Explanatory Memorandum to COM(2011)897 - Award of concession contracts - Main contents
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This page contains a limited version of this dossier in the EU Monitor.
| dossier | COM(2011)897 - Award of concession contracts. |
|---|---|
| source | COM(2011)897  |
| date | 20-12-2011 |
The Commission announced the intention to adopt a legislative initiative on concessions in its communication The Single Market Act Twelve levers to boost growth and strengthen confidence of 13 April 2011.
The award of works concessions is presently subject to a limited number of secondary law provisions, while service concessions are covered only by the general principles of the TFEU. This loophole gives rise to serious distortions of the internal market, in particular limiting access by European businesses, especially small and medium-sized enterprises, to the economic opportunities offered by concession contracts. The lack of legal certainty also results in inefficiencies.
The present initiative aims to reduce the uncertainty surrounding the award of concessions contracts, and thereby benefit public authorities and economic operators. EU law does not restrict a contracting authority or entity's freedom to perform the public interest tasks falling within its remit by using its own resources, but when a contracting authority decides to call on an outside entity to carry out such tasks, all EU economic operators must be granted effective access to the market.
In the context of severe budgetary constraints and economic difficulties in many EU Member States, efficient allocation of public funds is of particular concern. An adequate legal framework for the award of concession contracts would favour public and private investment in infrastructure and strategic services at best value for money. The potential of a legislative initiative on concession contracts to create a supportive EU framework for PPPs was singled out in the Commission's 2009 communication on Mobilising private and public investment for recovery and long term structural change: developing public private partnerships.
This draft is being put forward in tandem with the revision of Public Procurement Directives.[1] It will result in the adoption of a separate legal instrument regulating the award of concesssions which, together with the two proposals to revise Public Procurement Directives (2004/17/EC and 2004/18/EC), aims at creating a modern public procurement legislative framework.
Contents
Between 12 May and 9 July 2010, the Commission held a public online consultation open to the general public. Between 5 August and 30 September 2010 another public consultation targeting the business community, social partners and contracting entities was held. The consultations confirmed that the lack of legal certainty caused problems and they demonstrated the obstacles that companies face with regard to market access. They also suggested that appropriate EU action should be taken. The results can be found at ec.europa.eu/internal_market/consultations/2010
These conclusions have been corroborated by a number of bilateral meetings with the representatives of Member States, at local level, with businesses active in the sectors concerned and with industry associations.
The information gathered during the consultations fed into the Impact Assessment Report, which was examined and accepted by the Impact Assessment Board on 21st March 2011. The Impact Assessment Board made recommendations on providing, in particular, additional evidence on the scale of the problems, the consequences of the distortions found, the differences in treatment between public contracts and concessions and on strengthening the impact analysis and the comparison of options. These recommendations were taken into account in the re-submitted version of the Impact Assessment. The Impact Assessment Board's opinions on the report have been published together with this proposal, the final Impact Assessment report and the executive summary of the report.
The report confirmed the need for new legislation. It found that economic operators are faced with an unlevel playing field, which often leads to missed business opportunities. This situation gives rise to costs and is detrimental to competitors located in other Member States, contracting authorities and contracting entities and consumers. Moreover, both the definition of concessions and the precise content of the obligations of transparency and non-discrimination arising from the Treaty remain unclear. The resulting lack of legal certainty increases the risk that illegally awarded contracts will be canceled or terminated early and it ultimately discourages the authorities from using concessions where this type of contract could be a good solution.
Even if Member States were to pass legislation setting up a legal framework based on the Treaty principles the legal uncertainty related to interpretations of those principles by national lawmakers and the large disparities between the laws of different Member States would remain. In certain cases the total lack of national legislation has been cited as a cause for direct awards with the associated risks of malpractice or even corruption.
The optimal solution identified was legislation based on the current provisions on public works concessions, adequately adjusted and supplemented with certain specific provisions. A more restrictive approach, would be to extend to concessions the provisions that apply to public contracts. This approach was considered counter-productive in that it could potentially discourage contracting authorities from using concessions.
