The Internal Market Committee of the European Parliament (“IMCO”) has endorsed in September the proposal for a new directive on the award of concession contracts tabled by the European Commission in December 2011. The Directive shall be on the agenda for the EP Plenary sessions this November and, if adopted, Member States will have to implement the new rules by 30 June 2014 both for new awards and for existing concessions contracts, if such contracts are modified or terminated after the entry into force of the new rules.

The Commission’s intention was three-fold: (i) to diminish the high degree of legal uncertainty which economic operators encountered; (ii) to eliminate the obstacles that particularly small and medium enterprises face when participating in concession awards procedures; and (iii) to ensure that contracting entities may choose the most advantageous economic offer which would also satisfy social goals. By this, the Commission aimed at enforcing the freedom to provide goods and services by opening the concessions market to economic operators from other EU Member States than the one the contracting entity originates. At the same time, it proposed a framework for concessions to be awarded jointly by several contracting authorities from different EU Member States.

To achieve these objectives, the Commission proposed a series of rules which substantially transpose the conventional rules on the award of public works, supply and services contracts (e.g. types of procedures, award criteria, technical specifications) to the award of concession contracts.

While agreeing on the need for a specific legislation on concessions, IMCO took a different approach which resulted in a much lighter set of rules, giving lots of leeway for contracting authorities in choosing the procedure and the award criteria for concessions.

The transposition of the draft directive as currently amended by IMCO, if adopted, would bring some novelties such as:

  • The harmonised rules proposed under the new directive would cover both works and services concessions, as opposed to the current Procurement Directive 2004/18/EC, which only regulate public works concessions;
  • The threshold on concession contract value triggering the application of the new harmonised rules would be increased from 5 to 8 million Euro;
  • In recognition of the significant element of negotiation that the award of concession contracts involve, contracting authorities would not have to follow specific procedures in order to award concession contracts. This contrasts with the current practices in some Member States, which have enacted procedures for the award of concessions which borrow from the procurement contracts (see for example Romania, where both works and service concessions must follow either an open or restricted tender procedure or a competitive dialogue procedure, as a rule, the negotiated procedure being allowed only in exceptional circumstances). In terms of publicity, the new directive would require publication of a concession notice upon the launch of the procedure and of an award notice upon its completion. However, Member States must enact rules to ensure that the award procedures are transparent and non-discriminatory and ensure genuine competition and equal treatment of economic operators. Also, Member States must adopt rules to combat fraud, favouritism and corruption and prevent any conflicts of interest;
  • The award criteria may include, among others, environmental, social or innovation-related criteria. The contracting authorities may give a ranking of such criteria, but they are not obliged to indicate the relative weighting given to each criteria;
  • The duration of a concession contract should secure a reasonable return on the concessionaire’s invested capital but should not exceed the normal amortisation period for such investment; notably, the duration shall take into account not only the initial, but also the subsequent investments required during the concession lifetime.

The new rules are expected to streamline implementation of major infrastructure and public utilities concessions that are delayed by strict procedural steps and run increased risks of litigation in some jurisdictions under current award rules which are akin to procurement contracts.

Further information refer to:

Proposal for a directive of the European Parliament and of the Council on the award of concession contracts (click here)

Report on the proposal for a directive of the European Parliament and of the Council on the award of concession contracts (click here)

Click here to see IMCO’s press release.