  clarified  in 
line  with  the  guidance  provided  in  the  SGEI  Communication.  In  particular,  the Guide  now 
provides two new examples of non-economic activities: the provision of childcare in Norway 
according to a 2008 judgment of the EFTA Court and the organisation of public hospitals in 
Spain  in  line  with  a  2003  ECJ  ruling.100  Moreover  the Guide  explains  that  the  examples  of 
non-economic activities provided in the Communication are not exhaustive101 and recalls that 
the  classification  of  economic  and  non-economic  activities  can  change  over  time,102  thus 
addressing concerns expressed on many occasions by Member States experts, notably in the 
SPC working group, by service providers and by other stakeholders. 

In line with the Communication, the Guide has also been enriched with additional examples 
on local SGEIs which do not seem to affect trade between Member States.103 One in particular 
refers to the provision of long-term mental health care.  

The  status  of  the  service  providers,  which  is  the  object  of  frequent  debate  in  the  social 
services  field,  has  been  addressed  in  the  new  Q&A  32:  responding  to  whether  public 
authorities can give preference to some types of service providers, the Guide recalls that State 
aid rules do not prevent Member States to do so and refers to Q&As 209 and 227 as regards 
public procurement and internal market rules.  

Complementing the guidance provided by the SGEI Communication on the fulfilment of the 
fourth Altmark criterion, the Guide: 

• 

reminds public authorities that fulfilling the fourth Altmark criterion by organising a 
tender does not lead per se to the fulfilment of the other three criteria. Nevertheless the 
contract signed following the tender procedure and the tender documents can contain 
all necessary specifications that would ensure compliance with the other three Altmark 
criteria (see Q&A 62); 

•  explains why the provision of a SGEI should be compensated according to the ‘least 
cost for the community’ criterion and clarifies what this criterion implies: as already 
mentioned above,104 the criterion of the ‘least cost for the community’ is broader than 
the  lowest  price  and  can  be  complied  with  by  using  the  ‘most  economically 
advantageous  offer’  criterion,  as  long  as  the  award  criteria  are  closely  related  to  the 
subject-matter  of  the  service  provided.  This  will  allow  to  use  in  the  award  phase  a 
variety of elements referring to the quality of the services as well as other social and 
environmental criteria (see Q&A 63); 

•  explains  what  is  meant  in  the  Communication  by  open,  restricted  and  negotiated 

procedures (see Q&As 65, 66 and 67); 

•  clarifies  what  is  meant  with  ‘generally  accepted  market  remuneration’  which  is  the 
best  benchmark  to  assess  the  compensation  that  an  efficient  undertaking  requires,  in 
the second alternative of the fourth Altmark criterion (see Q&A 71). 

100  See box in Q&A 27. 

101   See Q&A 29. 

102   See Q&A 30. 

103   See box in Q&A 38. 

104   See section 2.1 and, in particular, page 11. 

28 

 
 
                                                 
The Guide also recalls that compensation that does not comply with the fourth Altmark 
criterion and thus constitutes State aid can still be compatible with the internal market 
in line with the Decision or the Framework.105  

A typical case 

A municipality applies a negotiated procedure with prior publication to select the provider of 
family  assistance  services  as  it  believes  this  procedure  is  particularly  suitable  for  this  very 
complex choice. As seen in section 3.1 above, this will be in line with EU public procurement 
rules.  As  the  negotiated  procedure  with  prior  publication  is  in  principle  not  sufficient  to 
comply with the fourth Altmark criterion,106 the financing provided by the municipality to the 
selected service provider may qualify as State aid. However, the financing can be granted in 
compliance  with  the  SGEI  Decision  presented  in  section  2.2  above  and  thus  be  compatible 
with the internal market. 

New Q&As on the act of entrustment have also  been added to the Guide.  They  address the 
following points: 

• 

the authorities entitled to entrust the provision of a service (Q&A 49); 

•  whether the provider can itself define the contents of the act of entrustment (Q&A 50); 

•  whether a public authority can entrust the provision of a service to the same provider 

at the end of an entrustment period (Q&A 57); 

•  whether an act of entrustment is also necessary under the SGEI de minimis Regulation 

(Q&A 76). 

•  whether, under the SGEI Decision, the duration of an entrustment can exceed 10 years 
(Q&A 101)  and  whether  it  is  still  possible  to  authorise  a  provider  for  an  unlimited 
period (Q&A 102); 

•  why there is a new requirement in the Decision to add a reference to the Decision in 

the entrustment act (Q&A 115). 

A key  Q&A in  the  section on the  Altmark decision is the one which explains  in details  the 
differences between the 2005 and the 2011 Decisions (Q&A 111). 