· Legal basis
The proposal is based on Articles 53 i, 62 and 114 of the Treaty on the Functioning of the European Union (TFEU).
· Subsidiarity principle
The subsidiarity principle applies insofar as the proposal does not fall under the exclusive competence of the EU.
The objectives of the proposal cannot be sufficiently achieved by the Member States for the following reason:
The coordination of procedures for public procurement above certain thresholds is an important means of complementing the internal market in the field of public purchasing by ensuring effective and equal access to concessions for economic operators across the single market. European-wide procurement procedures provide transparency and objectivity in public procurement, resulting in considerable savings and improved procurement outcomes that benefit Member States’ authorities and, ultimately, the European taxpayer.
This objective could not be sufficiently achieved through action by Member States which would inevitably result in divergent requirements and possibly conflicting procedural regimes thereby increasing regulatory complexity and causing unwarranted obstacles to cross-border activity. Indeed, until now many Member States have not interpreted, clarified or implemented the relevant Treaty principles of transparency and equal treatment in a manner that ensures that concession contracts concessions contracts are awarded correctly. The ensuing lack of legal certainty and foreclosure of markets is unlikely to be eliminated without intervention at the appropriate level.
EU intervention is therefore necessary to overcome existing barriers to an EU-wide concession market and to ensure convergence and a level playing field, ultimately guaranteeing the free movement of goods and services throughout 27 Member States.
The proposal therefore complies with the subsidiarity principle.
· Proportionality principle
The proposal complies with the proportionality principle since it does not go beyond what is necessary in order to achieve the objective of ensuring the proper functioning of the internal market by laying down limited rules on the award of concessions.
The Impact Assessment allowed a range of solutions to be identified. These were then analysed to see whether they would adequately meet the objectives of the legislation. This analysis showed that the objectives cannot be achieved by means of infringement policy or other non-legislative tools such as ‘soft law’. The most basic set of provisions, currently applicable to public works concessions, was also found to be inadequate because it does not provide sufficient legal certainty and compliance with the Treaty principles. On the other hand, more detailed legislation similar to the existing rules for the award of public contracts was considered to go beyond what is necessary to achieve the objectives.
· Choice of instruments
Since the proposal is based on Articles 53 i, 62 and 114 TFEU the use of a Regulation applying both to the procurement of both goods and services would not be permitted by the Treaty. The instrument proposed is therefore a Directive.
Non-legislative options were discarded for reasons set out in detail in the impact assessment.
The proposal has no budgetary implications.
· Review/revision/sunset clause
The proposal contains a review clause concerning the economic effects on the internal market resulting from the application of the thresholds laid down in Article 5.
· Detailed explanation of the proposal
The proposed Directive is expected to guarantee transparency, fairness and legal certainty in the award of concession contracts, and thereby contribute to improved investment opportunities and ultimately to more and better quality of works and services. It will apply to concessions awarded after its entry into force. This provision is in line with rulings by the Court of Justice of the European Union on modifying contracts (without prejudice to the temporary arrangements that may prove strictly necessary to ensure the continuity of the provision of the service pending the award of a new concession).
The gains referred to above are expected to be obtained thanks to a number of procedural requirements and clarifications applicable to concession awards, pursuing two major objectives: increasing legal certainty and ensuring a better access to the concessions markets for all European undertakings.
The main objective of the Directive is to provide for clarity on the legal framework applicable to the award of concessions, but another is to clearly delimit the scope of application of this framework. The specific obligations in the field of concessions will increase legal certainty on one hand by providing contracting authorities and contracting entities with clear rules incorporating the Treaty principles governing the award of concessions and on the other hand by giving economic operators with some basic guarantees with regard to the award procedure..
Definition: The present proposal for a Directive on the award of concession contracts provides for a more precise definition of concession contracts with reference to the notion of operational risk. It makes clear what types of risk are to be considered operational and how to define significant risk. It also provides references as to the maximum duration of concessions.
