service contract

A service contract is a public contract for the provision of services. It is one of the three main contract types in EU/EEA procurement law — alongside supply contracts (goods) and works contracts (construction). The classification determines which procedural rules and threshold values apply to the procurement.

How does a service contract work?

When a contracting authority needs services — such as cleaning, IT support, consultancy or transport — it must typically conduct a tender procedure. Suppliers submit bids based on the tender documents, and the contract is awarded according to defined award criteria.

For mixed contracts — where the procurement contains elements of supplies, services and works — the classification is determined by the main subject of the contract. Both the Court of Justice of the EU and national review bodies regularly reclassify contracts where the contracting authority has applied the wrong category.

Key rules for service contracts

• Thresholds: Under EU Directive 2014/24/EU, the thresholds for service contracts are EUR 143,000 for central government authorities and EUR 221,000 for sub-central contracting authorities.
• Social and specific services: Certain service contracts for social, health and education services have a higher threshold of EUR 750,000 and follow a lighter procurement regime.
• Value estimation: For recurring service contracts, the estimated value is based on the total spend over the preceding 12 months. Contracts without a fixed total price are estimated over 48 months.
• Exclusivity exception: Service contracts may be exempted from procurement rules if the provider holds an exclusive right granted by law or regulation compatible with the EEA Agreement.

Tools like Cobrief help suppliers discover and track service contracts published on TED and national procurement portals.

A service contract is the contract type that applies whenever the public sector purchases services rather than goods or construction work. Correct classification is essential for compliance — errors can lead to the wrong procurement rules being applied, potentially resulting in legal challenges and contract annulment.