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Procurement package: MEPs close deal with Council on concession contracts
Businesses wishing to operate across borders will benefit from uniform EU-wide rules on awarding high-value and long-term concession contracts provisionally agreed by internal market MEPs and the Irish Presidency on Tuesday. The deal equips public authorities with more tools to select the best offer and excludes the water sector from the scope of the new rules.
"The political agreement reached today on the concessions directive with the Council and the Commission constitutes a major step forward for the internal market. Clear rules will apply to the awarding of concession contracts, for both works and services, putting an end to the current patchwork of national rules and interpretations of EU principles and case law," said Parliament's rapporteur, Phillipe Juvin (EPP, FR), after the deal was clinched. “No, the directive does not lead to privatization of public services. No, the directive does not question public authorities' freedom of choice regarding the organisation of their public service missions,” he stressed.
Public authorities use concession contracts to hire private firms to supply services or to perform works. Examples include building roads, bridges or sports arenas and supplying energy, water or waste disposal services.
The key feature of such contracts is that the private companies must bear a substantial part of the economic risk stemming from executing the contracted works or services.
Concession threshold and award criteria
MEPs agreed that the draft EU rules would apply to concession contracts worth €5 million or more but secured a review three years after the directive enters into force in order to note the effect on the internal market.
Under the deal, concession award criteria must be objective to ensure an overall economic advantage for public authorities. MEPs inserted a provision allowing environmental, social or innovation-related criteria to be included in the award process. Public authorities will have the option of refusing to grant concession contracts to economic operators who repeatedly fail to comply with environmental, social or labour law obligations.
MEPs made it possible for public authorities to ask tenderers to indicate any share of the concession they might intend to give to subcontractors. This will increase transparency and show more clearly how the future economic operator envisages executing works or providing services.
No push to privatise public services
The deal stresses that member states remain free to decide how they want public works and services to be performed – in-house or outsourced to private companies. The draft rules do not require the privatization of public enterprises or the services they provide.
MEPs acknowledge the particular importance of water as a public good and therefore accepted the exclusion of the water sector from the scope of the directive. However they also ask the Commission to assess the impact of this exclusion three years after the new directive has been transposed into the national laws of member states.
Some other services of a specific nature, such as certain lotteries, civil defence and protection, emergency services performed by non-profit organisations, and media, financial or legal services, are also excluded from the new rules.
The proposed "concessions directive" is part of a package of four legislative proposals tabled by the European Commission in 2011 in the field of public procurement: three directives ("classic", "utilities" and "concessions") and one regulation ("third market access" or "reciprocity"). An update to the "classic" and "utilities" directives is also in the final stage of three-way negotiations between Parliament, Council and the Commission. The "third market access" regulation is dealt with by the International Trade Committee
The provisionally agreed text still needs be formally approved by the Council and Parliament's Internal Market Committee. The committee will probably vote on the deal in July, paving the way for a plenary vote in the autumn.