Moreover,  in  that  section,  the  Guide  addresses  one  issue  which  is  very  relevant  for  social 
services: the boundaries of the exemption of notification from which these services benefit. In 
particular: 

• 

it  explains  that  the  list  of  social  services  exempted  by  the  Decision,  i.e.  services 
‘meeting social needs as regards health and long term care, childcare, access to and 
reintegration into the labour market, social housing and the care and social inclusion 
of  vulnerable  groups’,  is  exhaustive  to  ensure  legal  certainty,  yet  broad  enough  to 
encompass the most important areas of social services. By including services relating 
to  ‘the  care  and  social  inclusion  of  vulnerable  groups’  it  gives  the  public  authorities 

105   See Q&A 67 in fine. 

106   See page 11 above. 

29 

 
 
                                                 
the  necessary  flexibility  to  grant  support  to  a  wide  variety  of  social  services  in 
accordance with the specific needs of their community (see Q&As 93 and 94);107 

• 

• 

it  clarifies  the  meaning  of  the  terms  ‘childcare’  (Q&A  96),  ‘meeting  social  needs’ 
(Q&A 97),  ‘social  inclusion  of  vulnerable  groups’  (Q&A 98),  ‘access  to  and 
reintegration into the labour market’ (Q&A 99); 

it  confirms  that  aid  to  social  and  work  integration  enterprises  can  be  covered  by  the 
Decision (Q&A 100). 

The  Commission  services  have  also  updated  the  Q&As  on  the  compensation  that  can  be 
granted in line with the Decision108 as well as those on the entry into force of the Decision and 
on the transition period.109 

As  explained  supra,110  the  section  of  the  Guide  which  focuses  on  the  Framework  is  not 
particularly  interesting  for  the  social  services  area.  The  section  on  the  SGEI  de  minimis 
Regulation, in contrast, is very useful for the provision of social services and in particular the 
following Q&As are worth mentioning: 

•  Q&A  74  explains  the  difference  between  the  SGEI  de  minimis  Regulation  and  the 

general de minimis Regulation; 

•  Q&A 7 5 recalls the methods to ensure that the € 500 000 ceiling is respected; 

•  Q&A 77 explains the advantage of using the SGEI de minimis Regulation compared to 
the Decision: a lighter act of entrustment and no need to check for overcompensation; 

•  Q&A 78 reminds that it is possible to cumulate aid granted under the two de minimis 
Regulations  up  to  the  ceiling  of  €  500  000: 
in  other  words,  if  a  provider  has 
received € 200 000 over three years under the general  de minimis Regulation, it 
can  receive  in  the  same  period  up  to  €  300  000  under  the  SGEI  de  minimis 
Regulation; 

•  Q&A 79 clarifies that a service provider cannot receive compensation under the SGEI 
Decision and compensation under the SGEI de minimis Regulation for the provision of 
the  same  service.  If  it  provides  two  different  services,  it  can  receive  compensation 
under  the  Decision  for  the  provision  of  one  service  and  under  the SGEI  de  minimis 
Regulation for another (Q&A 80). 

•  Q&A 81 explains that cumulation between compensation received under the Decision 
or the Framework and compensation received under the SGEI de minimis Regulation 
is also possible if these compensations concern different periods of time. 

Addressing  concerns  expressed  in  the  SPC  working  group  and  in  debates  at  the  European 
Parliament111,  the  Commission  services  have  also  updated  the  questions  concerning  the 

107   On this point, see also section 2.2 above. 

108   See, in particular, Q&As 123, 131 to 136, 140, 141 and 143. 

109   See Q&As 151 to 153. 

110   See section 2.3 of this report. 

111   See in particular the debate at the Intergroupe on Public services on 19 September 2012 on which a press 
release  is  published  in  http://www.francoisecastex.org/2012/09/financer-les-sieg-par-les-fonds-structurels-
une-clarification-simpose.html. 

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application of State aid rules to financing granted by public authorities using resources from 
the  European  Social  Fund,  the  European  Regional  Development  Fund  and  the European 
Agricultural Fund for Rural Development.112 

Finally, in the Chapter on State aid, the Guide provides guidance on the interaction between 
State  aid  and  public  procurement  rules,  anticipating  issues  that  are  further  developed  in 
Chapter 5 of the Guide. In particular: 

•  Q&A  113  recalls  that  the  SGEI  Decision  does  not  require  the  selection  of  the  least 

expensive provider; 

•  Q&A  114  and  188  respectively  recall  that  the  compliance  with  the  Decision  in 
particular  and  with  the  SGEI  package  in  general  does  not  mean  that  the  applicable 
public procurement rules would not have to be complied with.  

