Directive to rationalise and promote use of concessions
By Sophie Mosca | Tuesday 20 March 2012
The European Commission intends to rationalise and promote the use of concessions by public services via a new and specific directive on the awarding of these complex long-term contracts through which an adjudicating authority (state, local authority or body with a public service mission) entrusts the management of a public service to a private operator. The latter has to take responsibility for the investment and the operational risks and is frequently remunerated thanks to the price paid by the user of this service. Previously, only concessions for works were subject to an integrated EU regulation in the directives on public procurements (however, the awarding phase was not covered) as those applying to services came under general principles of transparency and equality of treatment.
The draft directive, published on 20 December 2011, which covers the two sectors, aims to introduce greater transparency in these contracts to ensure more participation and more innovation in these sectors and to ensure better management of public expenditure.
LEGAL CERTAINTY AND TRANSPARENCY
The Commission wants to harmonise - within the EU - the awarding of these contracts in a separate directive, which, according to an architecture that is similar to that of the revised directives on public procurements, takes account of the specificities of concessions by comparison with public procurements and which factors in the contributions of the 25 rulings of the EU Court of Justice since 2000. It also wants to facilitate better access to justice through the extension of the scope of application of the Remedies Directives (89/665/EEC and 92/13/EEC).
First of all it specifies the key relevant concepts and the scope of application of its proposal so that all the European economic actors are on the same footing. But the distinction between works’ concessions and services’ concessions is not obvious as some of the former include services and mixed concessions pose a problem that the proposal does not fully resolve.
The text applies beyond a threshold of €5 million whilst spelling out the awarding criteria and, for services’ concessions of between €2.5 million and €5 million, it envisages a simplified system. To avoid discrimination and the risk of fraud and to increase participation, especially that of SMEs, it imposes obligations for the notice of a concession and an award (also for concessions of services) to be published in the EU’s Official Journal and a bidding period of 52 days.
The award arrangements are also put into a framework. The criteria must be prioritised and weighted. They must only relate to the subject of the contract and must be restricted to the most economically advantageous offer. As for the execution arrangements, they are also more strictly circumscribed. To avoid abuse, the length of the concession will be restricted to the time needed to allow the concessionaire to recover the cost of the investments carried out while it is doing the works or operating the services and to ensure it a reasonable return on the capital invested.
Where there is a “substantial” change in the provisions of an ongoing concession contract, it will be necessary to proceed to a new award procedure.
LACK OF CLARITY WITH EXEMPTIONS
Exempt from these new rules are the concessions currently governed by Regulations 1370/2007 on public transport services and 1008/2008 establishing common rules for the operation of air transport services and those relating to non-priority services. Some other exemptions are envisaged for services with a limited transnational dimension – social services, for example – but the removal of the pre-existing distinction in the public procurement directives between priority and non-priority services introduces confusion, which worries operators, especially as regards security services. The proposal also excludes activities linked to the management of network infrastructure in the context of an exclusive right being exercised by an economic operator. But it does not take into account a situation where the provision of energy is regulated by the member state according to a standardised system of tariffs where competition is also almost non-existent because the authority does not have the choice of operator. For some sectors, such as port services or public transport, the exemption is not clearly set out.
The exemption of vertical cooperation between an adjudicating authority and another moral person where there is a majority of public ownership according to stricter specific criteria than has been established by case law (Teckal and Coditel rulings) has generated a lot of criticism (see Open Forum). Some observers wonder about the relevance of refusing any private participation.
Horizontal cooperation between public entities is also excluded from the draft directive if certain criteria are met (absence of any private capital; aim of the cooperation leading to a public service mission being carried out; excluding any purpose other than the public interest). But the addition by the Commission of criteria supplementary to case law is creating debate as is that relating to the impossibility of financial transfer other than refunding the cost of work, services or supplies concerned by the concession.
The proposal was discussed in the European Parliament’s Committee on the Internal Market (IMCO) in a second exchange of views, on 19 March, and a hearing will be organised on 21 March.
The draft report is due to be available on 18 April and amendments can be lodged between 8 May and 8 June to be scrutinised on 11 July and 6 September. The vote in IMCO is expected on 10 October.
This timetable will be changed if a new impact study organised by the European Parliament were to be requested.