Social Services and Contract Changes: The Legality of Social Service Outsourcing Practices in EU Procurement Law

Abstract

Ensuring the social welfare offered to citizens is an important part of diverse political agendas in EU Member States. The obligation to supply these services of general interest including health care, education, and social services often lies with local governmental institutions such as municipalities. Today, however, these services are to a large extent sourced out to private service companies. In this process, contracting authorities normally build in contract clauses granting the authority a right to demand changes – even radical ones – in the services performed by the private service company. In some contracts, these unilateral variation clauses are so extensive that their validity – even according to fundamental principles of contract law and public procurement law – seems doubtful.

In this article we test the legality of contractual outsourcing practices regarding social services, placing specific emphasis on contract changes. A brief assessment of contract clauses from selected Member States (Denmark, Sweden, Norway, Poland, and the United Kingdom) is provided, since it seems that contracting authorities stretch EU procurement law to its limits, and even beyond, when outsourcing social services.

Keywords: public procurement, contract modification, social services

JEL Classification: K12, K33, K20