What  is  now  needed  is  to  ensure  that  the  Guide  is  distributed  widely  to  the  public 
authorities  in  the  Member  States.  Within  the  SPC  working  group,  Member  States' 
experts have reported that many public authorities, especially at regional and local level, 
and service providers were not aware of the 2010 Guide. The Commission services will 
therefore  continue  to  promote  the  Guide  in  collaboration  with  the Member  States  and 
with civil society organisations. 

112   See Q&As 189 to 196. 

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5.  CONCLUSIONS 

The reforms of the EU rules applying to SSGI – both the State aid package already applicable 
and the public procurement proposals to be adopted by the legislator - bring the answers and 
the solutions that Member States and stakeholders were looking for: 

•  with the State aid package the Commission has followed Mario Monti’s invitation to 
‘examine  […]  all  possibilities  to  further  increase  the  flexibilities  of  the  rules 
applicable  to  financial  compensation,  including  through  an  increase  of  thresholds 
and/or through expanding the list of activities for which compensation does not have 
to be notified irrespective of the amounts involved’;113 

• 

the proposed public procurement regime for social services follows the same logic of 
simplification and of a diversified and proportionate approach: it is clearer and simpler 
than the one currently provided for the ‘Annex II B’ non-priority services and is much 
lighter  than  the  standard  regime  for  other  goods  and  services  set  out  in  the  proposal 
currently under discussion. It also takes better account of the specific characteristics of 
social  services 
to  quality,  continuity  and 
comprehensiveness and to the flexibility it provides on procedures. 

the  attention 

it  pays 

thanks 

to 

The  improvement  of  the  rules  has  been  a  result  of  the  thorough  consultations  that 
the Commission  has  undertook  both  on  State  aid  and  on  public  procurement  and  of  the  on-
going dialogue on SSGI with Member States (notably within the SPC) and with stakeholders.  

The  simplification  and  clarification  of  the  State  aid  rules  should  be  an  incentive  for  public 
authorities to apply these rules to the social services sector, without the obstacles created by 
the  complexities  and  burdens  of  a  notification  procedure  and  the  fears  of  possible 
misunderstanding. 

Similarly,  the  lighter  and  more  adapted  public  procurement  regime  should  facilitate  the 
acceptance of public procurement rules by those who perceive these rules as burdensome and 
not  suited  to  social  services.  At  the  same  time,  the  reforms  at  EU  level  might  offer  the 
opportunity  to  scrutinise  national  procurement  legislation  which  did  not  fully  avail  of  the 
potential for flexibility and quality assurance that EU rules offer in the social services field. 
When  transposing  the  Public  Procurement  Directives,  Member  States  may  choose  to  follow 
the most innovative options that these Directives offer – such as the prohibition of the lowest 
price  award  criterion  or  the  introduction  of  specific  and  adapted  procedures  for  social 
services. 

It is now the task of the public authorities to fully apprehend these rules and use them to 
design high-quality and cost-effective social services meeting the needs of their citizens. 

To help with the implementation of the rules, the updated Guide already provides answers to 
concrete questions relating to the new State aid package. While the 2013 update reflects the 
changes brought to State aid rules by the SGEI package, another update shall follow once the 
directives on public procurement and on concessions have been adopted by the EU legislator. 
This is in line with the wish expressed by public authorities and stakeholders for the Guide to 
be regularly updated to take into account changes in legislation and new case law. 

113   See report quoted in footnote 14 above. 

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Others  questions  can  be  dealt  with  within  the  Interactive  Information  System.114  Member 
States,  service  providers’  and  users’  organisations  as  well  as  other  stakeholders,  at  EU  and 
at Member States’ level, can also help raise awareness on the rules through information and 
training initiatives. The Commission services will support and encourage these efforts through 
their regular dialogue with public authorities and stakeholders and through specific seminars 
and meetings at European and local level. 

The long process of dialogue and exchange in which the Commission and all stakeholders in 
the  area  of  SSGI  have  been  engaged  since  2006  is  bearing  fruit  just  as  high-quality  and 
efficient social services are needed more than ever.  

A better understanding and a correct application of the EU rules on State aid and public 
procurement  will  help  public  authorities  to  make  better  use  of  the  resources  to  be 
invested in social services: it will secure the legality of financing, as far as EU rules are 
concerned,  and  will  increase  the  effectiveness,  transparency  and  efficiency  of  public 
spending. In other words, thanks to the EU rules, investing in social services will deliver 
a greater return for people living in Europe. 

114   See footnote 18 above. 

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