Case Law Teckal Checklist

Teckal checklist

In summary, in order to ensure that your company benefits from the Teckalexemption and complies with the provisions of the proposed new procurement directive:

1.     There can be no private ownership or involvement and preferably no possibility of issuing shares to private sector participants at a later date, although if this is a possibility, this will not in itself undermine the ‘in-house’ relationship.

2.     Ensure that the constitution gives ‘decisive influence’ to the public sector owners, acting together. This should include the ability to determine the strategic objectives and significant decisions of the company, with any proposal to move outside an agreed business plan being referred back to the members. The participating authorities must each have the ability to appoint a representative to the board.

3.     The company constitution should include objects that are clearly focussed upon the public interest and there should ideally be a clear prohibition or limit on pursuing commercial activities.

4.     If there is a strong desire to undertake open market activity, this must not amount to more than 10% in terms of turnover of the activity of the company – ie at least 90% of the activity of the company must be for its public sector owners.

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5.     Care must be taken to ensure: (1) with any group structures, that the element of control is present throughout; or (2) if the company is intended to mutualise at some point in the future, that the public sector owners will be able to step out with control passing to the employees.

If the shared services arrangement is to be by way of agreement or committee, without a joint company, then the five ‘Hamburg’ elements should be present:

1.     There must be genuine cooperation aimed at carrying out public service tasks with mutual rights and obligations.

2.     The arrangements must be solely concerned with the public interest.

3.     No more than 10% (in terms of turnover) of the activity in question can be carried out in the open market.

4.     Financial transfers between the parties must be limited to cost reimbursement only.

5.     There can be no private participation in any of the contracting authorities involved.