Reserved Contract

Reserved contracts are one of the most significant tools available to contracting authorities that wish to use procurement to advance social inclusion objectives. They allow buyers to deliberately restrict competition to organisations that exist primarily to employ and integrate people with disabilities or other disadvantages, creating a legitimate exception to the general principle of open competition. EU procurement law explicitly permits this exception because the social objective served is a recognised public interest that the market alone does not reliably deliver.

What is a Reserved Contract?

Article 20 of Directive 2014/24/EU permits contracting authorities to reserve the right to participate in public contract award procedures to sheltered workshops and economic operators whose main aim is the social and professional integration of disabled or disadvantaged persons. A separate but related provision in Article 77 allows certain public service contracts to be reserved for specific types of organisations under the light-touch regime.

Under Article 20, the reservation can be made for any type of contract (works, supplies, or services) and the reserved procedure is otherwise identical to the standard competitive procedure: the authority must still publish a notice, run a competition among the eligible organisations, and award on the basis of the most economically advantageous offer. The only difference is that the pool of eligible bidders is restricted to qualifying organisations.

Qualifying organisations must meet two conditions: their main aim must be the social and professional integration of disabled or disadvantaged persons, and at least 30% of their employees must be disabled or disadvantaged persons. Examples include sheltered workshops (specialist employers of people with significant disabilities), social firms, work integration social enterprises (WISEs), and organisations established by disability charities to provide employment opportunities.

Under Article 77 of Directive 2014/24/EU, contracting authorities may reserve certain health, social, cultural, and educational service contracts for organisations that meet all of the following: they are not-for-profit or operate on a mutual basis, they involve employee ownership or participation in the management of the organisation, they pursue a public service mission linked to the delivery of the services, and they reinvest any profits in pursuit of the mission. The authority can award such contracts on a reserved basis for a period of up to three years at a time.

Why it matters for bidders

If your organisation is a social enterprise, sheltered workshop, or work integration social enterprise, reserved contracts are opportunities that other commercial competitors cannot access. Identifying reserved contract opportunities requires scanning procurement notices for the reservation clause, which should be stated in the contract notice. Bidovate flags reservation status in the notices it surfaces.

For standard commercial organisations, reserved contracts are not opportunities you can pursue. However, understanding the reservation regime helps you understand market structure: some categories of public service, particularly in social care, employment services, and supported employment, are routinely reserved to social enterprises in member states that actively use this tool.

Example

A Danish county council regularly uses social integration services delivered by sheltered workshops for its supported employment programme. It decides to reserve its next procurement for integration support services to organisations that qualify under Article 20, requiring that at least 30% of the service delivery workforce is composed of people with significant disabilities. It publishes the contract notice on TED with the reservation clearly stated. Only sheltered workshops and equivalent organisations may submit tenders.

Frequently Asked Questions

Can any type of contract be reserved?

Article 20 of Directive 2014/24/EU does not restrict reserved contracts by type: works, supplies, and services can in principle all be reserved. In practice, reserved contracts are most commonly used for service contracts, particularly employment, training, cleaning, mail room, laundry, and other services that sheltered workshops commonly deliver. The Article 77 specific services reservation is limited to the listed categories of health, social, cultural, and education services.

What evidence must an organisation provide to qualify for a reserved contract?

The contracting authority will specify in the procurement documents what evidence it requires. Typically this includes evidence of the organisation's legal form and constitutional objectives (demonstrating the social mission), payroll records showing that at least 30% of employees are disabled or disadvantaged, and relevant quality certifications. The definition of "disadvantaged" may include people with mental health conditions, long-term unemployed, care leavers, and other groups depending on national implementing legislation.

Can a contracting authority always choose to reserve a contract?

A contracting authority has discretion to reserve or not to reserve. The directive permits reservation; it does not require it. Contracting authorities that wish to use reserved contracts must make that policy decision and be prepared to justify it as a legitimate exercise of their discretion. In some member states, central government procurement policy notes or social value frameworks actively encourage the use of reserved contracts for appropriate categories.