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Concessions Directive�(2014/23/EU)

Presentation of the acquis:

EU Public Procurement legal framework

Brussels, 6 December 2018

DG for Internal Market, Industry, Entrepreneurship and SMEs (DG GROW)

Unit G3 – Procurement Legislation and Enforcement Dita Collinsová

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Introduction

Concessions:

constitute a form of collaboration between the public and private sector (public-private partnership) and a key tool for a wide range of economic activities

high economic value

unlike public contracts, at EU level they were previously only partially regulated (works concessions) or completely excluded from secondary legislation (service concessions)

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Introduction (II)

have specificities, like operating risk and extent of the required investments, that justify separate regulation

suffered from lack of legal certainty, which gave rise to serious distortions of internal market (such as widespread direct awards)

are now regulated in a comprehensive framework, under Directive 2014/23/EU on the award of concession contracts

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Objectifs of Concessions Directive

to establish a clear legal framework enabling contracting authorities and entities to accomplish their missions

to ensure access by economic operators to concessions across the EU, as part of the freedoms of the internal market

"Privatisation"/externalisation is not the objective: public authorities remain free to carry out public task by using their own means

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Concept of concession

Contract in writing for pecuniary interest by means of which:

one or more economic operators are entrusted execution of works or provision and management of services

consideration (remuneration) consists in right to exploit work or services (sometimes also with payment)

there is an operating risk

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Concept of concession (II)

Operating risk:

involves possibility of not recouping investments made or the costs incurred (no guarantee)
involves real exposure to vagaries of the market
it can consist of either a demand risk, a supply risk or both
it can be limited but it cannot be merely nominal or negligible (real exposure to possible loss)
it stems from factors (foreseeable but uncertain) outside the control of the parties
it is different from bad management, contractual defaults and force majeure (inherent to every contract)

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Distinction from other legal setups

In a public contract, an economic operator receives a fixed amount for completing a work or providing a service and is not subject to an operating risk

In an authorisation or licence, an economic operator has to comply with legal conditions for carrying out an economic activity

Terminology under national law might be misleading!

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Scope of application

Both works and service concessions with a value of �5 468 000 € or higher

Both public sector and utilities are covered

"Light" regime for social and other services, requiring only ex ante and ex post publication

Concessions not covered by Directive but having cross-border interest are still subject to fundamental principles under the Treaties

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Exclusions

Drinking water (supply or distribution)�
Certain concessions awarded to holders of exclusive rights �

Certain lotteries�
Public passenger transport services (Reg. 1370/2007)�
Other exclusions similar to those in Directives 2014/24/EU and 2014/25/EU

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Calculation of value

Based on total turnover of concessionaire (generated over the duration of the contract), net of VAT, as estimated by contracting authority/entity, in consideration for works and services and supplies incidental to them

Contracting authority must provide most accurate estimated value, using an objective method specified in concession documents

If actual value at moment of award is more than 20% higher than estimate, actual value is used for determining whether the threshold is attained

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Duration

Duration must be limited

For concessions lasting more than 5 years, duration must not exceed the time in which a concessionaire could reasonably be expected to recoup investments made together with return on invested capital

Member States must be able to prove link between duration and recoup of investment

Extension of initial duration must comply with Directive's rules concerning both duration and modifications

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Procedural rules and guarantees

No obligation to follow a specific procedure – possibility for negotiation
Obligation to respect general principles of equal treatment, non-discrimination and transparency
Publication of notices in EU Official Journal
Minimum time limits for receipt of tenders
Information to interested parties on the envisaged procedure and recording of procedure
Reduction of the number of candidates in a transparent manner and using objective criteria
Qualitative selection and exclusion grounds

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Procedural rules and guarantees (II)

Award criteria

Compliant with general principles
Objective, linked to the subject matter, must permit to identify the overall economic advantage and do not confer unrestricted freedom of choice
Compulsory ranking in descending order of importance
Possibility of including social, environmental and innovation-related aspects

Remedies Directives

- Applicable to concessions covered by Concessions Directive

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Modifications and�public-public cooperation

Virtually same rules as for public contracts
(but percentage for modifying concession
under safe harbour is always 10%)

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Public-private partnership (PPP)

no simple definition: covers various types of contracts or other delivery models
any form of cooperation between contracting authorities and private sector economic operators to ensure funding/construction/management/maintenence of infrastructure (works) and/or provision of services
key features: sharing or transfer of risk to the private sector partner; usually long duration
structure: contractual or institutional (IPPP)

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Public-private partnership (PPP) II

no legal definition in EU public procurement directives, but EU public procurement rules apply to the procedures for the award of PPPs

PPPs can be (i) public/utility contracts; (ii) concession contracts (works or services); (iii) contracts excluded from the scope of the directives (those of cross-border interest are subject to fundamental Treaty principles: transparency, equal treatment, non-discrimination, proportionality, mutual recognition…)