Incorporation of Treaty obligations into secondary law: The proposal extends the majority of the obligations which currently apply to the award of public works concessions to all services concessions. . It also lays down a number of concrete and more precise requirements, applicable at different stages of the award process on the basis of the Treaty principles, as interpreted in the case law of the Court of Justice of the European Union. Moreover, it extends the application of secondary law to the award of concession contracts in the utilities sector, which is currently exempt from such legislation.
Public-public cooperation: There is considerable legal uncertainty as to how far cooperation between public authorities should be covered by public procurement rules. The relevant case-law of the Court of Justice of the European Union is interpreted differently between Member States and even between contracting authorities. Hence the present proposal clarifies the cases in which contracts concluded between contracting authorities are not subject to the application of concession award rules. Such clarification is guided by the principles set out in the relevant case law of the Court of Justice.
Modifications: The modification of concessions during their term has become an increasingly relevant and problematic issue for practitioners. A specific provision on modifying concessions incorporates the basic solutions developed in the case law and provides a pragmatic solution for dealing with unforeseen circumstances requiring an a concession to be modified during its term.
The proposal provides for a fundamental improvement economic operators' access to the concessions markets. The provisions are primarily designed to increase the transparency and fairness of award procedures by restricting the arbitrariness of contracting authorities and contracting entities' decisions on such issues as prior and post-publication, procedural safeguard, selection and award criteria and the deadlines imposed on tenderers. Furthermore, they provide for a better access to justice in order to prevent or to address violations of those provisions.
Publication in the Official Journal: In order to ensure transparency and equal treatment to all economic operators, the present proposal provides for compulsory publication of concession contracts with a value equal to or gerater than EUR 5 000 000. This threshold, which already applies to works concessions, has now been extended to services concessions taking into account the public consultations and studies carried out by the Commission in preparing this proposal. It is aimed at keeping any additional administrative burden and costs proportionate to the value of the contract and at focusing on contracts with a clear cross-border interest. The threshold applies to the value of such contracts calculated following a methodology spelled out in the contract. In the case of services, this value reflects the estimated overall value of all services to be provided by the concessionnaire during the whole term of the concession.
The new rules also define the minimum scope of information to be given to potential tenderers.
Deadlines: This proposal also sets a minimum deadline for the submission of interest in any concession award procedure, amounting to 52 days, as this is currently the case for public works concessions. It has been decided to provide for concessions a longer deadline than in case of public contracts, given that concession contracts are usually more complex.
Selection and exclusion criteria: The proposal provides for obligations realting to the selection criteria to be applied by the contracting authorities or contracting entities when awarding concessions. These rules are less restrictive than similar provisions currently applicable to public contracts. However, they restrict the selection criteria to those related to the economic, financial and technical capacity of the bidder and limit the scope of the acceptable exclusion criteria.
Award criteria: The proposal provides for an obligation to apply objective criteria linked to the subject matter of the concession, ensuring compliance with the principles of transparency, non-discrimination and equal treatment, guaranteeing that tenders are assessed in conditions of effective competition allowing an overall economic advantage for the contracting authority or the contracting entity to be determined. These criteria should prevent arbitrary decisions by contracting authorities and contracting entities and must be published in advance and listed in descending order of importance. Member States or contracting authorities or contracting entities which so wish, may also provide for or apply the ‘most economically advantageous tender’ criterion for the award of concessions.
Procedural guarantees: Unlike the Public Procurement Directives, the proposed rules do not contain a fixed catalogue of award procedures. This solution allows contracting authorities and contracting entities to follow more flexible procedures when awarding concessions notably reflecting national legal traditions and permitting the award process to be organised in the most efficient way. However, the proposal establishes a number of clear procedural safeguards to be applied to the award of concessions notably during negotiations. These safeguards aim at ensuring that the process is fair and transparent..
Remedies: This proposal provides for an extension of the scope of application of the Remedies Directives (Directives 89/665/EEC and 92/13/EC, as amended by Directive 2007/66/EC) to all concession contracts above the threshold in order to guarantee effective channels for challenging the award decision in court and provide minimal judicial standards which have to be observed by contracting authorities or entities.