in-house provision

In-house provision refers to the practice where a public body carries out tasks using its own staff and resources, rather than purchasing services from an external supplier. When a municipality uses its own employees to run a care home, for example, that is in-house provision. Since no contract is concluded between two separate legal entities, EU procurement rules do not apply.

How does in-house provision work?

Classic in-house provision is straightforward: a contracting authority performs the task within its own legal entity. Government departments and agencies that form part of the same legal person can carry out work for each other without triggering procurement obligations.

More complex is the in-house exemption, codified in Article 12 of EU Directive 2014/24/EU. This allows a contracting authority to award a contract to a separate legal entity — typically a publicly owned company — without competitive tendering. The doctrine originates from the landmark Teckal case (Case C-107/98) before the Court of Justice of the European Union. In Norway, the exemption is implemented in the Public Procurement Regulation § 3-1.

Three conditions for the in-house exemption

For the in-house exemption to apply, three conditions must be met:

• Control criterion: The contracting authority must exercise control over the entity similar to the control over its own departments — meaning decisive influence over strategic objectives and significant decisions.
• Activity criterion: The controlled entity must carry out more than 80% of its activities for the controlling contracting authority or other entities controlled by that authority.
• Capital criterion: There must be no direct private capital participation in the controlled entity.

The directive also allows for inverse in-house arrangements — where a controlled entity awards a contract to its controlling authority — and for arrangements between entities under joint control. Tools like Cobrief can help contracting authorities assess whether a procurement falls within or outside the scope of the rules.

In-house provision is a key strategic tool for public bodies wishing to maintain control over core services. The exemption remains one of the most debated areas in procurement law, with the CJEU and national review bodies such as KOFA regularly testing its boundaries through case law.